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As you are aware, export of computer software is admissible
for concessionary export finance/refinance facility in terms
of BPRD Circular No.5 dated 3rd March,1997 under the Export
Finance Scheme as per procedure laid down in BPRD Circular Letter
No.23 dated 20th October, 1998. There has been a spate of complaints
that banks are not extending loans/finance for export of software
under the Scheme on one pretext or the other to the software
exporters / software houses / I .T. Companies. This practice
besides being against the spirit of the Scheme also runs counter
to the Government's desire in enhancing exports through non
traditional resources. In this context attention of banks is
invited towards Prudential Regulation III in terms of which
clean facilities granted to finance the export of commodities
eligible under the Export Finance Scheme shall be exempt from
the per party limit of Rs 100,000.
As development of software represents intellectual
property, banks are advised to provide export finance facility
under the Export Finance Scheme by taking due cognizance of
the fact that the exporter of a software possesses a valid
firm export order / irrevocable letter of credit and has committed
to repatriation of export proceeds from the export of software.
This export order or L/C should be accepted as a collateral
for bank borrowing under the Export Finance Scheme.
All banks are, therefore, advised to set up
separate units in their respective banks for dealing with
the I.T. exporters of computer software and to ensure proper
flow of credit to the sector. You are requested to bring the
contents of this circular to the notice of all the Regional
and Zonal Offices, particularly those dealing with exporters.
Please acknowledge receipt.
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