RBI supports export business in the country by initiating various measures

KOLKATA, India - May 30, 2013 - PRLog -- A panel group from Reserve Bank of India supports export business in the country by initiating various measures

A technical committee chaired by G. Padmanabhan, Executive Director, RBI has been formed to provide some crucial recommendations to support exports which will be considered by the apex bank.

Key suggestions are listed below :-

1. Restriction on interest margins which is charged by banks for providing loans to exporters. Presently SMEs are charged LIBOR plus 500 bps – it is considered as too high.

2. Export credits will be categorized as the part and parcel of priority sector lending (PSL) intended for all commercial as well as foreign banks, for a time period ranging from three to five years. Export credit was pulled out from the grasp of PSL for foreign banks covering more than 20 branches

3. Inside the PSL, eight per cent of the total credit will be allocated for exports.

4. Defaulter Banks not fulfilling their yearly PSL targets, have to give out 50% of the shortfall for exports, in the Rural Infrastructure Development Fund.

5. Securitization of receivables related with SMEs to protect Small and Medium Enterprises (SMEs) from the vagaries of payments from large corporations

6. To aid exporters to acquire finance from overseas, the committee has urged to appoint Exim Bank as a nodal agency to enhance the process for bargaining with overseas lenders. The agency can then have a loan on a pool basis for further on-lending to Indian exporters

The committee submitted its report to H.R.Khan, Deputy Governor, RBI., The Export Import Bank of India, Export Credit Guarantee Corporation, Federation of Indian Export Organisations, Fixed Income, Money Market and Derivatives Association, Indian Banks’ Association and other entities also took part in preparing the report.

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Submitted by Rajib Dey
Content Writer
http://www.loadjunction.com (An online freight rate analysis portal for Indian transport sector)

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