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Working group set up to simplify export finance

The Reserve Bank of India has announced the setting up of a working group of bankers to simplify procedures for delivery of credit to exporters and create an exporter-friendly environment.

Announcing this in its half yearly monetary and credit policy today, RBI governor Bimal Jalan said the group officials would interact with exporters as well as local bank officials by visiting bank branches and suggest changes designed to reduce repetitive documentation requirements and improve the quality and reduce cost of non-fund based services to exporters.

The objective would be to make available export credit on line including foreign currency loans, on the basis of performance, with minimum paper work and to provide related services efficiently, Jalan said.

Suggesting exporters to make maximum use of the foreign currency loans and serviced such loans out of foreign currency export receipts, Jalan said the scheme of Exchange Earners Foreign Currency had been enhanced further by increasing the retention percentage and also purposes for which the balances in the account could be utilised.

Currently, the entitlement is 50 per cent for all foreign exchange earners and 70 per cent for exporters coming under the categories of Export Oriented Units or of those operating in export processing zones.

The working group of bankers would also review the operation of the EEFC scheme with a view to suggesting improvements in the scheme and making it more exporter friendly, the governor said.

The average utilisation of export credit refinance during the fortnight ended October 9 was Rs 48.38 billion as compared with Rs 240 million during the corresponding fortnight last year. In this context, the RBI emphasised that provision of rupee export credit at present rates is not sustainable in the long run.

On June 11 this year, banks were advised to charge a spread of not more than 1.5 percentage points over LIBOR on foreign currency loans in order to ensure internationally competitive interest cost for exporters.

UNI

The RBI's Credit and Monetary Policy 1998-99