Mumbai: The Reserve Bank of India has decided to set up a technical working group to iron out existing issues and boost bank finance for exports.
The group will be led by G. Padmanabhan, Executive Director, RBI, and also involve key agencies such as 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.
Addressing media persons at the third quarter monetary policy review on January 29, Governor, D. Subbarao said, “I believe banks are mandated to extend up to 12 per cent (of adjusted net bank credit) for exports, but the aggregate level of export finance is 5 per cent or even lower.”
Apart from the cost of financing for exports there are a number of other non-cash issues such as transaction costs, accounting norms, documentation, and procedural difficulties, the RBI said.
In June 2012 the RBI expanded the rupee export credit refinance facility to 50 per cent from 15 per cent. This was introduced to enable cheaper lending to exporters.
A couple of weeks back, the RBI also introduced the dollar-rupee swap facility of $6.5 billion, where banks could refinance the dollar loans they extend to exporters in rupees.
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