The Hindu Business Line : New bank exposure norms boon to exporters

Derivative loss
This relaxation will give us some respite. Moreover, we are happy to note that the RBI has instructed the banks that ‘this loss should not be carried forward to declare the regular current account as NPA,” an official said.

L.N. Revathy

Coimbatore, Nov. 2 The Reserve Bank of India’s decision to ease the off-balance sheet exposure norms of banks has come as a big relief to the exporters in Tirupur, particularly those with forex derivative exposure.

Hailing the relaxation of the prudential norms (for off-balance sheet exposure of banks), the President of the Forex Derivative Consumers’ Forum, Mr Raja M Shanmugham, aid ‘this is our first victory in our fight against the derivatives.

“While the relaxation of norms has not absolved us of our plight, it will at least enable us to continue in business,’ he said.

Rs 400 cr loss

The small and medium exporting units, numbering about 40 in Tirupur alone, are said to have suffered a loss totalling around Rs 400 crore from such forex derivative dealings.

“The reported move to treat the derivative losses in a separate account will definitely help us carry on with our day-to-day operations. Hitherto, the banks were crediting the receivables in the same account and our operations were getting strangulated.

“This relaxation will give us some respite. Moreover, we are happy to note that the RBI has instructed the banks that ‘this loss should not be carried forward to declare the regular current account as NPA,” he said.

Panel set up

While thanking the Finance Minister, Finance Secretary, the RBI Governor and Deputy Governors as also the the auditors and advocates for their expert guidance and help, he said “a committee has been formed to probe the forex derivative exposure dealings.

“A Parliamentary Committee is also enquiring into this issue. This committee is expected to submit its report to the Government within the next fortnight or so.”

More Stories on : Exports & Imports | Forex | Derivatives Markets | Tamil Nadu

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