The Finance Ministry will initiate talks with the Reserve Bank of India (RBI) on exporters’ plea for continuation of the flexible regime on repatriation of export proceeds.
This was stated by the Financial Services Secretary, Mr D.K.Mittal, at an interactive meeting on export credit organised by the Federation of Indian Export Organisations (FIEO) here on Thursday.
Currently, exporters are required to bring back their export proceeds within 12 months from the date of shipment, against six months earlier. This facility will be available only up to September 30 this year.
In the wake of the difficult global economic environment, FIEO has sought extension of one more year for this facility.
Mr Mittal said a final call on this matter would be taken only after talks with the central bank.
Mr Mittal said exporters should not be currency traders. “Trading on currency is not the job of exporters. That is the job of expert traders”.
Speaking on the sidelines of the meeting, Mr Mittal said that bulk deposits were posing a huge risk to the banking system.
Public sector lenders can raise bulk deposits up to 10 per cent of their total deposits. In the case of certificate of deposits, the number is 5 per cent, according to a recent Government circular. “Within that, they have the flexibility”, he said.
On Iran, Mr Mittal indicated that Government may facilitate a possible line of credit to the country.
“The line of credit issue needs to be resolved. It is before the Department of Economic Affairs. It will help project exports. We will resolve it. But it has to be read in line with the sanctions issue”
The US and European Union have imposed trade sanctions against Iran for allegedly pursuing a weapons-based nuclear programme.
India had, in February this year, worked out a rupee-based payment mechanism for financing oil imports from that West Asian Country.