Our Bureau

New Delhi, Nov. 6

THE Associated Chambers of Commerce and Industry of India (Assocham) has asked the RBI to hike the bank credit limit to exporters from 12 per cent to 15 per cent of the total bank credit.

The chamber has also asked the apex bank to accord exporters the priority sector lending status.

In its mid-term Credit Policy review, the RBI fixed the bank credit ceiling of 12 per cent for exporters.

In a memorandum submitted to RBI, the chamber said that raising the bank credit limit was a must because export performance had been consistently being going up. Credit limit of 15 per cent would further spur the export growth, said the chamber.

Assocham pointed out that exporters faced impediments in getting adequate and timely credit from banks, both at pre- and post-shipment stage. They are asked to provide collateral security and personal guarantees, the norms of which are stringent, and tough for first generation entrepreneurs.

To meet export finance requirements, the chamber also suggested to RBI to set up a `dollar window' and adopt a flexible interest rate policy.

According priority treatment to SMEs and agri-businesses in tune with the Budget proposals for fiscal 2005-06 has also been called for. Adopting flexible interest rate policy and setting up of a dollar window will facilitate disbursement of export credit in foreign currency. It will also provide larger access of banks' finance to industry, particularly small and medium enterprises.

The chamber said that in most of the developed economies of the world, dollar window facility is prevalent through which export finances can be obtained. But in India, this facility is hardly available. The chamber also suggested the creation of foreign currency assistance for exporters from forex reserves.

(This article was published in the Business Line print edition dated November 7, 2005)
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