Economy

Commerce Ministry wants to take upcredit woes of exporters with the RBI

Amiti Sen New Delhi | Updated on April 06, 2020 Published on April 06, 2020

Exporters want loan period extended and waiver on interest

The Commerce Ministry is seeking a meeting with the Reserve Bank of India (RBI) to discuss the acute credit crunch being suffered by exporters, especially due to the blockage of payments due to the Covid-19 crisis, and ways to ease the situation for them. “Senior officials in the Commerce Ministry are trying to fix a video conference with the RBI as the banking and credit issues being faced by exporters need to be immediately addressed,” a government official told BusinessLine.

The Federation of Indian Export Organisations (FIEO) has also written to the RBI Governor, seeking a meeting to apprise officials of the various banking challenges being faced by them. “We want an extension in the pre- and post-shipment credit by a minimum of 180 to 270 days, as the payments from buyers who have already received our shipments are getting delayed because of the disruption caused by Covid-19,” pointed out Ajay Sahai from FIEO.

In its presentation to Commerce and Industry Minister Piyush Goyal last week, the FIEO also sought exemption from interest and penalty on crystallisation of bills on due date. Another demand was that loss in forward cover should be converted into interest-free loans to be paid after 90-180 days and that auto enhancement of credit by 10 per cent be permitted without additional documentation.

Garment exporters

The Apparel Export Promotion Council (AEPC), in a letter to Prime Minister Narendra Modi last week, also highlighted the tight credit situation being faced by garment exporters, who are mostly in the MSME sector.

“The cancellations, deferments and postponement of shipments have resulted in packing credits being eroded, impacting the fund-liquidity position of exporters as cash flows have completely stopped,” pointed out A Sakthivel, Chairman, AEPC, in his letter.

AEPC suggested that the packing credit period for existing loans and export bill realisation period be extended by six months, and working capital limits be increased by a minimum 25 per cent without any additional collateral.

Some banks are taking undue advantage of the lockdown period and have stopped giving quotes for conversion of foreign exchange in their Exchange Earners’ Foreign Currency Account (EEFC) account to Indian rupee, pointed out Engineering Export Promotion Council (EEPC) of India in its presentation to Goyal, adding that they were doing everything possible to dissuade them from converting foreign exchange.

India’s goods exports declined 1.5 per cent to $292.91 billion in April-February 2020 compared to the same period last year. Exports increased marginally in February 2020, but are expected to dip in March 2020, because of the breakdown in production, supply, and payment networks.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on April 06, 2020
This article is closed for comments.
Please Email the Editor