Commerce and Industry Minister Piyush Goyal. (FiIe Photo)
Commerce and Industry Minister Piyush Goyal said Friday that the RBI has been asked to extend $25 billion (Rs 1,73,150 crore) line of credit for exports and ensure that exporters get funds at interest rates not exceeding 2 per cent above LIBOR.
The minister was speaking at a meeting with participants from various public and private sector banks, RBI, EXIM bank, exporters organisations to look into the issues pertaining to export credit sector.
"Goyal put forth the proposal to make credit in foreign currency available to exporters at London Interbank Offered Rate (LIBOR) plus maximum 200 basis points and directed RBI, ECGC and other banks to work out the modalities to make it possible," a commerce ministry statement said.
The Reserve Bank of India (RBI) has been asked to look into $25 billion line of credit from its foreign currency reserves for swap to well performing banks, and to also look into priority sector lending norms for export credit, it added.
Libor is a widely-used interest rate global benchmark.
To take Indian economy to $1 trillion exports each in goods and services in the next five years, the minister said availability of credit at low rate of interest is important.
He said that it is a joint responsibility of banks and government to ensure that export credit at competitive rates is available to businesses.
"The volume of export credit is on a declining trend for the last few years and the situation needs urgent measures," he said.
Talking on interest subsidy scheme, he asked the participants to find ways to maximise the impact of such subvention.
He suggested that the subvention scheme may be used better as backstop guarantee for credit, thus increasing the coverage of ECGC (Export Credit Guarantee Corporation) for export lending purposes.
The minister asked RBI, EXIM Bank and SBI to study the matter in detail and present it in the follow up meeting to be held on June 30 in Mumbai.
During the meeting, Federation of Indian Export Organisations (FIEO) has been asked to submit a report within 30 days on shifting from subsidy to cheaper availability of loan in foreign currency to exporters.
The federation was also asked to suggest ways for further simplification of banking procedures for exports.
The other issues which were deliberated in the meeting, include bank coverage charges, exports to Iran, processing fee, collateral requirements and loan disbursals.
Goyal directed the concerned departments and participants to take note and come up with solutions in a time bound manner on these matters.
The meeting was attended by the representatives of the Ministry of Finance and Commerce.
Officials from RBI, State Bank of India, Canara Bank, Punjab National Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, Barclays Bank, Citi India, Bank of America, EXIM Bank, ECGC, and Indian Banks' Association also attended the meeting.
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