Mumbai: Worried over the low share of export credit in the books of banks, Reserve Bank Governor D Subbarao on Tuesday constituted a technical advisory group to look for solutions to help the sector. (Agencies)
The announcement of the committee, to be headed by RBI Executive Director G Padmanabhan, comes on the same day when Subbarao declared the burgeoning current account deficit as "biggest risk for inflation and macroeconomic management".
"Apart from cost of financing, there are a number of non-cost issues like transaction costs, accounting norms, documentation required, procedural difficulties...we decided to constitute a technical working group under Padmanabhan to go into these issues," the Governor said.
Subbarao further said the last six months have seen the apex bank making some changes like raising the rupee export credit refinance facility to 50 per cent from 15 per cent and the recent dollar-rupee swap facility to USD 6.5 billion.
Apart from officials from the central bank, the committee will also be represented by the Exim Bank, Export Credit Guarantee Corporation, the Indian Banks Association and the Federation of Indian Exporters Organisation, he said.
The Governor said banks' exposure to the exports sector stands at a poor 5 per cent or even less in some cases, even when the RBI has allowed them to go up to 12 per cent.
Responding to the RBI's point, IBA chairman and PNB chief KR Kamath said: "The feedback which we got is that more than the interest rates, there are bottlenecks in getting money on time, with speed, in the way it is required. There is a need for us to really look at facilitating the exports."
State Bank of India Chairman Pratip Chaudhuri said during their meeting with the Governor the bankers asked for raising the export credit refinance limits and a swifter working of the interest subvention scheme.
"It takes an unusually long time, perhaps extending up to a year, to get the money back because it has to go around the ministries of commerce, finance, the RBI and then come to us," he said, calling for expediting the payment faster or making it instantaneous.
Mumbai: Worried over the low share of export credit in the books of banks, Reserve Bank Governor D Subbarao on Tuesday constituted a technical advisory group to look for solutions to help the sector.