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RBI may consider LIBOR + lending to MSME export sector : FIEO

Date 25-March-2014
Subject RBI may consider LIBOR + lending to MSME export sector : FIEO

Mumbai : Mr M Rafeeque Ahmed, President, Federation of Indian Export Organistions (FIEO) while commenting on the forthcoming announcement of the monetary policy review on 1st April 2014 prior to the annual policy stated that as the per the RBI update of 21st march 2014, WPI had settled at 4.7% and CPI stood at 8.1% , with credit to the commercial sector moderating at 14% , RBI could consider a rate cut in the policy given that there is a upsurge in credit and a demand by banks to cut CRR to provide credit to industry.

FIEO Chief stated that net foreign exchange assets of banks have grown to 17.3% and given that exports have shown a decline of 3.7 per cent in US$ terms over a year, and rupee is again in a volatile mode, banks could consider providing export credit in foreign currency at LIBOR + rates as against a deregulated regime of export credit in foreign currency announced a couple of years back, added Mr Ahmed.

This would help the MSME export sector which is unable to borrow through ECB route easily.

FIEO Chief stated that providing foreign currency loans at competitive rates in a scenario of appreciating rupee/narrowing CAD due to clamp on gold/ and India 's exclusion in respect of many important products from the European Union (EU)'s GSP benefits would imply that mineral products, textiles, motor vehicles, bicycles, chemicals etc , which originate from India, will no longer get preferential treatment attracting higher duties in EU. This would further impact exports even though markets in advanced countries are showing buoyancy in terms of consumption patterns/volume of world trade increasing by 0.6% in January 2014 said Mr Ahmed.

Source : dailyshippingtimes.com

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