Export credit dips 45% on rise in NPAs, regulatory reforms
Loans to exporters have fallen steeply in the last one year, adversely affecting labour-intensive micro, small and medium enterprises.
According to the latest sectoral credit deployment data of the RBI, export credit came down 45.5 per cent year-on-year (till January 2018-end). In FY19, there was a decline of 38.1 per cent in export credit.
Export credit, which is on the priority sector lending list of banks, fell from ?32,100 crore in January 2018 to ?17,500 crore in January 2019.
Interestingly, overall priority sector growth was 9.4 per cent in the same period, and shows that advances to exporters were last priority.
There have been concerns over the fall in export credit, and the Ministry of Commerce, in consultation with the RBI, intervened to drive banks to lend more for exports.
Banks blame it on the general macro economic scenario and increasing NPAs. “Last year, GST made an adverse impact and export credit quality was hit due to problems MSMEs and other exporters faced. So, we need to have some caution. There has been no improvement till date in repayments,” said a top executive of a public sector bank.
Exim Bank’s net loan portfolio has grown only marginally to ?107,500 crore as on March 2018, compared to ?102,600 crore in the previous year. “The impact of the new domestic regulatory measures got reflected in the state of the financial sector, which, in turn, was mirrored in Exim Bank’s performance,” the bank said in its annual report for 2017-18.
The reasons for delayed repayments from exporters are both micro and macro, according to banking and industry players. These include delay in refund of input tax credit, and problems in the General System of Preferences (GSP) in the US, which grants duty-free access to American markets for some Indian exports. The exporters of ready-made garments, jems and jewellery, and other engineering goods have been showing stress, according to bankers.
Source :- Thehindubusinessline.com