Rbi Monitoring Export Credit

The Reserve Bank of India (RBI) is monitoring the off-take of export credit with banks, following the steady decline in the performance of the export sector, bankers said yesterday.

They said the RBI _ which routinely monitored credit delivery _ had increased the intensity of its enquiries on export credit with banks in this year.

"They are monitoring the flow of export credit very closely. They are also following up with banks more frequently now than they used to previously," an official at a public sector bank said. Officials said, despite the slowdown in export growth and credit delivery, export credit with leading public sector banks had grown by about 12 per cent year-on-year in the first quarter this year compared with the same period last year.

Bank credit, as a whole, showed a year-on-year growth of 16.4 per cent as on July 17, central bank data showed. Bankers said they were experiencing a cyclical drop in export credit which would pick up around October.

But, given the downslide in the sector, they could not predict whether the RBI's growth target of 12 per cent would be met. Authorities expressed concern over the slowdown in exports which contributed around 12 percent of the gross domestic product and was causing India's trade balance to widen to $1.856 billion in March from $842.51 million in the previous year. Growth was negative this year, with flows in April-May down by 7.54 per cent year-on-year to $4.99 billion. Growth in the previous fiscal year was a mere 2.64 per cent at $33.98 billion. As part of a support package, the Union commerce ministry and the RBI last week cut export credit rates to nine per cent from 11 per cent. Exporters attributed falling growth to slowdown in world trade, the Asian economic crisis, and the devaluation of south east Asian currencies which affected their competitiveness.