FIEO urges RBI to share info on banks offering rupee trade to aid exporters

Apex exporters' body FIEO has urged the RBI to publicly share information on banks offering the rupee trade settlement system (SRVA) as lack of awareness is limiting its use.

The system simplifies trade and saves foreign exchange, but many exporters do not know where to access it, Federation of Indian Export Organisations (FIEO) President S C Ralhan told PTI.

In 2023, the Reserve Bank permitted banks operating in the country to open Special Rupee Vostro Accounts (SRVAs) of partner banks from specified countries as part of efforts to promote bilateral trade in local currencies. 

This enables exporters and importers to invoice and pay in their respective domestic currencies enabling the development of a bilateral foreign exchange market.

This system makes it easier to trade with some countries in rupees instead of dollars or euros, "but many exporters don't even know which banks offer this service, because that information isn't easily available. The RBI should make this public. Better awareness means better use of this good initiative," Ralhan said.

He raised the issue among others during his meeting with RBI Governor Sanjay Malhotra last week in Mumbai.

He also said there are instances where banks have approved loans for exporters, but only about 35-40 per cent of it is actually used.

"Often it's because the process to access these funds is complicated, slow, or unclear. It's like being told you can have a loan, but then being made to jump through so many hoops that you give up. We need to fix this so exporters can actually use the money that's been approved for them," the Ludhiana-based exporter said.

On high interest rates, he said that Indian exporters, particularly small and medium ones, should be able to compete fairly with businesses from other countries.

"But right now, they are at a disadvantage because borrowing money (credit) is too expensive for them. The credit cost has become more important as the payment period has been extended by buyers facing liquidity challenges," he said, adding that many countries help their exporters with cheaper loans or subsidies.

In India, without schemes like interest equalisation (which makes loans cheaper), domestic exporters are struggling to match prices with global competitors.

The high cost of borrowing makes products more expensive and less attractive in the international markets.

Ralhan sought support of the RBI for immediately rolling out the Interest Equalisation Scheme.

He has also flagged that the country's exports are growing but the credit support (loans and financial backing) that exporters need is not growing at the same pace.

"The RBI governor responded positively to all our requests and he has assured us to look into all the matters," Ralhan said.

India's exports turned positive after four months, recording a marginal 0.7 per cent increase to USD 41.97 billion in March, while overall exports of goods and services touched an all-time high of USD 824.9 billion in the last fiscal despite global economic uncertainties.

Cumulatively, during 2024-25 (April-March), the country's exports moved up by 0.08 per cent to USD 437.42 billion. Services shipments have reached an all-time high of USD 387.5 billion in 2024-25.