Exporters Resort To Ecbs

During June to September this year the finance ministry has cleared external commercial borrowings of around Rs 38,448 crore for exporters.

According to a Federation of Indian Export Organisation (FIEO) survey to which 60 exporting companies responded, 25 per cent firms said they had not received adequate finance and 22 firms said they were unaware of the foreign bills rediscounting scheme introduced by RBI. This means that efforts should be made to make exporters aware of the scheme.

Under this scheme, some exporters pointed out that while the rate was lower (Libor plus), the firms lose the forward premium on the interest rate. Also, the banks charged an additional amount if the bills were to be paid in advance. The condition that the minimum bills should be for $50,000 also acted as an disincentive.

 

Exporters are also complaining that banks are insisting on Export Credit Guarantee Corporation (ECGC) policy for letter of credit documents. This tends to be time consuming and raises overhead costs.

Further, non payment of interest on balances held in EEFc account is another problem area identified. Exporters have suggested that the ideal rate of interest is around 8 per cent.

Exporters also felt that their turnover could increase by 25 per cent if the post-shipment finance was available at 13 per cent for 90 days and above.