Financial Daily from THE HINDU group of publications
Tuesday, Aug 23, 2005
Money & Banking
Industry & Economy - Industry Associations
PHD Chamber urges RBI to lower rates on export finance
New Delhi , Aug 22
IN a representation to Reserve Bank of India, the PHD Chamber of Commerce and Industry has brought to the apex bank's notice that it was imperative for the interest rate of export finance, both pre and post, to be further reduced by at least 100 basis points.
The Chamber feels that this reduction would help their transaction cost being reduced further and help exporters retain their competitiveness.
The Chamber has also underlined the need to extend export credit on a par with international rates and not to associate them with the current bank rates.
Raising the issue of Packing Credit in Foreign Currency (PCFC), the Chamber has said that presently PCFC was practically available only with dollar as the base currency.
There was an imperative need for RBI intervention to ensure that exporters were not deprived of the form of currency in which they wanted to seek credits.
For this to happen, the Chamber said that credit should also be made available in other currencies such as euro, pound sterling and yen, among others.
Though there have been specific guidelines in this regard, other funds are practically not at all accessible under the scheme, says the Chamber.
The Chamber has also urged the apex bank to allow interest on Export Earners Foreign Currency account.
It was disallowed when the foreign reserves had reached alarmingly low levels. At present, the forex reserves are at healthy levels and if RBI once again allows the interest on EEFC then the exporters would be inclined towards it, feels the Chamber.
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