The Hindu Business Line : Assocham seeks flexible interest rate policy

TO meet export finance requirements, the Associated Chambers of Commerce and Industry of India (Assocham) has suggested that the Reserve Bank of India adopt a flexible interest rate policy and accord priority to small and medium enterprises (SMEs) and agri-businesses in tune with the budget proposals for the current fiscal.

In a memorandum, on Mid-Term Review of Credit Policy 2005-06, submitted to the RBI Governor, ASSOCHAM has also suggested setting up a `Dollar Window' to facilitate disbursement of export credit in foreign currency.

The chamber also suggested creation of foreign currency assistance for exporters from existing foreign exchange reserves, most of which remains unutilised.

The chamber demanded export credit for a three-year term instead of yearly terms, to help lessen the workload of exporters and banks, and reduce transaction costs for exporters.

The chamber also suggested that RBI makes it mandatory for commercial banks to achieve the 12 per cent target for export credit. Despite RBI guidelines, banks are not extending export credit equivalent to 12 per cent of their total deposits, says the chamber.

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