New Delhi, May 22 (PTI) The measures announced by RBI on Friday will provide more liquidity in the hands of exporters which would help them in fulfilling their overall obligations during these difficult times of COVID-19, according to exporters.
Welcoming RBI's decision to extend the loan repayment moratorium for another three months up to August 31, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel said the central bank has taken effective steps to protect the sector.
The Reserve Bank of India(RBI) on Friday announced a Rs 15,000-crore line of credit to the Export-Import Bank of India, to boost the sagging foreign trade.
Among other measures, the central bank has decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020.
“RBI's decisions to ensure access to affordable and collateral free loans, moratorium on term loans, easing of working capital financing, increase of export credit period to 15 months from 12 months, extension of packing credit period for existing loans, among others will go a long way in ensuring the survival and growth of exporters,” Sakthivel said in a statement.
He added that the flexibilities extended to the institutions and exporters availing credit will help in addressing the need of the apparel export industry for a buffer period in stabilising their business after the restart.
Sharing similar views, Federation of Indian Export Organisations (FIEO) said the repo and reverse repo rate cut of 40 basis points, extension in the moratorium period for three months along with the extension of the pre and post shipment credit for the exports sector has come as a much needed respite for the sector.
'This will allow more liquidity in the hands of the exporters thereby helping them in fulfilling their overall export obligation during such difficult and testing times. We are ushering into an era of very competitive credit rates to help manufacturing and overall economy,' FIEO President Sharad Kumar Saraf said.
He said these measures will not only help in revival of growth but will also help in mitigating the impact of COVID-19 while ensuring that the inflation remains within the target range.
'Besides, steps taken with regard to outward remittance for imports being extended from 6 months to 12 months will help importers as they will have the longer repatriation period,' he said.
Trade Promotion Council of India (TPCI) Chairman Mohit Singla said financially stressed exporters will benefit from unforeseen circumstances beyond control, on account of importers' inability to pay within 6 months and thus causing offence in India.
Therefore, increasing the time of outward remittance from 6 months to 12 months, will surely help as they will have a longer payment time, Singla said.
'The loan moratorium increase from 3 months to 6 months is a very welcome move allowing an exporter with wider window to manage financial conditions better. This will ease the pressure from borrower of one-time accumulated payment by increasing the payback cycle,' Singla added.
Further, he said measures like extending the dollar swap facility to Exim Bank, extension of import payments from 6 month to 12 month and increasing the exporters' length of credit to 15 months will solve the working capital woes of traders to a considerable extent and ease the pressure of making immediate payment.
Vikramjit Sahney, President of International Chamber of Commerce, Paris-India welcomed the RBI Governor’s announcement to extend moratorium on term loans till August 31 and reduce repo rate to 4 per cent.
Sahney, however, expressed concerns over Indian banks becoming very conservative in these tragic times as the economy faces both demand and supply side constraints.
He also expressed concerns over Indian banks not opening clean Letter of Credits (LoC) by insisting on various corona-related clauses or not discounting LoCs from reputable banks hampering international trade of the country. PTI RR ANU ANU