Interviews
President of FIEO to share concerns of exporters with RBI Governor
09 Apr '09
5 min read
7. The service charges of the banks are on the increase.These include heads such as processing fee on non funded limits; renewal cum enhancement of credit limits; charges on stock audits; charges on bank certificates and requirements of indemnity bond for each bill etc. need to be cut down. FIEO receives several representations which are forwarded to the Banking Codes and standards board of India and we hope that they will be duly examined and erring banks be made answerable / accountable for the same.
8. Given the existing circumstances, the RBI may also consider a review of the collateral security vis-à-vis exposure norms:
Banks obtain a high percentage of collateral securities by way of equitable mortgages on properties and/or cash deposits.Sometimes it ranges around 50% of the fund based limits sanction.Besides personal guarantee of Directors as well as relatives are asked for Bank should sanction the limits only against personal guarantee of the Directors and should not insist on other collaterals in case of export finance.
The exposure norms have been notified by RBI vide Circular dated August 3, 2005.
Credit exposure for individual/Group Borrowers has been notified in the said circular. However, no specific guideline for exposures vs. bank finance for exports has been notified by RBI.
No documented guidelines have been issued by individual banks to enable transparency in dispensation of export credit. The quantum of credit dispensed depends on the previous track record and credibility of exporters.
RBI may, therefore, issue guidelines for collaterals for exposure norms for the export sector to enable transparency.
9. Of late representations from the MSME sector also mention the requirement of credit rating if there credit limits (both fund based and non fund based) are above 5 crores.The sector is to be duly rated from approved agencies like CRISIL, CARE, FITCH and ICRA as per the Basel II framework requirements on Capital Adequacy.These agencies charge exorbitantly and the MSME sector need to be exempted from such compliance or agencies of the Government such as SMERA be included in the list of approved agencies for credit rating.
8. Given the existing circumstances, the RBI may also consider a review of the collateral security vis-à-vis exposure norms:
Banks obtain a high percentage of collateral securities by way of equitable mortgages on properties and/or cash deposits.Sometimes it ranges around 50% of the fund based limits sanction.Besides personal guarantee of Directors as well as relatives are asked for Bank should sanction the limits only against personal guarantee of the Directors and should not insist on other collaterals in case of export finance.
The exposure norms have been notified by RBI vide Circular dated August 3, 2005.
Credit exposure for individual/Group Borrowers has been notified in the said circular. However, no specific guideline for exposures vs. bank finance for exports has been notified by RBI.
No documented guidelines have been issued by individual banks to enable transparency in dispensation of export credit. The quantum of credit dispensed depends on the previous track record and credibility of exporters.
RBI may, therefore, issue guidelines for collaterals for exposure norms for the export sector to enable transparency.
9. Of late representations from the MSME sector also mention the requirement of credit rating if there credit limits (both fund based and non fund based) are above 5 crores.The sector is to be duly rated from approved agencies like CRISIL, CARE, FITCH and ICRA as per the Basel II framework requirements on Capital Adequacy.These agencies charge exorbitantly and the MSME sector need to be exempted from such compliance or agencies of the Government such as SMERA be included in the list of approved agencies for credit rating.
Federation of Indian Export Organisations
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