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Banks should respond to reduction to lower their PLR: FIEO
21
Apr '09
Shri A Sakhtivel, President, Federation of Indian Export Organisations (FIEO) while commenting on the Annual Policy Statement announced stated that although the major economies of the world and the developing countries face the worst contraction since the IInd World War, 'tough measures' to counter the impact and to stimulate demand like lowering of PLR or delinking PLR for export credit for the MSME export sector, restructuring of loans or settlement of derivative losses as suggested by us have not been taken.

The FIEO Chief elaborated that although headline inflation had decelerated dramatically from intra-year peak of 12.91% on August 2, 2008 to 0.26% by March 2009 calling for rationalization in interest rates, the cost of credit continues to be at double digit levels which is making Indian exporters uncompetitive as buyers are asking for longer duration of credit. Moreover overall credit growth had fallen to 17.27% during 2008-2009 as against a peak of 29% in October, 2008.

The FIEO Chief added that despite repeated /sharp reductions in repo/ reverse repo the bench mark PLR's had not fallen by more than 50-100 basis points for most banks and Indian banks needs to respond to RBI's initiative. He re-iterated the need for a separate chapter for export of MSME sector to highlight the importance of this sector besides providing all banking facility for them at one place to make it user friendly.

Federation of Indian Export Organisations (FIEO)

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