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Tirupur exporters seek RBI help for mitigating losses
08
Jul '08
In the last one year, a number of exporters had entered into exotic forex derivative deals with banks like ICICI Bank, Axis Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank. Many of these contracts are turning in to steep losses for the exporters due to the unexpected fluctuation in the forex market.

A representative team from the exporting community in Tirupur under the banner of Forex Derivatives Consumers' Forum met Mr Y V Reddy, Reserve Bank of India Governor.

Members of the team made a plea to the Reserve Bank Governor asking him to lend a helping hand for losses caused by speculative foreign exchange derivates deal struck with private banks.

Exporters in Tirupur have estimated that the cumulative loss due to forex derivative contracts could be somewhere between Rs2000-6000 million.

Meeting the Governor turned out be quite fruitful as he not only paid heed to the serious problems faced by the exporters but also assured them his 'moral support'.

In a bid to straighten out things, the Tirupur exporters have agreed to appoint a fact finding mission and place inputs collected by the mission with the central bank for appropriate action.

Fibre2fashion interviewed the Forex Derivatives Consumers' Forum about the outcome of the meeting with Mr Reddy. The forum replied; “They have put in a request to set up a high power committee to investigate the entire loss of derivative contracts that were entered into by the banks with various Indian Exporters across the country in violation of RBI's circulars. Instructions have also been given to bankers to settle the issue in favor of the exporters and not to debit the resultant loss in regular account of the customer.”

Further, exporters have also requested the banks not to classify them as non-performing assets because that would halt any further credit flow from the banks.

Fibre2fashion News Desk - India

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