EEPC India urges RBI to facilitate easy bank loans for MSME exporters

Engineering exporters' apex body EEPC India has urged the Reserve Bank of India (RBI) to facilitate easy and cheaper bank loans mainly for the MSME exporters. "With US-China trade tensions leaving the global financial markets and trade in a state of anxiety, it is time for Indian exporters to stay competitive and RBI should facilitate an easy and less expensive bank loans for the MSME exporters," EEPC said in a statement here.

"We are in the midst very anxious global economic environment marked by ever-rising US-China trade tensions, instability in the crude oil prices which tend to leave forex market highly volatile. In this trading landscape, the Indian exporters, particularly the small enterprises in the engineering sector, are facing severe cost and other challenges," EEPC chairman Ravi Sehgal said.

He further said the apex body has made a comprehensive presentation to the RBI for carving out an exporter-friendly interest rate structure and expect the Central bank to advise banks accordingly and notify the changes.

The EEPC India has suggested to the RBI that the interest equalisation scheme for the exporters become horizontal in nature by covering the entire MSME sector, so that the linkage with exports goes away and does not fall foul of the WTO's norms as well.

At present, the scheme is for rupee export credit with two variants including five percent interest equalisation for the MSME rupee export credit and a 3 percent interest equalisation for 416 tariff lines and merchant exporters who export items falling under these specific tariff lines.

"However, as the interest equalization scheme is export specific, it is WTO non-compliant and should accordingly be re-aligned," Sehgal said.

In its presentation to the RBI, the EEPC India also suggested that the banks should not ask for external credit rating as they are doing internal rating and banks be advised not to charge loan application processing and credit limit renewal fee.

"Besides, when export bills are purchased/discounted under ECGC policy, in case of non-realisation on the due date, banks should not recover the money by debiting the exporters account. Rather they should wait for payment beyond due date otherwise they should wait for claim to be settled by ECGC," EEPC said in its representation.

It further said that RBI should ask banks not to insist for discounting of usance export bills.