Exporters Urge RBI to Promote Rupee Trade Settlement and Ease Credit Access

Strategic Insights -

Exporters have pressed the Reserve Bank of India (RBI) to give adequate publicity to trade settlement in rupees and the currencies of key trading partners, citing benefits like forex savings and competitiveness. They sought better awareness of local currency trade, faster rollout of interest subsidy schemes, and streamlined processes for accessing approved export credit. The Federation of Indian Export Organisations (FIEO) President, S C Ralhan, raised these concerns at a meeting with RBI Governor Sanjay Malhotra in Mumbai, emphasizing the need for quick credit support to avoid losing out on global opportunities.

Key Takeaways:

  • Exporters have urged the RBI to promote rupee trade settlement and ease credit access to boost competitiveness.
  • The RBI has allowed trade transactions in rupees and other local currencies, with 123 correspondent banks from 30 trading partners opening special accounts in India.
  • A total of 56 Special Rupee Vostro Accounts (SVRO) have been opened with 26 banks authorized to deal in foreign exchange transactions.
  • The RBI has entered into Local Currency Settlement System (LCSS) arrangements with select trade partner countries, including UAE, Indonesia, and Maldives.
  • Exporters have pushed for faster rollout of the Interest Equalisation Scheme (IES) or interest subsidy scheme to reduce high credit costs.
  • Only about 35-40% of approved loans are actually used by exporters due to complicated processes and slow approval times.
  • Exporters have sought streamlined processes for accessing approved export credit to enhance competitiveness.
  • The RBI was asked to provide information on which banks facilitate local currency trade to improve awareness and usage.
  • FIEO President S C Ralhan emphasized the need for quick credit support to avoid losing out on global opportunities.

Statistics:

  • 123 correspondent banks from 30 trading partners have opened special accounts in India to facilitate rupee trade settlement.
  • 56 Special Rupee Vostro Accounts (SVRO) have been opened with 26 banks authorized to deal in foreign exchange transactions.
  • The RBI has entered into Local Currency Settlement System (LCSS) arrangements with 3 trade partner countries.
  • Only about 35-40% of approved loans are actually used by exporters due to complicated processes and slow approval times.

Sources:

  • Federation of Indian Export Organisations (FIEO)
  • Reserve Bank of India (RBI)
  • IE Online Media Services Pvt. Ltd.
  • Contify.com