May 11, 2021 4:29:24 am
A reduction in the quantum of loans being dispersed by banks in Gujarat to the International Finance Tec-City (GIFT City) at Gandhinagar seems to be one of the reasons behind exports falling by almost 20 per cent during 2020-’21.
“GIFT City is a major Special Economic Zone (SEZ) for the services industry in Gujarat, where exports have fallen from Rs 3,971 crore in 2019-20 to Rs 3,181 crore in 2020-21,” a government official who did not wish to be named told The Indian Express.
“The reduction in LIBOR (London Interbank Offered Rate) — a global benchmark for borrowings — from three per cent to 0.5 per cent, drastically pulled down the income from interest on lending by banks in GIFT SEZ, thus adversely affecting exports. The banks in GIFT City give loans in US dollars. With LIBOR rates dipping to 0.5 per cent, the profit margins also declined. Most of their earnings was because of LIBOR rates,” the official said.
Major lenders in the GIFT SEZ, such as Yes Bank, Kotak Mahindra Bank, IndusInd Bank and State Bank of India, have also been adversely affected during 2020-21. “Yes Bank, which is one of the major banks in GIFT City, also saw a decline in their portfolio,” the official added.
Yes Bank reported the book size of loans had come down from US $3 billion during 2019-20 to US $ 1.8 billion in 2020-21. “The bank also said due to recent RBI action on the bank, their rating has been adversely affected, leading to higher cost in sourcing funds by way of borrowing from the international market,” the official said.
The book size of SBI also saw a decline from US $1.8 billion in 2019-20, to US $1.5 billion due to issues relating to rising NPAs. The IndusInd Bank which mainly funds EXIM transactions also reported they have reduced their buyers’ credit portfolio due to the general economic slowdown.
The GIFT SEZ, which also houses the country’s first IFSC, currently has 234 units of which 41 set up base within the SEZ in 2020-21. Major players like HSBC, Citi Bank, ICICI Lombard, PwC, Cyrill Amarchand Mangaldas, IC Universal Legal, Vman, Accuman, Truebeacon, Kedaara Capital, ASK Investment and SBI Fund Management are among new units that set up base in the SEZ, said officials of GIFT City. Apart from GIFT City, other major SEZs contributing to services exports in Gujarat have remained steady. For instance exports of Rs 2,436 crore from TCS SEZ for the year 2020-21 saw a marginal growth of 0.57 per cent, while exports from L&T SEZ saw a marginal dip by 0.57 per cent to Rs 712 crore.
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