Banks become selective over export credits

Over six-months ago or so, there was no great demand for export credit. And banks were only too happy to find a borrower. Juxtapose this wit...

Over six-months ago or so, there was no great demand for export credit. And banks were only too happy to find a borrower. Juxtapose this with the current situation wherein banks have become “very selective” as far as such credit goes. Demand for such credit, particularly for packing credit in foreign currency has been on a rise.

“We have become selective while offering export credit in foreign currencies as funds are limited,” said bankers across the board. Banks meet credit demand under the PCFC scheme from their reserves of net foreign exchange assets.

Although, individual bank’s net forex asset position is not readily available, net inflow of forex assets to the banking sector during the fortnight ended Nov 1, was Rs 2,306 crore. This figure may suggest the extent of export demand in foreign currencies.

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Bankers said following the huge export credit demand and the subsequent pressure on their net forex assets, some have even opted to avail lines of credit from the overseas market to meet the demand.

An official said the “selective approach” towards providing export credit, said “we are now offering loans only to exporters with good turnover and who come up with ‘good’ security. With the rise in demand, banks are not in a position to provide loans to all as funds are limited.”

Demand for pre and post-shipment foreign currency export credit has been high after the US Federal Reserve reduced its ate by 50 basis points to 1.25 per cent.

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