FIEO/PUB/PR /66/12 - June 28, 2012
FIEO COMPLEMENTS SBI FOR SLASHING INTEREST RATE BY 0.50 % ON EXPORT CREDIT
Complimenting the State Bank of India for taking the lead in announcing reduction of Interest rate by 0.50% on export credit, Mr M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) said that the move is in positive direction though he expected far deeper reduction in view of the fact that RBI has increased refinance to export sector. Elaborating it further, Mr Ahmed said that the refinance by RBI to bank has been enhanced from 15% to 50% and the same would be available to the banks at 8%. Since the cost of deposit of the banks is in the range of 9-10% with 50% refinance facility available at 8%, the cost of export credit should come down in the range of 9-9.5%.
President, FIEO added that Indian exporters lose much of their competitiveness in exports due to high cost of credit particularly at a time when requirement of the same is for longer period as buyers are making payments only after selling of the products. FIEO Chief hoped that SBI would be a trend setter and other banks will follow the suit and this may be a harbinger of reduction of interest rates in the country.