ASSOCHAM shares RBI optimism on economic growth
First discontinuation of Automatic Caution Listing and now External Trade Facilitation measures announced by RBI on 4 Dec 2020 has been really providing big support to exports, said Sharad Kumar Saraf, President, Federation of Indian Export Organisations (FIEO).
While reacting to the RBI’s Bi-monthly Policy, he complimented RBI for its excellent support to the exporting sector during this pandemic situation.
The FIEO Chief said that removal of the monetary ceiling in respect of direct dispatch of shipping documents to overseas buyers and regularising such cases, where export proceeds have been realised, irrespective of the value of the export shipment, will provide great relief to exporters whose bills are pending in EDPMS.
This also addresses the concern of those exporters who were forced to send the documents directly to buyers during Covid times as courier services were not functioning in India due to lockdown, he pointed out.
Similarly, a large number of cases will be closed by banks, providing write-off of unrealised exports’ value exceeding 10% of the previous calendar year’s exports, without referring to the RBI. This will save the transaction time of exporters, said Saraf.
It was a long pending demand of exporters to permit set off export receivables against import payables when such goods are consigned to and or from their associate companies and accepting this demand on 4 Dec’s announcement is a welcome step, said the FIEO President.
Off late dispute was arising between the exporters and banks regarding the refund of export proceeds, where the goods had perished/destroyed/auctioned as banks were insisting on imports of such material which was not pragmatic. Allowing refund in such cases, of course on submission of documentary evidence, will certainly settle the dispute.
Saraf also welcomed the unchanged key rates, making RTGS system 24X7, coverage of other stressed sectors in synergy with the credit guarantee available under the Emergency Credit Line Guarantee Scheme (ECLGS 2.0) of the Government. This will encourage banks to extend credit support to stressed sectors at a lower cost.
Saraf expected such more facilitation measures in the future also which will help in achieving US$1 trillion exports by 2025 as targeted by the Government.
The key takeaway from the credit policy review by the RBI Monetary Policy Committee is to continue with the ‘accommodative stance’ for the lending rates with an assurance that the central bank would extend support to the growth on a sustained basis, said ASSOCHAM.
“Given the inflationary challenges, it is no surprise that the RBI-MPC has kept the policy repo rate unchanged at 4%,” ASSOCHAM Secretary General, Deepak Sood said.
“However, we must applaud the MPC for staying on course with regard to accommodative interest rate stance. What is more, Governor Shaktikanta Das has laid a lot of emphasis on the fact that economic recovery would be dependent on sustained policy support,” said Sood.
He said there is adequate liquidity in the banking system at present, leaving some more room for transmission of lower lending rates, leveraging the earlier reductions by the RBI.
Sood noted that the banking system is clearly looking much more stable and robust today, weathering the Covid-19 storm with prudent and pragmatic policies.
The ASSOCHAM Secretary General listed specific measures in the policy review with regard to export finance, digital payment and strengthening the regulatory supervision as positives.
“We share the optimism of the RBI about the growth returning with vigour in the financial year 2021-22,” he said. #economy #exports #investment #banking /fiinews.com
