ComMin wants RBI to slash rates on export credit

The Commerce Ministry wants the Reserve Bank to reduce interest rate for dollar credit in its forthcoming monetary policy to help sustain the fledgling recovery in the exports sector.

"We are expecting that the Reserve Bank will bring down the interest rate for export credit in its quarterly credit policy review," a Ministry official said. The apex bank is slated to announce the third quarter monetary policy on January 29.

Earlier, Commerce and Industry Minister Anand Sharma took up the matter with the Finance Ministry and stressed on the need to reduce interest on dollar credit--the rates exporters pay for borrowing foreign currency.

Sharma said interest rates on dollar credit could be reduced from the London inter-bank offered rate (Libor) plus 3.5 per cent to Libor plus one per cent. The Libor is a benchmark rate for global financial markets.

The Ministry official said exports have entered the positive zone after a gap of 13 months in November and more efforts are needed to ensure sustained recovery.

The Federation of Indian Export Organisation (FIEO) is also hopeful that the central bank would cut the interest rate. "There is an ample inflow of foreign currency and we hope the RBI will reduce the interest rate for the benefit of exporters," Fieo director general Ajay Sahai said.