RBI panel recommends review of Gold Card scheme for exporters

A Reserve Bank of India technical committee on services/facilities for exporters headed by G Padmanabhan has, among other things, recommended review of the Gold Card scheme for extension of export credit to exporters.

The Gold Card scheme introduced in the Exim Policy 2003-04 allows creditworthy exporters with good track record easy access to export credit on best terms.

All credit worthy exporters, including those in small and medium sectors with good track record will be eligible for issue of Gold Card as per the criteria to be laid down by the individual banks.

Besides, it has recommended appropriate inclusion of export finance under the priority sector advances for scheduled commercial banks, raising of foreign currency loans on pool basis for extension of export credit to exporters, allowing factoring on non-recourse basis, liberalisation of merchanting trade, financing to units in domestic tariff area (DTA) / special economic zone (SEZ).

The committee also suggested more incentives in the area of taxation benefits and subvention, denomination of export credit limit in foreign currency, simplification of hedging procedure, securitisation of receivable/ introduction of new insurance products by Export Credit Guarantee Corporation (ECGC)/liberalisation of claim procedure by ECGC, etc.

RBI said it would along with the other agencies examine the recommendations for implementation.

It may be mentioned that the RBI, over time, has liberalised and delegated powers to authorised dealer (AD) banks to decide interest rates on loans to exporters and documentation/ procedure with respect to purveying of credit to export sector. However, RBI said, it has been receiving a number of representations from various trade bodies/individual exporters highlighting the difficulties being faced by them in getting timely, adequate and hassle-free flow of credit towards working capital, capital expenditure and other requirements of the sector.

Given the current global and Indian scenario and the importance of export sector in the overall context,

RBI governor D Subbarao announced the constitution of a technical committee to examine the issues regarding export credit on 29 January at post policy meeting with bankers. The committee under deputy governor G Padmanabhan had representation from the EXIM Bank, ECGC, select banks, trade bodies such as Federation of Indian Export Organisation (FlEO), Indian Banks' Association (IBA), Foreign Exchange Dealers Association of India (FEDAI) etc besides senior officers from the Department of Banking Operations and Development  and the Department of Economic and Policy Research of the Reserve Bank. The RBI also solicited views/comments of the stakeholders from outside the committee members.

Its terms of reference included review of the existing policies/procedure relating to bank finance for exports and suggest measures to improve timely, adequate and hassle-free flow of credit towards working capital, capital expenditure and other requirements of the sector, and, in particular SME units.

Besides, the committee has been asked to evaluate and suggest ways for improving financial support to the export sector from alternative sources like factoring, interest subvention, export advance from the external sources, etc; suggest measures to simplify and rationalise the existing procedures, including the documentation, matters relating to transaction cost/transition period, to examine specifically the special needs of exporting units located in SEZ, requirements of merchanting trade, etc.