Banks urge RBI to extend trade relief measures beyond December
Banks are asking the Reserve Bank of India for more time on loan relief for exporters. The current scheme ends this month. Exporters face ongoing challenges from global trade issues. Banks believe the real impact of these issues will be seen next quarter. An extension would offer a crucial safety net for exporters.
Mumbai: Commercial banks have approached the Reserve Bank of India (RBI), seeking an extension of the trade relief measures that permit loan moratoriums for exporters, people familiar with the matter said.
The central bank announced the measures in mid-November, allowing banks and non-banking finance companies to offer exporters a moratorium on loan repayments and restructuring options to ease stress from delayed receivables and extended working capital cycles.
The scheme, which ends on December 31, was aimed at preventing defaults amid global trade uncertainties and tariff-related disruptions.
Banks have urged RBI to extend the scheme by one more quarter, citing continued challenges for exporters from supply chain realignments and certification delays, particularly in sectors with high exposure to the United States, such as marine products.
"Exporters are reaching out to banks, seeking an extension of the RBI moratorium scheme," B K Divakara, executive director at CSB Bank, told ET. "Most are waiting for clarity on trade deals to assess the cost impact of tariffs," he added.
Bankers said uptake of the moratorium has been modest compared to a similar scheme announced during the Covid period. However, they expect demand to pick up next quarter.
"We have not seen any major impact on our portfolio yet. The real impact will be felt next quarter. I am also not ruling out demand for RBI's restructuring scheme," State Bank of India (SBI) chairman C S Setty told ET in an interview published on November 22.
Setty said it was too early to assess the impact of the 50% tariff imposed by the US on Indian exports "as many exporters can diversify their geographical markets in a short span of time."
A senior bank official said extending the trade relief measures by at least one more quarter will provide a safety net if receivables remain delayed. He added that demand for relief measures may remain weak since exporters could offset tariff impact through a depreciating rupee, which has fallen nearly 6% over the past year.
Total bank credit to exporters stood at ₹2.17 lakh crore as of September 30, according to RBI data. Although this is just 1% of total bank credit, exports of goods and services contribute significantly to employment and have nearly one-fifth share in India's GDP.
Export services mainly comprise IT companies, which are largely debt-light.