High banking charges hampering exporters

The Federation of Indian Export Organisations (FIEO) recently revealed that the levy of higher transaction costs and additional charges by banks is adversely affecting the export sector in India.

Issuing a press release, A Sakthivel, president of FIEO, stated, "Banks are imposing higher charges in different garb, resulting in increase in the overall transaction cost for exporters, thereby leading to an erosion of competitiveness of the Indian export sector."

The FIEO president further pointed out that the banks are earning more revenues on each transaction of a dollar in Cross Currency Booking as they impose additional charges on their mark-up margins between spot and forward rates for quoting forward quotation.

"Higher processing charges make export credit expensive for small-scale exporters, thereby also deterring them to approach banks for loans," said Vinod Agarwal, senior analyst working with East India Securities, a small-sized trading house and brokerage firm in Kolkata.

Mr Sakthivel also noted that banks are levying additional costs on foreign currency funds, which are officially available at London Interbank Offered Rate (LIBOR) +200 basis points. This is against the norms specified by the Reserve Bank of India (RBI) that clearly states that banks will not levy any other charges on credit in foreign currency.

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bio.:David Parks is a well known author and has written articles on Automobile Manufacturers and Eyewear Suppliers, suppliers, Manufactures and many other subjects.