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Banks must pass on low interest rate benefits to exporters says the Engineering Export Promotion Council

The Nationalised banks do not pass on the benefits of the low interest tax regime implemented by the Reserve bank of India to the Exporters and Export Finance in India continued to be high compared other financial markets of the world, Engineering Export Promotion Council has charged the government.

The banks decline to pass on the benefit to the Exporters for whom the low interest regime is intended

When Reserve Bank reduces interest rates periodically, the banks swing into action and immediately reduce the interest rates for depositors. They do not spare even the senior citizens but decline to pass on the benefit to the Exporters for whom the low interest regime is intended.

While RBI's lower interest rate regime is intended at supporting growth, steps need to be taken for full transmission of the rates to the exporters and end-customers at large. Export finance continues to be high in the country when compared with other similar markets, said Chairman of Engineering Export Promotion Council India Mahesh Desai. 

Commenting on monetary policy statement, Mr Desai said that RBI must advise all the banks to pass on full benefits of low interest rate to borrowers especially SMEs.

He said that the central bank has kept the key interest rate unchanged at 4 per cent on expected lines. Further, it has retained the accommodative stance given that the second wave of pandemic poses threat to growth.

RBI has maintained the GDP growth forecast at 10.5 per cent for the current fiscal.

Some of the macro indicators such as GST collection and merchandise export figures in the last few months have shown economic growth gathering pace from historic low last year. “But given the surge in Coronavirus cases and restrictions imposed by various states to contain the pandemic, there are downside risks.

Moreover, there have been periodic lockdowns in several western countries which could slow down the ongoing recovery in international trade, said Mr Desai. 

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