(MENAFN- KNN India)
RBI hikes repo rate by 35 bps; FIEO seeks extension of Export Refinance Facility to banks New Delhi, Dec 7 (KNN) Federation of Indian Export Organisations (FIEO) has requested RBI to extend 'Export Refinance Facility' to banks as a response to the increase in the Repo Rate by 35 basis points.
Under such a mechanism, banks may be encouraged to provide export credit in Rupee to exporters and the same amount can be refinanced by the RBI at the Repo Rate, said FIEO.
It has also requested the Government to increase interest subvention under the Interest Equalization Scheme (IES) from 3% and 2% respectively to 5% to all MSME manufacturers and 3% (to all other eligible categories).
The export apex body have sought this because interest rates have already crossed the pre-covid level by a high margin when the Interest Equalization Scheme was provided for 5% & 3% for subvention.
Reacting to the increase in the Repo Rate by 35 basis points, FIEO President, Dr A Sakthivel said that such an increase to contain inflation and the flight of capital is on expected lines with further fears of Fed rate hike in the US.
The FIEO President said that global trade is passing through a difficult phase owing to rising inflation, reducing the purchasing power, and countries entering into recession and high volatility in currencies.
In the given scenario, he said India has to ensure that further increase in export credit rates should not blunt our competitive edge as we are losing out to our competitors in countries with reduced rates of interest and deep depreciation of their currencies.
(KNN Bureau)
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