Engineering Export Council asks banks to provide adequate liquidity

Year-end pressures must be mitigated by the banking system to provide adequate credit to engineering exporters, industry body Engineering Export Promotion Council (EEPC) India said on Tuesday.

"Even though operating in an embattled global economic environment, exporters are finding it hard to get adequate bank credit in the wake of tight liquidity creeping in the financial markets," EEPC India chairman TS Bhasin said in a statement.

The Reserve Bank on Tuesday left the key policy rate unchanged at 6.75% and the reverse repo rate at 5.75%.

"RBI Governor Raghuram Rajan has recognised the issue of tight liquidity in the banking system. The situation is particularly precarious for the SME exporters who do not find favour with the banks, especially when there is a liquidity crunch," he said.

Against this backdrop, Bhasin said reducing the Cash Reserve Ratio (CRR) from the existing 4% would have helped.

"There are reports that the RBI has been intervening now and then to strengthen the rupee, a policy which will not help the cause of the exporters. A sharp fall in the currency value of other competing economies is exerting pressure on Indian exporters," he said.