The interface with user groups, held at the behest of the RBI, was attended by RBI executive director MG Srivastava, senior RBI officials from the industrial and export credit department (IECD) and officials of State Bank of India, Bank of India, Vysya Bank and others.

The interface was aimed at evaluating the success of the various export credit schemes that have been announced after 1993, since the exporters have been given the option of availing of export credit either in rupees or in foreign currency. Thisleeway was followed up by subsequent guidelines issued from time to time by the RBI, the last comprehensive one on February 28, 1999, which had stated, among other things, that banks should permit interchangeability between pre-shipment and post-shipment credit limits, not insist on submission of export order documents for every tranche of pre-shipment credit (in the case of good borrowers), reduce sanctioning process layers to a maximum of three, speed up credit clearance, etc.

As regards the low offtake of foreign currency credit, it was generally felt that the main reason behind this was that with rupee funds at a concessional 10 per cent and foreign currency Libor-linked funds currently at between 6-6.5 per cent, many exporters whose need for foreign currency funds was not large, did not find it worthwhile to go in for them, especially when the exchange risk and service charges were factored in. Other restricting factors were the dual ECGC cover that exporters had to bear when banks also passed on theirECGC guarantee charges to them (in addition to the ECGC insurance premium payable by exporters), exorbitant charges imposed when converting pre-shipment credit to post-shipment, non-availability of a clear cut exemption from 20 per cent withholding tax in the case of export credit as has been granted to external commercial borrowings, and procedural irritants inhibiting project exports.