Pharmabiz
 

Pharmexcil seeks RBI intervention in solving issue of PSU banks' denial of credit to SMEs

Ramesh Shankar, MumbaiMonday, January 4, 2010, 08:00 Hrs  [IST]

The Pharmaceutical Export Promotion Council (Pharmexcil) has sought intervention of Reserve Bank of India (RBI) in resolving the issues arising out of the denial of credits to the small and medium pharma companies by the public sector banks for export to developing countries in Africa, Latin America, CIS countries and South East Asian countries. Senior Pharmexcil officials met Anand Sinha, executive director, RBI, recently in this regard and urged the apex bank to intervene in the matter. Sources said that Sinha has asked A Sreekumaran, GM RBI, to look in to the matter. He will take up the matter shortly with public sector banks as there are no resections from RBI for restricting export finance to developing countries. The Pharmexcil has apprised the RBI officials that the union commerce ministry, to promote the country's export, has earmarked some of the regions like Africa, Latin America, CIS countries, etc as focus markets and for encouraging the companies to export to these markets the government is providing several incentives. But, denial of PSU banks in providing necessary credits to these companies will prove to be a stumbling block to the efforts of the Commerce Ministry to boost the exports from the country. SME pharma companies usually export to developing countries like Africa, Latin America, CIS countries and South East Asian countries as the SME sector is not able to export to European Union, USA and Japan since they do not have US FDA clearances. Denial of export credit is indirectly curbing exports of SME sector. On the one hand, the government is encouraging exports to focus countries as per government policy, on the other hand PSU banks are creating non-tariff barriers, sources said. Sources said that while the government has classified some markets as focus countries, the PSU banks are rejecting loan requests after classifying these markets like Kenya, Uganda, etc as high-risk markets. Meanwhile, the department of pharmaceuticals had also tried to solve the issue by calling a meeting between the DoP and the department of banking last month. But, the attempt by the DoP came a cropper as the officials from the banking department chose to ignore the meeting.

 
[Close]