A recent press report said that Exim Bank (Export-Import Bank of India) is expecting products benchmarked to government security (G-sec), than base or benchmark prime lending rate (BPLR), to gain more popularity among exporters.
Mr. T C A Ranganathan, Chairman and Managing Director, Exim Bank said that the Companies should choose loans benchmarked to government security (G-sec) as that would help them protect themselves from the pressure of rising interest rates. The bank had recently introduced G-Sec linked products.
Mr. Ranganathan said that the interest rates of Exim bank have been raised in tandem with the market and so companies who want to protect want themselves from the pressure due to the rise in interest rates, can go for G-secs based borrowing as it is the most market friendly.
He said that loans linked to G-Secs rise in tandem with the market but when the liquidity position improves, these loans are usually the first ones to fall. He commented that they were completely transparent.
He also said that small and mid-sized companies should adopt a cluster approach and increase value addition in order to enhance exports from the region in order to offset the high cost of credit.