Rbi Intervention Sought By Pharmexcil To Help Smes

The Pharmaceutical Export Promotion Council (Pharmexcil) has asked the Reserve Bank

of India (RBI) to resolve the persisting credit concerns faced by SME drug exporting units, arising due to the reluctance of banks to lend to the SME sector.

As per industry officials, banks are rejecting loan applications of small and mid-sized pharma firms, which are seeking credit assistance for increasing their exports to developing countries such as Latin America, Africa, Commonwealth of Independent States (CIS) countries and South East Asian countries.

Given that the risk associated to lending to SME exporters is very high, banks and financial institutions are still wary of providing loans to small units. Credit denial is making it difficult for small units to expand their activity base, said Sandeep Ghoshal, proprietor of Durga Stores, a small-sized drug supplier in Kolkata.

Senior representatives of Pharmexcil has urged the apex bank to take up this matter with other nationalised banks and issue them guidelines for offering export finance to SMEs.

So far, the RBI has not issued any directives to nationalised banks for imposing restrictions on providing export finance to SMEs, which are seeking loans for stepping up their exports to developing countries, said Sanjeet Kumar, proprietor of Sanjeevani, a small-sized drug store in Ranchi, Jharkhand.

The Council has also apprised RBI that the Union Commerce Ministry has asked exporters to lay more emphasis on reaching new markets such as Africa, Latin America and CIS countries. However, denial of export credit by banks is indirectly curbing exports from the countrys SME pharma sector.

by: David Parks

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