Exporters have asked the Reserve Bank of India (RBI) and Finance Ministry to resolve their (exporters') row on derivatives with banks resolved, or else the disputed amount of Rs 1,500 crore may turn into non-performing assets in lenders' accounts closing on March 31.
Rejecting the banks' offer for converting the exporters' losses on complex derivative products into term loans, the Federation of Indian Export Organisations (FIEO) has approached the RBI and the Finance Ministry for dispute resolution.
ICICI Bank, ABN Amro, Axis Bank, Standard Chartered, State Bank of India are among those which sold currency-related derivatives to about 250 exporters from October 2007 onwards, when the rupee was appreciating fast, FIEO President A Sakthivel told PTI.
While exporters said they bought complex financial products to cover their currency-related risks, they suffered losses when the rupee made a U-turn from early this fiscal. From Rs 39 to a dollar, the Indian currency has depreciated to over Rs 50 between October 2007 and March 20 2009.
Almost all of them have refused to pay their loss amounts, stating that banks did not explain to them the complexities of the products. Sakthivel said the agreements signed with banks could not be enforced since they were in violation of RBI rules.