Hit hard by the forex derivative trade, a group of medium and small exporters today met Finance Minister P Chidambaram and pleaded for amicable settlement of the issue concerning derivatives losses with the banks on "no profit and no loss" basis.
"The Minister is aware of the problem and has promised to forward the memorandum to the Reserve Bank of India to look into the grievances of the exporters," President of the Forex Derivative Consumers' Forum Raja M Shanmugam said after meeting Chidambaram.
Many exporters, who tried to hedge their currency risk by executing forex derivatives contracts with banks, suffered huge losses on fluctuation in the value of rupee and now want that the issue to be settled with banks amicably.
"Members of the forum are prepared to refund the profit earned, if any, from these exotic derivative products and the banks are requested not to claim the losses incurred", said the memorandum submitted to the Minister.
Chidambaram, who gave a patient hearing to exporters, reportedly told them as the matter involves private and foreign banks, government cannot interfere directly but will refer the matter to the central bank.
Exporters claim that they were lured into entering derivatives contracts to hedge foreign currency losses by banks and were not informed that "these contracts are purely speculative and ...Has the inherent potential to result in enormous loss."
Exporters, the memorandum further said, are faced with hundreds of crores in losses which could result in shutting down of several units.
