The RBI’s relief package for exporters couldn’t have come at a more delicate moment. With the global trade tensions flaring up with his trademark unpredictability, India’s export ecosystem has been bracing for fresh tariff shocks.
Several sectors are already feeling the tremors through deferred orders, payment delays and buyers holding back shipments. In this backdrop, the central bank’s intervention, therefore, lands not just as a policy response but as a strategic shield in an increasingly hostile global trade climate.
The package is a well thought out one. The moratorium on term-loan instalments due between September and December 2025, interest calculated on simple-interest basis, longer credit windows and extended timelines for realising export proceeds together form a liquidity safety net for exporters suddenly caught in geopolitical crossfire.
Adding to this, the government’s credit guarantee scheme to the mix, and the immediate pressure on working capital eases significantly. This gives exporters the runway to survive near-term cash-flow turbulence without slipping into default.
The other side
But for banks, this comfort for exporters translates into a more complicated credit landscape. The biggest unknown is uptake.
If a meaningful share of exporters opts for moratoriums and deferred payments banks could lose critical visibility over asset quality.
In a world already reshaped by Donald Trump’s tariff threats and supply-chain realignments, lenders want sharper signals, not blurred dashboards.
The RBI has rightly ensured that accounts availing relief won’t be tagged as restructured. It keeps the regulatory optics clean, but also introduces an awkward opacity.
The moment relief lifts, lenders may discover that several borrowers were skating far closer to distress than expected. In global uncertainty, delayed repayments can quickly become deferred hope.
Also, the required five percent provisioning on such relief-linked accounts adds another layer of pressure. As rating agency Icra points out, while the impact on profitability will be limited in the near term, the cumulative effect for banks with heavy export exposure is not trivial.
At a time when credit demand is rising and deposits are growing unevenly, locking up capital in provisions stiffens the balance-sheet posture.
Then there is the machinery of implementation. Banks, specially the public-sector ones, must overhaul MIS systems to track every borrower, every credit facility, and every relief extended.
This is laborious work in an already compliance-heavy environment. Meanwhile, treasury teams will be grappling with the liquidity mismatches caused by extended export-credit cycles of up to 450 days.
Credit culture
The behavioural risk of the borrower, however, might be the most enduring. When relief is available, firms--even healthy ones--tend to take it “just in case”.
In an era where Trump’s tariff moves can swing overnight from threat to enforcement, this instinct will only sharpen.
A widespread availing of moratoriums could distort repayment expectations and force banks to rethink their risk appetite for new export-linked credit.
To sum up, while the RBI’s measures are necessary and timely banks may have significant risks ahead if things don't go as planned.
(Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector's most important events for readers)
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