Banks come to the rescue of struggling Indian exporters

The Indian government is turning to its banking sector to prop-up its sagging economy.

The Ministry of Finance has directed banks with a major overseas presence to arrange credit for Indian exporters in an attempt to stem a sharp slide in Indian exports. These banks will have to extend credit directly or make funds available to exporters through smaller banks.

These big banks will have to work out within a week a mechanism to fund smaller banks to ensure flow of credit to micro- and small-enterprise exporters.

The ministry said it has told big banks to help customers of smaller banks by lending directly to these banks with a mark-up of not more than 10 basis points.