Banks to up scrutiny on loans to export-driven cos post RBI’s relief measures

Banks expected to monitor asset quality closely as moratoriums, deferments, and tariff pressures reshape risks
| Photo Credit:
ArLawKa AungTun

Financial institutions are set to increase their focus on credit extended to export-oriented businesses as the Reserve Bank of India’s recently introduced relief measures for exporters take effect.

Madan Sabnavis, Bank of Baroda’s chief economist, emphasized that lenders must maintain rigorous oversight of asset quality beyond December 2025. Export-reliant sectors including apparel, jewelry, auto parts, and leather goods—primarily MSME-driven—face heightened vulnerability due to tariff-related challenges.

“With the extended repatriation window for export proceeds shifting from 9 to 15 months, temporary imbalances between foreign currency inflows and outflows could emerge, potentially affecting exchange rate stability,” he noted.

Monitoring borrower relief utilization

Anil Gupta of ICRA Ratings highlighted lenders’ need to track the volume of deferments or moratoriums utilized by exporters. Significant adoption of these relief options may amplify uncertainties regarding loan performance. While 5% provisioning requirements on such accommodations could elevate credit costs, analysts expect limited near-term impact on profitability.

Karan Gupta from India Ratings indicated potential flexibility: “As during pandemic-era policies, moratorium extensions remain feasible if trade disruptions persist. Fresh credit decisions will involve granular, case-by-case evaluation of sectoral and borrower specifics.”

He added that while heightened vigilance on existing exposures is inevitable, not all export-linked loans face equal tariff risks. Institutions will differentiate between secured and unsecured facilities within affected portfolios.

Liquidity provisions

Federal Bank’s Executive Director Harsh Dugar outlined key relief components: repayment deferrals stretching to September 2026, relaxed margin requirements through limit reassessments, and extended export credit tenures to 450 days. “These measures offer crucial breathing space until trade normalizes through government-mediated solutions,” he stated.

Market participants anticipate the current export sector strain to be transitional, expecting resolution through ongoing diplomatic and trade agreement negotiations.

Published on November 19, 2025