Banks refuse dollar loans to exporters

Here is the beginning of my post. And here is the rest of it.Suddenly, foreign currency loans have become a scarce commodity. Indian banks draw foreign currency credit lines from international banks to lend to local exporters. These credit lines have now dried up with the subprime fiasco severely impacting the global money market. Under the rules stipulated by the Reserve Bank, banks can charge a maximum of Libor (London inter-bank offered rate) plus one percentage point for such loans, commonly called packing credit in foreign currency (PCFC). Libor is the international benchmark rate for bulk money. “Liquidity has become so tight that we would be losing money if we give PCFC loans to exporters,” said the head of trade finance of a private bank.