NEW DELHI: Some Middle Eastern countries, including Qatar, have refused to accept the letters of credit (LC) issued by the country's largest bank, State Bank of IndiaBSE -1.43 %, saying that the bank does not have adequate credit rating.
This can increase the cost of imports from these countries as buyers will need to furnish costlier LCs issued by foreign banks. Qatar is one of the biggest source of gas for India.
SBI chairman Arundhati Bhattacharya said there was an issue which has now been resolved. "There was this issue some time back wherein they required LCs issued by AAA banks, but we explained that the bank is bound by the country's rating," she said. Standard & Poor's had downgraded SBI in 2012 to BBB-, the lowest investment grade rating, on expected deterioration in its asset quality.
A senior finance ministry official said that the Qatar government wasn't yet convinced and that talks were on to solve the differences. "We are actively in talks with other countries as well so that there is no issue," he added, requesting anonymity.
LCs enable buyers to take delivery of goods without upfront payment and sellers to receive immediate payment soon after goods are shipped.
No comments:
Post a Comment