"There are disputes and long time is taken to realise the collateral. I don't think it gives you any kind of comfort, which can only come from timely repayment," he said.
As a wayout, Kumar suggested that enhancing the insurance coverage from the Export Credit Guarantee Corporation of India (ECGC) to 90 per cent can help banks reduce collateral for exporters.
He said bankers have agreed that they will reduce the cost of lending for exporters if the ECGC will increase the cover to 90 per cent.
"If export finance has to be collateral-free then the ECGC coverage has to be enhanced which will help in both reducing the cost and requirement of collateral, he said.
Kumar also called for extending the interest subvention to all MSME units, irrespective of their target marketserving the domestic market or exports, but added that the discounted rates should be used only at the receivable discounting level.
Urging exporters to develop trust with bankers and the system in general he said, "I always have maintained that one Nirav Modi did not cause a loss of Rs 14,000 crore to one bank, as the damage he did to the system is much higher say Rs 1 lakh crore.
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