Tirupur: The 'exotic forex derivative' issue which allegedly cost nearly Rs 400 crore to exporters here, has again surfaced, as a major bank recently initiated the process of auctioning a running textile unit in this knitwear town to recover some Rs 23 crore from the owners.
During 2007, a few banks started aggressively marketing certain 'exotic derivative' contracts, projecting them as an alternative profit-making mechanism available to exporters, whereas actually these contracts had exposed the exporters to enormous risks, Raja Shanmugham, President, Forex Derivative Consumers' Forum, formed by a few affected exporters from Tirupur, told reporters here today.
Within a few months, the contracts started resulting in huge losses to exporters in the country, following which a person from Odisha filed case in the High Court there, he said.
Gradually both RBI and CBI, which were investigating the matter after the High court order, confirmed that serious irregularities and violation of FEMA had taken place in these derivative contracts sold by banks, he added.
Due to persistent efforts of the Forum, RBI mooted an investigation and slapped penalties on 19 erring banks for violating the rules on sale of derivatives.
The issue was also raised by Left parties leaders, D Raja and T K Rangarajan in Parliament, he said.
However, one of the major Indian banks, which was also penalised, started recovery process against Renaissance (RTW) Asia Pvt Ltd, which had signed a few derivative contracts based on the advice of the bankers, which resulted in losses running to several crores, M Anand, its Managing Director, claimed.
"The company is ready for an open inquiry by any of the investigating agency or court but till then the matter should be kept pending without resorting to any coercive steps, like publishing the photographs of the owners in newspapers," Shanmugham said.
