- The short (what’s moving on desks)
- Where stress surfaces first (SMA ladder)
- Who’s tightening what (banks/NBFCs)
- Sector & HS-code risk map
- RBI/liquidity watchlist
- 30-day lender playbook
- FAQ
The short
- Receivables risk: U.S. buyer re-pricing/deferrals push export bills beyond terms—first into SMA-0, then SMA-1 if not cured.
- WC guardrails: Banks aren’t blanket-cutting limits; they’re lowering drawing power, nudging higher margins, and shortening tenors for exposed SKUs.
- Provisioning stance: Conservative overlays in tariff-exposed portfolios; tighter sanction conditions on renewals/rollovers.
Where stress surfaces first — the SMA ladder
| Bucket | What trips it | Signals to watch | Desk action |
|---|---|---|---|
| SMA-0 | Up to 30 days overdue | Export bill collections slip; buyer discount asks | Call-ups; partial cures via ECGC/insurance; roll to shorter tenors |
| SMA-1 | 31–60 days | Repeated “ex-tariff” renegotiations; inventory build | Lower drawing power; raise margins; covenants on SKU/HS exposure |
| SMA-2 | 61–90 days | FX hedge lapses; disputed invoices | Standstill discussions; collateral top-up; restructure only with visibility |
Early cures are cheaper: escalate the moment export bills age beyond contractual grace; pair with layered FX cover.
Who’s tightening what — street read
Banks (PSU & private)
- Drawing-power haircuts ↑ 2–5 pp on receivables from high-tariff HS codes.
- Shorter assessment cycles; quarterly stock/receivable audits.
- Event-based covenants: tariff escalation → auto re-pricing or margin step-up.
NBFCs/Fintech lenders
- Invoice discounting limits tightened; higher IRR floors for exposed lanes.
- Selective pause on unsecured WC for exporter MSMEs without ECGC cover.
- Real-time bureau pulls on early-warning triggers (bounced e-mandates, GST gaps).
Sector & HS-code risk map (first-order)
| Bucket | HS codes | Credit watch | Spreading |
|---|---|---|---|
| Apparel/Textiles | 61/62/63 | Thin margins; high buyer power | ECGC cover; shorter cycles; purchase-order backed loans |
| Gems & Jewellery | 71 | Lumpy ticket sizes; inventory risk | Insured inventory; strict KYC for counterparties; escrowed collections |
| Footwear | 64 | Retail demand elasticity | Make-to-order; vendor finance with recourse to buyers |
| Furniture | 94 | Customs/storage costs; delivery lags | 3PL duty-drawback; tighter LC terms |
| Seafood (Shrimp) | 03 (0306) | Perishability; cold-chain capex | Transit insurance; confirmed orders with deposits |
RBI/liquidity watchlist
- Ops toolkit: VRR/VRRR fine-tuning, OMOs/Twists to smooth curve if FX volatility rises.
- Transmission: Watch MCLR resets and working-capital interest coverage in exposed MSMEs.
- Supervision: Expect tighter scrutiny of export finance books and provisioning assumptions.
30-day lender strategy
Risk & collections
- Daily SMA dashboard for tariff-exposed NAICS/HS buckets.
- Early-warning triggers: >7-day invoice aging, GST e-way anomalies, hedge gaps.
- Pre-emptive restructuring only with PO visibility and ECGC coverage.
Sanctions & pricing
- Shorten tenors (90–120d), step-up pricing or covenants on trigger events.
- Lower receivable eligibility from U.S. buyers lacking ex-tariff clauses.
- Mandate layered FX hedges for limit utilisation >70%.
Treasury & ALM
- Stress test interest-coverage under 100–200 bps spread widening.
- Hedge USD funding mismatches; watch OIS-G-sec basis for cues.
Governance
- Board note on tariff exposure; quarterly disclosure of overlay methodology.
- Client education pack: ex-tariff pricing templates, hedge playbooks.
FAQ
- Will limits be cut across the board? Unlikely. Expect line-by-line tightening tied to HS exposure and buyer contracts.
- Best early-warning indicator? Aged receivables > 15–30 days vs historic DSO, especially where FX cover is missing.
- Where to add buffers? ECL overlays on exposed pools; extra collateral margins where realizable values are volatile.