A Coimbatore court has said exotic forex derivatives sold by banks to garment exporters during the global financial crisis in 2008 were illegal. The Tirupur Forex Derivatives Consumer Forum, which was formed by 25 exporters from Tirupur, who lost more than Rs 400 crores in the issue, moved court in Coimbatore saying that as many as 19 banks were involved in the fraud by selling the product that was not authorised by the Reserve Bank of India.

The court observed that the products sold by the banks were against the country’s laws and public policy, and also against RBI rules and guidelines. Garment exporters incurred losses due to fluctuations in currency rates while getting payments from overseas buyers. Banks were involved in the fraud, which was responsible for at least Rs 38,750 crores moving out of the country.

Exporters are now upping the ante seeking a CBI probe into the issue. In 2007-08, the rupee appreciated sharply to 39 to the dollar from 46 in just 15 days. At Rs 25,000 crores, Tirupur accounted for 45 per cent of total exports of readymade garments from the country last year. Exports fell short of the targeted Rs 30,000 crores with Brexit and the subsequent fall in the pound value upsetting calculations of exporters.