Exim Bank of India – An Overview
Export-Import or Exim Bank of India was established on January 1st, 1982. The Bank fills an institutional gap in the area of financing India’s international trade. With its setting up, a long felt need for an apex bank that can function as the principal financial institution for interfacing with institutions engaged in financing export and import trade was fulfilled. In 1983, Bank introduced a new facility under the name “Exim Syndicate Facility” to attract greater participation in export credit from commercial banks in India, who were authorized dealers in foreign exchange. In 1984, Bank also introduced two new lending programmes, one relating to financing of deemed exports and the other to financing of 100% export units and units in free trade zones. Bank entered into an arrangement with Templeton Worldwide Inc. U.S.A. to help medium sized Indian Companies access capital.
The Bank entered the Japanese commercial Yen market and signed a loan agreement for raising Yen 1 billion.
In 1987, A new programme to finance computer software exports was introduced under two channels:
(i) for those seeking finance and clearance under Exim tract, where, the bank undertook 350% of the export obligation.
(ii) for those who seek only financial assistance (necessarily Rupee term finance). The Bank promotes Indian exports through a variety and a range of lending programmes.
The Bank offers export bills re-discounting facility, refinance of supplier’s credit, refinance of term loans to export oriented units and bulk import finance to commercial banks in India. The Bank also participates in guarantees issued by commercial banks on behalf of Indian project exporters. During the year, two consultancy assignments were awarded to Indian consultants for providing management information system and cost accounting system for a food processing company and an automotive parts manufacturing company, both in Poland.
Role of Export-Import Bank of India
Export-Import Bank of India (Exim Bank) was set up by an Act of the Parliament “THE EXPORT-IMPORT BANK OF INDIA ACT, 1981” for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for co-ordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade and for matters connected therewith or incidental thereto.
Exim Bank has two broad business streams:
i) the traditional export finance typical of export credit agencies around the world
ii) financing of export oriented units (export capability creation), which are non-traditional for export credit agencies.
Since inception, Exim Bank has been the principal financial institution in the country for financing project exports and exports on deferred credit terms. As per Memorandum of PEM (MEMORANDUM OF INSTRUCTIONS ON PROJECT EXPORTS AND SERVICE EXPORTS) of Reserve Bank of India, the following constitute project exports:
- Supply of goods / equipment on deferred payment terms
- Civil construction contracts
- Industrial turnkey projects
- Consultancy / services contracts
Exim Bank extends funded and non-funded facilities for overseas turnkey projects, civil construction contracts, technical and consultancy service contracts as well as supplies.
- Turnkey Projects are those which involve supply of equipment along with related services, like design, detailed engineering, civil construction, erection and commissioning of plants and power transmission & distribution
- Construction Projects involve civil works, steel structural works, as well as associated supply of construction material and equipment for various infrastructure projects.
- Technical and Consultancy Service contracts, involving provision of know-how, skills, personnel and training are categorized as consultancy projects. Typical examples of services contracts are: project implementation services, management contracts, supervision of erection of plants, CAD/ CAM solutions in software exports, finance and accounting systems.
- Supplies: Supply contracts involve primarily export of capital goods and industrial manufactures. Typical examples of supply contracts are: supply of stainless steel slabs and ferro-chrome manufacturing equipments, diesel generators, pumps and compressors.
Exim Bank, under powers delegated vide the PEM, provides post-award clearance for project export contracts valued upto USD 100 million. Project export contracts valued above USD 100 million need to be provided post-award clearance by the inter-institutional Working Group.
In the case of very large value projects, officials of Ministry of Finance, Ministry of Commerce and Industry and Ministry of External Affairs, Government of India, are invited to participate in the Working Group Meetings. In order to obtain immediate clarifications for speedy clearance of proposals by the Working Group, the exporters concerned and their bankers are also associated with the meetings.
With the same objective, participation of the main sub-suppliers, sub-contractors or other associates and their bankers in such meetings is also encouraged, particularly in respect of proposals for high value contracts. Exim Bank also plays the role of a financier and provides funded and non-funded support for project export contracts of Indian Entities.
In addition to project exports, Exim Bank also extends fund-based and non-fund-based facilities to deemed export contracts as defined in Foreign Trade Policy of GOI, e.g.,
- secured under funding from Multilateral Funding Agencies like the World Bank, Asian Development Bank, etc.;
- contracts secured under International Competitive Bidding;
- contracts under which payments are received in foreign currency.
- contracts in India categorized as Deemed Exports in the Foreign Trade Policy of India.
- To ensure and integrated and co-ordinated approach in solving the allied problems encountered by exporters in India.
- To pay specific attention to the exports of capital goods;
- Export projection;
- To facilitate and encourage joint ventures and export of technical services and international and merchant banking;
- To extend buyers’ credit and lines of credit;
- To tap domestic and foreign markets for resources for undertaking development and financial activities in the export sector.
- Planning, promoting and developing exports and imports;
- Providing technical, administrative and managerial assistance for promotion, management and expansion of export sector.
- Undertaking market and investment surveys and techno-economic studies related to development of exports of goods and services.
The Exim Bank has a 17-member Board of Directors, with Chairman and Managing Director as the chief executive and full-time director. The Board of Directors consists of the representative of the Government of India, RBI, IDBI, ECGC, commercial banks and the exporting community.The Exim Bank also extended its financial assistance to Indian exports through letters of credit, re-lending facility, export bills re-discounting, overseas investment finance, facilities for deemed exports and assistance to hundred per cent export units and units in free trade zone.
In June 1986, the Exim Bank introduced a new programme called the Export Marketing Fund (EMF), under which finance is made available to Indian companies for undertaking export marketing activities. The programme also covers activities like desk research, minor product adaptation, overseas operations and travel to India by buyers overseas.
Mr. Yaduvendra Mathur has been appointed by the Government of India as Chairman and Managing Director of Export-Import Bank of India (Exim Bank).