All you should know about EXIM Bank

Export-Import Bank of India is the premier export finance institution in India and a key player in the promotion of cross border trade and investment. The Team of has prepared a unique case study on EXIM bank, which further describes it’s roles and importance.

Export Import Bank of India or EXIM Bank is the premier agency in India in the arena of export financing. It was established in the year 1982 under an act of Parliament in order to make Indian companies get requisite credit facilities for exporting their products to different countries of the world. The bank has now grown into an organization that does not support only export from the country, but also encourages overseas investment, pre-shipment and post-shipment finance, finance for developing business cycle for Indian companies, etc.

EXIM Bank: Since the Beginning

Export-Import Bank of India was established under the Export Import Bank of India Act 1981 with a view to increase the foreign trade from India. The first chairman of the bank was R.C. Shah, who was an eminent banker with vast experience in banking and finance. The organization is wholly owned by The Government of India with its headquarter being in Mumbai, Maharashtra. The present chairman of the bank is Yaduvendra Mathur

EXIM Bank: Functions and Activities

 The bank broadly focuses on two areas- one is the conventional area of export finance and the other is the non-conventional area of creating capability for export oriented units. Though the first is typical of any export credit agency of the world, the latter is a unique one for India. The various functions of the bank are:

  • Project Financing: It extends credit facilities for overseas turnkey projects, civil construction contracts, technical and consultancy service contracts and supplies. Turnkey Projects are basically those which involve supply of equipment along with related product such as design, detailed engineering, commissioning of power transmission projects etc
  • Post Award Clearance: EXIM Bank provides post award clearance for project, export contracts valued up to $100 million. For contracts above that limit, an inter-institutional working group is required for which EXIM Bank works as the nodal agency
  • Financing Deemed Export Contracts: EXIM Bank provides fund based and non-fund based facilities to deemed export contracts as defined in the Foreign Trade Policy of the bank such as the ones secured under funding from agencies such as the World Bank, International Monetary Fund, etc. contracts secured under international competitive bidding, etc.
  • Pre-shipment Credit: It provides pre-shipment credit in both Indian currency and foreign currency to exporters to purchase raw materials and other inputs in the manufacturing stage
  • Supplier’s Credit Facility: The bank offers the Supplier’s Credit facility to Indian exporters which enables them to extend term credits to overseas importers of eligible goods at the post-shipment stage
  • R & D Finance: The bank offers credit facilities to organizations which invest in research and development for promoting exports from the country. These institutions are known as export oriented organizations
  • Technology Promotion Finance: The bank provides credit facility to importers for importing high-end technology in the country and at the same time, promotes investments by Indian companies abroad in joint ventures with foreign organizations
  • Guarantees: The bank provides a guarantee facility to Indian companies in order to secure export contracts from foreign organizations as well as for import transactions. The guarantees can range from advance payment guarantee to performance guarantees, retention money guarantee (this enables the exporter to get the money retained by the client before the issuance of project acceptance certificate)
  • Buyer’s Credit Facility: This facility is extended by EXIM Bank to its overseas customers for imports from India of eligible goods. It enables the exporters to expand in overseas market as well as non-traditional markets
  • Consultancy Services: EXIM Bank undertakes consultancy assignments for other developing countries where it can share the experience of promoting foreign trade in a diverse country like India

EXIM Bank: Schemes that Made the Difference

EXIM Bank has launched a number of schemes in order to serve its purpose of promoting international trade from India. Some of the remarkable schemes are as under:

  • Technology & Innovation Enhancement and Infrastructure Development Fund (TIEID: This fund is basically meant for small and medium enterprises and the objective of the fund is to increase the flow of credit to the MSME sector. This fund of $500 million is meant to help these firms augment their export competitiveness and internationalization efforts by partnering with banks and financial institutions
  • SME-ADB Line of Credit: The bank has arranged for a line of credit with Asian Development Bank for extending term loans to MSME organizations in certain specific lagging states of India such as Assam, Madhya Pradesh, Odisha, UP etc. These loans can also finance domestic capital expenditure of the borrowers besides meeting their foreign currency capital expenditure requirements
  • Overseas Investment Finance Programme: EXIM Bank always promotes Indian ventures to invest abroad in the form of setting up manufacturing units, acquiring foreign companies, etc. The bank provides term loan facilities to Indian companies for investments in foreign market
  • Buyer’s Credit-National Export Insurance Account Programme: Under this facility, the bank extends credit facility to sovereign governments and government owned entities for importing of Indian goods and services. EXIM Bank obtains credit insurance cover under NEIA through Export Credit and Guarantee Corporation of India
  • Capital Equipment Finance Programme: Under this facility, Indian companies can approach EXIM Bank for credit in order to procure indigenous and imported capital equipment for executing overseas projects or deemed export contracts
  • Export Project Cash-flow Deficit Financing Program: EXIM Bank extends credit facility to Indian project exporters to meet expenses incurred in procuring material, personnel, equipment etc.

EXIM Bank, with a net worth of 9902 cores as on 31st March 2015, is an organization that supports the globalization initiatives by Indian companies across the country. It is a unique yet important organization that puts India in the block of developed nations which boast of strong export credit agencies of their own. The basic objective of these agencies is the same, i.e. promoting exports from the respective countries. However, EXIM Bank India is unique in its outreach and array of activities, it undertakes in its own capacity as well as on behalf of the government

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