Exim Bankof India

VIVEK COLLEGE OF COMMERCE
CHAPTER - 1 INTRODUCTION
1.1INSTITUTION:
Export-Import Bank of India is the premier export finance institution of the country, set up in 1982 under the Export-Import Bank of India Act 1981. Government of India launched the institution with a mandate, not just to enhance exports from India, but to integrate the countrys foreign trade and investment with the overall economic growth. Since its inception, EXIM Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, EXIM Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the Small and Medium Enterprises, in their globalization efforts, through a wide range of products and services offered at all stages of the business cycle, starting from import of technology and export product development to export production, export marketing, pre-shipment and post-shipment and overseas investment.
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1.2 INITIATIVES:
EXIM Bank of India has been the prime mover in encouraging project exports from India. The Bank provides Indian project exporters with a comprehensive range of services to enhance the prospect of their securing export contracts, particularly those funded by Multilateral Funding Agencies like the World Bank, Asian Development Bank, African Development Bank and European Bank for Reconstruction and Development.
The Bank extends lines of credit to overseas financial institutions, foreign governments and their agencies, enabling them to finance imports of goods and services from India on deferred credit terms. EXIM Banks lines of Credit obviate credit risks for Indian exporters and are of particular relevance to SME exporters.
The Banks Overseas Investment Finance programme offers a variety of facilities for Indian investments and acquisitions overseas. The facilities include loan to Indian companies for equity participation in overseas ventures, direct equity participation by EXIM Bank in the overseas venture and nonfunded facilities such as letters of credit and guarantees to facilitate local borrowings by the overseas venture.
The Bank provides financial assistance by way of term loans in Indian rupees/foreign currencies for setting up new production facility,
expansion/modernization/up gradation of existing facilities and for acquisition of production equipment/technology. Such facilities particularly help export oriented small and Medium Enterprises for creation of export capabilities and enhancement of international competitiveness.
Under its Export Marketing Finance programme, EXIM Bank supports Small and Medium Enterprises in their export marketing efforts including financing the soft expenditure relating to implementation of strategic and systematic export market development plans.
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The Bank has launched the Rural Initiatives Programme with the objective of linking Indian rural industry to the global market. The programme is intended to benefit rural poor through creation of export capability in rural enterprises.
In order to assist the Small and Medium Enterprises, the Bank has put in place the Export Marketing Services (EMS) Programme. Through EMS, the Bank seeks to establish, on best efforts basis, SME sector products in overseas markets, starting from identification of prospective business partners to facilitating placement of final orders. The service is provided on success fee basis.
EXIM Bank supplements its financing programmes with a wide range of value-added information, advisory and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness, thereby helping them in their globalization efforts.
1.3LEADERSHIP:
Since inception, EXIM Bank has had, at the helm of its affairs, leading banking professionals as Chief Executive Officers. Shri R.C. Shah, a seasoned banker, with vast commercial and international banking experience, was the first Chairman and Managing Director of EXIM Bank during January 1982-January 1985. His vision helped the setting up of the institution as a unique organizational model, with a flat, non-hierarchical culture, multi-disciplinary approach to problem solving, access to the latest technology and a climate for innovation. He was succeeded by Shri Kalyan Banerji, who was the Chairman and Managing Director during February 1985-April 1993. Shri Banerji had long years of commercial banking experience, with exposure to international banking. Ms. Tarjani Vakil took over as the Chairperson and Managing Director of the Bank in August 1993 and guided the institution in its endeavours for export capability creation, till October 1996. Ms. Vakil had long years of development banking experience and was associated with EXIM Bank since its inception. She was succeeded by Shri Y.B. Desai, who was the Managing Director of the Bank during August 1997-April 2001. Shri Desai had vast commercial banking experience and joined EXIM Bank in the initial years of the institution. Shri T.C. Venkat Subramanian took over as Chairman and Managing Director of EXIM Bank from May 1, 2001.
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Shri Subramanian has both commercial banking and development banking experience and has been associated with EXIM Bank since its inception. Under the stewardship of Shri Subramanian, EXIM Bank has crossed significant milestones in business promotion as well as other initiatives as the premier export finance institution of the country.
1.4BOARD:
In its endeavors, EXIM Bank of India has, all along, been guided, at the Board level, by senior policy makers, expert bankers, leading players in industry and international trade as well as professionals in exports or imports or financing thereof. The Board currently includes top level functionaries from the Ministries of Finance, Commerce, External Affairs and Industry, Government of India, a Deputy Governor from the Reserve Bank of India, Chairmen of Industrial Development Bank of India. Export Credit Guarantee Corporation of India, State Bank of India, Punjab National Bank and Bank of Baroda and the Director General of Research and Information System for Developing Countries. Some of the illustrious Board Members in the past, include Dr. Montek Singh Ahluwalia (former Secretary, Ministry of Finance, Government of India and currently Deputy Chairman, Planning Commission of India), Shri Kamlesh Sharma (former Indian High Commissioner in the UK and currently the Commonwealth Secretary General), Dr. Abid Hussain (former Commerce Secretary, Government of India and Indian Ambassador to USA), Dr. Bimal Jalan (former Secretary, Ministry of Finance, Government of India and Governor, RBI and currently a Member of Parliament in the Rajya Sabha), Shri S. Venkitaramanan (former Secretary, Ministry of Finance, Government of India and Governor, RBI), Dr. Deepak Nayyar (former Chief Economic Advisor, Ministry of Finance, Government of India and currently Professor of Economics, Jawaharlal Nehru University, New Delhi), Shri Tejendra Khanna (former Commerce Secretary, Government of India and currently Lt. Governor of Delhi), Dr. S.S.Sidhu (former Industry Secretary, Government of India and currently Governor of Goa ), Shri. T.R. Prasad (former Industry Secretary and Cabinet Secretary, Government of India ) and Shri S.S. Tarapore (former Deputy Governor, RBI, who led the Tarapore Committee on Capital Account Convertibility).
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CHAPTER - 2 HISTORY MISSION OBJECTVES

2.1 HISTORY: This Act extends to the whole of India. With effect from the date i.e. September 1981, as the Central Government by notification, appointed, a corporation Known as the Export Import Bank of India was established for the purposes of this Act. The Export Import Bank of India, commonly known as the EXIM Bank, commenced operations in March 1982. It was set up so as to take over the operations relating to export finance which the IDBI (Industrial Development Bank of India) had been handling since the year 1970. Exim Bank acts as the apex financial institution
relating to financing for foreign trade. It provides financial assistance by way of direct loans and advances for the purpose of export or import, rediscounting of usance export bills for banks and finance for international trade activities. 2.2 MISSION:
Exim Banks mission is to facilitate globalization of Indian Business.
Exim Banks mission statement: To develop commercially viable relationships with externally oriented companies by supporting their internationalization efforts, through a diverse range of products and services. 2.3 OBJECTIVES: for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the countrys international trade
shall act on business principles with due regard to public interest : The Export-Import Bank of India Act, 1981
CHAPTER - 3 FUNCTIONS
Grant of loans and advances in India solely or jointly with commercial banks to persons exporting or intending to export India goods which may include the export of turnkey projects and civil consultancy services. Grant of lines credit to Governments, financial institutions and other suitable organizations in foreign countries to enable person outside India to import from India, goods including turnkey projects, civil construction contracts and other services including consultancy services. Handling transaction where a mix of government credit and commercial credit for exports is involved. Purchasing, discounting and negotiating export bills. Selling or discounting export bills in international markets. Discounting of export bills negotiated or purchased by a scheduled bank or financial institution notified by government, or granting loans and advances against such bills. Providing refinance facilities to specified financial institutions against credits extended by them for specified exports or imports. Granting loans and advances or issuing guarantees solely or jointly with a commercial bank for the import of goods and services from abroad. Issuing confirmation/endorsing letters of credit on behalf of exporters in India, negotiating, collecting bills under letters of credit, opening letters of credit on behalf of importers of goods is services and negotiating documents received there under.
Buying and selling foreign exchange and performing such other functions of an authorized dealer as may necessary for the functions of an export- import bank. Undertaking and financing research, surveys and techno-economic studies bearing on the promotion and development of international trade. Providing technical, administrative and financial assistance to any exporter in India or any other person who intends to export goods from India for the promotion, management or expansion of any industry with a view to developing international trade.
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CHAPTER - 4 ROLE OF EXIM BANK IN SME AND AGRICULTURE FINANCE

4.1 EXIM BANK AND SMES:
Indian SMEs require business advisory services to enhance their international competitiveness in a highly competitive globalizing world. The SMEs find the services of reputed national and international consultants as not cost effective and often, not adequately focused. Recognizing this knowledge gap, EXIM Bank of India has been endeavoring to provide a suite of services to its SME clients. These include providing business leads, handholding during the process of winning an export contract and thus assisting the generation of export business on success fee basis, countries/ sector information dissemination, capacity building in niche areas such as quality, safety, export marketing, etc. and financial advisory services such as loan syndication, etc. In the past, EXIM Bank has implemented a number of innovative programmes focusing primarily on SMEs. The Bank, in the past, has operated an Agency Line of Credit for IFC and an Export Marketing Programme for the World Bank, which are targeted towards SME sector. The Bank proactively assists SME units in establishing their products in international markets. EXIM Banks Lines of Credit help SMEs to offer competitive credit term to the buyers and to explore newer geographical markets. Recently, the Bank has signed a Memorandum of Cooperation with the International Trade Centre (ITC), Geneva, to implement the Enterprise Management Development Services (EMDS) programme, for supporting SMEs in their globalization efforts. This initiative is being launched by ITC for the first time in any country.
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4.2 SERVICES OFFERED BY EXIM TO SMES:

The SME sector can avail of a comprehensive range of products and services that EXIM Bank offers. Broadly, these can be classified into three categories:
ExportCredit:
EXIM Bank provides pre shipment and post shipment credit in Indian rupees and foreign currency. Finance is extended for short term i.e. up to 6 months as also for medium/long term i.e. beyond 6 months for eligible products and projects. Medium/long term export credit is extended by way of supplier's credits i.e. through the Indian exporter with recourse to the exporter or buyer's credits i.e. directly to the overseas buyer with no recourse to the Indian exporter. Certain RBI guidelines apply for such medium/long term export credit.
EXIM Bank has been recently permitted by RBI to cover inter-alia agricultural commodities and processed foods under the Lines of Credit. Export contracts under Lines of Credits are financed without recourse to the exporter i.e. off balance sheet finance whilst the importer gets credit. EXIM Bank extends loans for executing deemed export contracts. EXIM Bank also issues guarantees overseas on behalf of Indian exporters.
FinanceforExportOrientedCompanies :
EXIM Bank offers loans for financing Export Oriented Companies which may be categorized as under: i. Project Finance

Finance for new projects, expansion, and modernization projects. Finance for purchase of equipment both imported as well as indigenous. Working Capital both short term as well as medium term.
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ii.
OverseasInvestmentFinance
Overseas investment by Indian companies may be in the form of Joint Ventures (JVs) or Wholly Owned Subsidiaries (WOS). Term loans are extended by EXIM Bank against equity contribution/loan extended by Indian companies to their JVs/WOS. Term finance is provided directly to the JVs/WOS with corporate guarantee of the Indian promoter companies. EXIM Bank can also participate in the equity of the overseas JV/WOS of the Indian company selectively subject to certain conditions. iii. Special Programmes
Export Marketing Finance (Finance for developing strategic forward linkages): Term loans are extended to important strategic marketing plan covering inter-alia, overseas market research, participating in
international trade fairs, promotion of product, brand positioning, international quality certification, mirror product adaptation, preoperative expenses for overseas offices, prospective buyers visits to India, etc.
Export Product Development: Term Loan for product adaptation, pilot plants, product/process development, etc.
Backward Linkage/ Vendor Development Programme: The Export Vendor Development Programme aims to support development of backward linkages by exporters. Rupee term finance is available on competitive terms to exporters for implementing strategic vendor development plans i.e. backward linkage for production of goods for exports in order to increase exports. Export/Trading Houses or manufacturer-exporters with satisfactory track record and strategic plan for development of backward linkages for exports are eligible to seek finance under this programme. EXIM Bank may provide farm finance to exporters entering into backward linkages through contract farming with farmers on partnership basis for exports.
Finance for Research and Development: EXIM Bank also provides lending for Research & Development activities for facilitating exports.
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The globalization and post-WTO scenario offers considerable scope for exports of Indian agricultural products. EXIM Bank has a dedicated Agri Business Group to cater to the financing needs of export-oriented companies dealing in agricultural products. Financial assistance is provided by way of term loans, pre-shipment/post- shipment credit, overseas buyers' credit, bulk import finance, guarantees etc. Term loans with varying maturities are provided for setting up processing facilities, expansion, modernization, purchase of equipment, import of equipment/technology, financing overseas joint ventures and acquisitions etc. The Bank has strong linkages with other stakeholders in Agricultural sector such as Ministry of Food Processing Industries, GOI, NABARD, APEDA, Small Farmers' Agri-Business Consortium (SFAC), and National Horticultural Board etc. Apart from financing, the Bank also provides a range of advisory services to Agri exporters. Term loans with varying maturities are provided for setting up processing facilities, expansion, modernization, purchase of equipment, import of equipment/technology, financing overseas joint ventures and acquisitions etc. The Bank has strong linkages with other stakeholders in Agri sector such as Ministry of Food Processing Industries, Government of India, NABARD, APEDA, Small Farmers' Agri-Business Consortium (SFAC), and National Horticultural Board etc. Apart from financing, the Bank also provides a range of advisory services to Agri-exporters. The Bank also publishes a number of Occasional Papers, Working Papers on export potential of various sub-sectors in agriculture and a bi-monthly publication in different languages on global scenario in agri-business and opportunities therein.
4.3 Initiatives by EXIM Bank for both Small and Medium Enterprises & Agri finance:
EXIM Bank has signed a Memorandum of Cooperation with DHAN Foundation, Madurai (a leading NGO covering 3 lakh families in 4 states) for advisory and financial support for export related activities for their grass root enterprises
Set up units to produce value-added products from organic tamarind grown in the area Steps are on to set up an export oriented coco-peat projects To market products made out of palm leaves and handmade papers in Europe through our overseas offices.
1) To devise marketing strategy for marketing local handicrafts to foreign tourists through 5 star hotels. 2) EXIM Bank has signed Memorandum of Cooperation with BASIX, Hyderabad. BASIX promotes development for the rural poor and women, mainly through Micro-credit and Micro Finance. Highlights of MoC:-
a) joint consultancy studies, b) productivity enhancement, c) market linkages, capacity building, d) entrepreneurship development, e) commercialization of India's rural sector in overseas market f) technical assistance to micro and small-enterprises in the farm and nonfarm sectors in other developing countries, 3) EXIM Bank along with BASIX to organise skill up gradation workshop for handloom weavers in Mahabubnagar Mandal & for Tussar silk weavers in Kosgi, Andhra Pradesh 4) BASIX in association with Govt. of Rajasthan and UNDP is engaged in discussions for developing export clusters in Rajasthan including Stone Carving and Dari Cluster in Lawan, Dausa and Pottery Cluster in Basawa.
a) EXIM Bank is engaged in helping the clusters in product development

and establishing export market linkages, organizing workshops and training programs for skill up gradation of rural artisans.
b) EXIM Banks Dubai ( formerly Budapest ) office helped in exporting

sandstone slabs to Hungary
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5) EXIM Bank has signed a Memorandum of Cooperation with Uravu (an NGO involved in employment generation programs in the bamboo sector for tribal & poor families in Waynad, Kerala) to provide larger visibility to bamboo-based handicraft products. Highlights of MoC:-
a) Facilitate promotion of Uravu's or its associates' products in overseas

market.
b) Identification of suitable buyers / partners by EXIM Bank for facilitating

export business of Uravu and its associates.
c) Exchange of information on international markets for various products,

technology, trade, business and investing opportunities to facilitate increased co-operation for commercial exploitation in overseas markets.
d) Conducting joint studies and research in areas of mutual interest.
6) EXIM Bank has initiated discussion with handloom weavers cooperative societies in Fulia (West Bengal) for marketing their products overseas.
7) National Institute of Fashion Design, Handloom & Handicraft Export Promotion Council and Directorate of Handloom, Govt. of West Bengal participated in the discussions at EXIMs office in Kolkata. 8) One suggestion under discussion is to form a marketing company with equity participation by the weavers co-op, West Bengal Govt. and EXIM Bank which will take up marketing of the products 9) Feasibility report under preparation by Indian Institute of Social Welfare & Business Management, Kolkata. 10) EXIM Bank is also associated with rural knowledge centre of M.S. Swaminathan Research Foundation for providing technology inputs to rural areas.
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4.4 RECENT DEVELOPMENTS:

EXIMs focus on SMEs Special Line of Credit from ADB: The Bank is negotiating a long term Line of Credit of US$ 250 mn. From the Asian Development Bank, without Central Government guarantee, for extending loans to SMEs. The Bank will have an option to draw the funds in different currencies, as per the needs of its customers. Innovative Programme for SMEs The Bank has entered into a cooperation arrangement with International Trade Centre (ITC), Geneva, for implementing a unique Enterprise Management Development Services (EMDS) program, which is an IT based solution provider to enable small enterprises to prepare business plans with international market in focus. This is a pioneering initiative for supporting SMEs and for providing term loans and export finance facilities to the identified units to help them in their globalization efforts. The Bank has partnered ITC in implementing this project. The Bank thus supports small enterprises through capacity building and assistance in formulation of viable proposals. It is envisaged that the learning from this programme would be transferred to other developing countries, and thus assist in capacity creation and institution building in the global arena. The Bank has partnered the Commonwealth Secretariat in the Commonwealth India Small Business Competitiveness Development
Programme. The objective of the programme is to undertake capacity development initiative that promotes economic development (increased employment, investment, trade and economic activity) in Commonwealth member states by providing competitive strategies and policies on SME development to practitioners and policy makers, and to build and develop institutional capacity.
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CHAPTER - 5 EXPORT CREDITS

EXIM bank offers the following Export Credit facilities, which can be availed of by Indian companies, commercial banks and overseas entities. 5.1 FOR COMMERCIAL BANKS: EXIM bank offers Rediscounting facility to commercial banks, enabling them to rediscount export bills of their SSI customers, with usance not exceeding 90 days.
We also offer Refinance of Suppliers Credit, enabling commercial banks to offer credit to Indian exporters of eligible goods, who in turn extend them credit over 180 days to importers overseas.
5.2 OTHER FACILITIES FOR INDIAN COMPANIES:
Indian companies executing contracts within India, but which are financed by multilateral finance agencies, can avail of credit under our finance for deemed exports facility; aimed at helping them meet cash flow deficits. FOR OVERSEAS ENTITIES Buyers credit: Overseas buyers can avail of Buyers Credit from EXIM bank, for import of eligible goods from India on deferred payment terms. 5.3 LINE OF CREDIT Introduction EXIM Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries, to import goods and services from India on deferred
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credit terms. The Indian exporters can obtain payment of eligible value from EXIM Bank, without recourse to them, against negotiation of shipping documents.
LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. EXIM Bank extends LOCs, on its own, as well as, at the behest of Government of India.
5.4 How does it work? 1. EXIM Bank signs LOC Agreement with overseas Borrower Institution (Borrower) and announces the availability of LOC for utilization, when the Agreement becomes effective.
2. Exporter checks with EXIM Bank, available amount under the LOC and quantum of service fee payable to EXIM Bank, if any, and negotiates contract with Importer.
3. Importer approaches the Borrower for approval of the contract.
4. Borrower appraises the proposal. If satisfied, approves the contract and refers to EXIM Bank for concurrence for inclusion of contract for being financed under the LOC.
5. EXIM Bank accords approval to the contract, if in conformity with the terms of LOC. EXIM Bank conveys contract approval to the exporter and the Borrower.
6. The Importer arranges remittance of advance payment to the Exporter and also opening of a Letter of Credit, which states that the contract is covered under EXIM Bank's LOC to the Borrower and reimbursement will be by EXIM Bank for the Eligible Value of Credit, upon compliance with stipulated conditions therein.
7. Exporter executes the contract/ships the goods/provides services.
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8. EXIM Bank/commercial bank in India designated as the Negotiating Bank negotiates shipping documents and pays the exporter.
9. EXIM Bank reimburses the Negotiating Bank, on receipt of valid claim and service fee, as applicable, by debit to the LOC account of the Borrower.
10. Borrower repays EXIM Bank on due dates.
Procedural flow chart
Benefits to the Indian Exporter: Under EXIM Bank's LOCs, the Indian exporters can obtain payment of eligible value from EXIM Bank, without recourse to them, against negotiation of shipping documents. The Indian exporter does not carry any credit risk either on the importer or the importer's country, whilst the overseas importer enjoys deferred credit facility. Thus, LOC is a safe mode of non-recourse financing option to the Indian exporter and serves as a market entry tool for
India's exports. The Indian exporter can also increase his export volumes by offering deferred credit, where required. Benefits to Overseas Importer of goods and services: EXIM Bank has been using the LOC mechanism for promoting India's exports to the traditional as well as new markets in developing countries, which need deferred credit for buying Indian machinery, goods and services. As the LOC is extended by EXIM Bank on internationally competitive terms, the overseas importer of Indian goods is allowed access to the credit facility at competitive interest rates. The overseas importer and the Indian exporter do not have to negotiate credit terms separately as the credit arrangement between EXIM Bank and the overseas borrower financial institution is already in place. Credit period allowed under the LOC Eligible Goods: Capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the 'EXIM Policy' of the Government of India.
Interest rate the overseas importer of Indian goods has to pay: The overseas importer of Indian goods has to approach the overseas borrower financial institution/recipient of EXIM Bank's LOC, for approval of his proposal for import of Indian goods on deferred credit terms. The interest rate that the importer will need to pay to the recipient of EXIM Bank's LOC, will depend on various factors such as the cost of fund, the currency of credit, tenor of credit, security offered by the importer, the risk perception of the importer and the interest rate structure prevalent in the country. It may however be mentioned that EXIM Bank's interest rates on LOCs being competitive, the importer would normally have to pay interest rate lower than what he would otherwise pay to his Bank on similar credits. Charges payable by the Indian exporter to EXIM Bank: In respect of certain LOCs, the Indian exporter has to pay a service fee to EXIM Bank. The exporter should check in advance with EXIM Bank the
quantum/percentage of service fee payable. In respect of LOCs extended by EXIM
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Bank, at the behest of Government of India, no service fee is normally payable by the exporter to EXIM Bank.
Minimum value of contract for being eligible for coverage under the LOC: Most of the LOCs stipulate a minimum contract value as US$ 50000. However, under certain LOCs, the minimum value of contract could be different. Exporters would be well advised to check the particulars of the individual LOC with EXIM Bank. Generally, export of capital goods and plant and machinery is allowed on credit terms of up to 5 years, whereas the export of industrial manufactures, consumer durables, raw materials and commodities is allowed on credit terms of upto 2 years. However, the credit period allowed under each LOC could be different. There are certain shortterm LOCs which provide for credit period of 1 year, and there are certain LOCs which permit credit period beyond 5 years. Exporters are advised to check the details with EXIM Bank, in advance. In respect of LOCs extended by EXIM Bank, at the behest of Government of India, credit period ranges from 8 years to 20 years depending on the categories of countries, based on their levels of incomes and external debt.
The stage at which the Indian exporter should contact EXIM Bank The Indian exporter should contact EXIM Bank before finalizing the price negotiation with his prospective importer, if the transaction is intended to be covered under EXIM Bank's LOC. The exporter should ascertain details such as the service fee payable to EXIM Bank, the credit period permissible under the LOC, the payment procedure involved and the contact person/department in the overseas borrower
institution/recipient of LOC. In respect of certain LOCs especially those extended by EXIM Bank, at the behest of Government of India; sectors/projects could be preidentified.
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ECGC cover As the LOC is a non-recourse financing option to the Indian exporter, he does not have to obtain any ECGC cover.
5.5) Recent Developments and News Highlights:
EXIM bank signs agreement with African counterpart New Delhi, March 20, 2008: EXIM Bank of India has signed an agreement with the African Export-Import Bank or EXIM bank for a Line of Credit to the tune of $30 million to be provided for financing Indias exports to Africa. The agreement was signed at the 4th CII-EXIM Bank conclave on India-Africa Project Partnership 2008 in New Delhi on. The agreement was signed by Mr. T C Venkat Subramanian, Chairman and Managing Director of EXIM Bank and JeanLouis Ekra, President of EXIM bank. This agreement will facilitate and boost Indias exports to member states of EXIM bank. The Line of Credit affords a risk free, nonrecourse export financing option to Indian exporters. EXIM Bank is a non-regional shareholder of EXIM bank which represents 38 member-states across Africa.
EXIM Bank of India and Lao Pdr Ink Credit Agreement: Export-Import Bank of India (EXIM Bank) and the Government of Lao People's Democratic Republic have signed a Line of Credit (LOC) Agreement for US$ 33 mn during the State Visit of the President of Lao PDR to India. The LOC Agreement was signed in New Delhi, on Wednesday, August 27, 2008, by Mr. S.R. Rao, Executive Director, on behalf of EXIM Bank of India, and H.E. Mr. Somdy Douangdy, Minister of Finance, on behalf of Lao PDR, in the presence of Hon'ble Prime Minister of India, Dr. Manmohan Singh, and the President of Lao PDR, H.E. Mr. Choummaly Sayasone. This Facility, extended at the behest of Government of India, is the first ever Line of Credit by EXIM Bank to Lao PDR. The LOC will be utilized to finance the Paksong S/S-Jiangxai 115 kV double circuit Transmission Line project, Nam Song 7.5 MW Hydropower project and equipment for Rural Electrification Phase 2 project in Lao PDR. Under the LOC, EXIM Bank will reimburse 100% of contract value the
Indian exporter, upfront upon the shipment of goods. Besides promoting India's exports, EXIM Bank's LOCs enable demonstration of Indian expertise and project execution capabilities in emerging markets. With the signing of this LOC Agreement, EXIM Bank has now in place 101 Lines of Credit, covering over 90 countries in Africa, Asia, Latin America, Europe and the CIS, with credit commitments amounting to US$ 3.32 bn, available for utilization for financing exports from India. EXIM Bank's LOCs afford a risk-free, non-recourse export financing option to Indian exporters.
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CHAPTER - 6 BANKS FINANCING ACTIVITIES

6.1 FINANCE FOR EXPORT ORIENTED UNITS (EOUs) For the purpose of our financing, an export oriented company is defined as any company with a minimum export orientation of 10% of net sales, or annual export sales of Rs 5 crores, whichever is lower.
PROJECT FINANCE For setting up of EOUs: EXIM bank offers term loans for setting up of new projects, and acquisition of assets for modernization/up gradation/expansion of existing units. The bank also extends 100% refinance to commercial banks, for term loan sanctioned by the lending bank to an EOU.
For textile and jute industries: The bank also extends finance to eligible units in textile and jute industries under The Technology Up gradation Fund Scheme, to enable them to upgrade their manufacturing facilities.
For software industry: The bank offers a comprehensive financing /services package for the software industry. These include project/equipment finance, working capital finance, and overseas investment finance, besides support for obtaining product/process certification, export marketing and export product development. To address the perceived constraint in the availability of trained software professionals, EXIM Bank extends term loans to software exporters for establishment/expansion of software training institutes. Further, the bank also facilitates setting up of software technology parks (STPs).
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For Indian companies involved in port development and related activities: EXIM Bank extends term loans to Indian companies involved in construction of ports/jetties, and for acquisition of fixed assets for stevedoring, cargo handling, storage and related activities like dry docks and ship breaking.
6.2 WORKING CAPITAL FINANCE.
EXIM Bank provides term loans (of 1year, 1-2years, and up to 5 years tenor) to eligible EOUs, to help them meet their working capital requirements.
OTHER FACILITIES Finance for R & D and Export Product Development: EXIM bank offers term loans to EOUs, for development of new technology to satisfy domestic and international environment and standards, and to help them develop and/or commercialize new product/process applications.
Finance for service sector: Services sectors financed by EXIM Bank include entertainment, health care, hospitality and shipping. EXIM Bank has entered into the business of film financing on a very selective basis to cover, inter alia, film production and finance for distribution in overseas markets. The banks approach towards film financing is to focus on films produced specifically for international audiences and/or film projects, which have foreign exchange earning potential. The banks film finance is targeted to select production and distribution houses with proven track record.
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Natural resources: EXIM bank selectively provides term loans to Indian companies in their endeavor to acquire overseas natural resources in terms of acquiring mining/exploration rights in overseas locations. EXIM finance will be available to Indian companies for acquisitions of such rights either on its own or in joint venture with an overseas partner, subject to a reasonable proportion of the resources being destined for India.
Underwriting: EXIM bank extends underwriting commitment to Indian exporters, to help them raise finance from capital markets through public/rights issues of equity shares /debentures.
Export Marketing Finance: EXIM bank offers term loans to Indian companies, to aid them in their efforts to penetrate and retain their presence in overseas markets, particularly in developed countries.
Import loans: EXIM bank finances bulk imports of consumable inputs and canalized items undertaken by manufacturing companies.
Guarantee facility: EXIM bank issues different kinds of guarantees for EOUs.These include: a) export obligation guarantees; b) deferred payment guarantees; c) guarantees in favor of commercial banks/lending institutions abroad on behalf of Indian exporters.
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CHAPTER -7 FINANCE FOR VENTURE OVERSEAS

The bank has a comprehensive programme in terms of equity finance, loans, guarantees and advisory services to support Indian outward investment. EXIM bank offers term loans to Indian companies, both for equity investment in their ventures overseas as well as for on lending purposes. Besides, EXIM Bank also undertakes Direct Equity Stake in Indian Ventures Abroad, to enable Indian companies to supplement their equity with EXIM Banks equity contribution.
OTHER SERVICES
EXPORT SERVICES
EXIM bank offers a diverse range of information, advisory, and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness.
For Multilateral Agencies Funded Projects Overseas (MFPO): EXIM bank offers value added information and support services to Indian companies seeking business in business funded by multilateral agencies such as World Bank, Asian Development Bank, African Development Bank, European Bank for Reconstruction and Development, and other official Development Agencies like the Japan Bank for International Cooperation. Services offered include: Identification of business opportunities in funded projects. Details on specific project of interest. Information on procurement guidelines, policies and practices of multilateral agencies.
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Advice on preparation of Expression of Interest, Capability, Profile etc. Advice on bids, with regard to bid evaluation, review of bid documents, etc.
Apart from these we also offer support services, such as liaising with Indian missions, monitoring bid performance, assistance in prequalification etc.
Commercial services: EXIM bank undertakes customized research on behalf of interested companies, in areas such as establishing market potentials, defining marketing arrangements, and specifying distribution channels. We also assist companies in developing export market entry plans, obtaining quality certifications and display of their products in our overseas offices. Country profiles: EXIM bank also undertakes country profiles, which assess the economic, political, currency and credit risks involved, along with the export opportunities in the country concerned. Financial counseling: EXIM bank offer advice on how to access foreign currency finance from multilateral institutions and import lines of credit, trade finance alternatives, collection/payment systems, as well on the credit worthiness of business entities and banks. Internationalization support: EXIM bank helps in identifying technology suppliers, partners, and in consummation of domestic and overseas joint ventures, through its network of alliances and its overseas offices. It also advice companies on regulatory clearances, and facilitate tying-up finance for equity and working capital.
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Information access: EXIM bank issues business opportunities alerts, which communicate business leads, acquisition opportunities, industry trends as well as collaboration opportunities.
Building export capability: Our EXIMius Learning Centers in Bangalore, Ahmadabad and Pune organize training programmes, workshop and seminars for exporters. These programmes, often on sector-specific issues, are conducted buy international experts from trade promotion organizations and multinational companies. The bank also carries out research on issues related to international trade, economics and sector/product/country studies, which it publishes in the form of Occasional Papers and Working Papers.
The bank disseminates information on export opportunities and highlights development that has a bearing on Indian exports, through its quarterly bulletin, EXIMius: Export Advantage.
Besides, this publication also carries a regular feature, country scan, which gives update on the trade/investment climate in various countries. The bank also brings out a bi-monthly publication titled Agri Export Advantage in English, Hindi and 10 regional languages. The bank supports three quarterly publications viz Indo African business, Indo-LAC business and Indo-CIS Business. EXIM Banks commitment to promoting and supporting trade with the African, LAC CIS regions.
International merchant banking services: EXIM bank provides advisory services to Indian exporters to enable them to offer competitive financial packages when they bid for exports.
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CHAPTER - 8 EXIM BANK AS AN INTERNATIONAL CONSULTANT
EXIM bank shares its expertise in the creation and operation of a financial institution in a developing country, with countries endeavoring to set up institutional infrastructure for international trade. Our activities in this regard include: Feasibility study for establishment of an export credit and guarantee facility for Gulf Co-operation Council (GCC) countries. Setting up the EXIM Bank, EXIM Bank in Malaysia, and the export credit guarantee company in Zimbabwe. Designing and operational sing of export financing programmes in turkey and South Africa. Inputs regarding export marketing/export development for Armenia, Vietnam and Ukraine. Feasibility study, undertaken on the behalf of the government of Mauritius, for projecting Mauritius as an investment hub for Indian firms.
JOINT VENTURES
Global procurement consultants limited (GPCL) is a successful consultancy company, promoted by EXIM bank in 1996,in partnership with leading private and public sector consultancy firms in India. GPCL provides procurement related services particularly related to multilateral agencies such as World Bank, Asian development bank and African development bank. Global trade finance limited (GTF), a joint venture which had its shareholders, EXIM bank; FIM bank, Malta; and international finance corporation, Washington and bank of Maharashtra commenced its business in September 2001.GTF offers factoring for export and domestic receivables with credit protection. The focus of GTFS activities is on market driven export-financing solutions for small and medium sized Indian firms.
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CHAPTER - 9 PROMOTIONAL PROGRAMMES
9.1 Promotional activities:

Exim Bank conducts Research Studies on products, sectors, countries, macro economic issues relevant to international trade and investment. These include your, a) Sector studies assessing export potential: The sectors covered are Computer Software, Floriculture, Medicinal Plants, Steel, Jute, Sports Goods, Machine Tools, Organic Products, Chemical and Pharma. b) Bilateral trade and investment studies: Kazakhstan, Kyrgyz Republic,
Uzbekistan- Trade Potential. Israel, Sri Lanka, Australia & New Zealand Trade & Investment Potential c) International trade related studies: Transaction Costs of Indian Exports - an Analysis, Business Practices of Successful Indian Exporters The Bank disseminates on export opportunities and highlights
developments that have a bearing on Indian exports, through its quarterly bulletin, EXIMius: export advantage. Its EXIMius: Export advantage
publication also carries a regular feature, Country Scan, which gives updates on the trade/investment climate in various countries. The Bank supports three quarterly publications viz. The Bank also brings out a bi -monthly publication titled Agri-Export Advantage in English, Hindi and 10 regional languages. The bank supports three quarterly publications viz. Indo-Africa Business, Indo Latin America Business, and Indo- CIS business. Support with these magazines demonstrates EXIM Banks commitment to promoting and supporting the t rade with Africa, Latin America and CIS regions.
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Award for Business Excellence:EXIM Bank, in association with the Confederation of Indian Industry (CII), presents as Annual Award for Business excellence for the best TQM practices adopted by an Indian company. The high performance standards set down in order to qualify for the Award serve to foster strong commitments to the TQM in the companys journey towards Business Excellence.
9.2 Exim Bank International Economic Development Research Annual (IEDRA) Award, 2008:In commemoration of Jawaharlal Nehru Birth Centenary (1889 -1989) THE AWARD Export-Import Bank of India has instituted an Annual Award for research in International Economics, Trade & Development and Related Financing. The objective is to promote research in International Economics, Trade & Development and Related Financing by Indian nationals at universities and academic institutions in India and abroad. The Award will consist of a sum of Indian Rupees One Hundred Thousand and a Citation. The Award was initiated in commemoration of Jawaharlal Nehru Birth Centenary (1889 -1989). THE ENTRY Research work by Indian nationals in International Economics, Trade & Development and Related Financing (either awarded a Doctorate or accepted for award of Doctorate) from a university or equivalent academic institution in India or abroad is a prerequisite for eligibility of Award. The Award will be made to a person eligible to receive an award in Indian Rupees. EXIM Bank will accept, as entry, thesis by which doctorate has been obtained/ accepted for award of Doctorate between January 1, 2004 and September 30, 2008. Thesis can be submitted either in English or Hindi and in the latter case must be accompanied by a version in English.
Support to Indian Consultants for undertaking services abroad:Under an agreement with the International Finance Corporation (IFC), Washington, EXIM Bank is a participant in the trust funds set up by the IFC in different parts of the world. As a result of this arrangement, Indi an consultants can avail of its support for undertaking specific assignment in select countries. Including Africa, Eastern Europe, CIS countries, China, South Asia, and the Mekong Delta region.
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CHAPTER -10 RUPEE RESOURCES OF EXIM BANK

Term Deposits: Issued for tenors 1 to 5 years. Minimum size of each deposit is Rs. 10,000/-. Applicable rates On the deposits for different tenors is published from time to time. An incentive in the form of a higher rate is available to senior citizens. The deposits are non-transferable. Term Money: Bank can borrow term money for 3-6 months from scheduled commercial banks and cooperative Banks at mutually agreed rates. Certificates of Deposit (CD) Issued for tenors 1-3 years at mutually agreed rates in multiples of Rs 1 lakh with Minimum amount of a CD from a single subscriber at Rs. 1 lakh. Eligible investors include individuals (other than minors), corporations, companies, trusts, funds, associations etc. and nonresident Indians (NRIs) Commercial Papers (CPs) Issued at a discount to the face-value at mutually agreed rates, for maturities of 15 days - one year in denomination of Rs. 5 lakh (face-value) or multiples thereof. Eligible investors Include individuals, banking companies, other corporate bodies registered or incorporated in India And unincorporated bodies, Non- Resident Indians (NRIs) and Foreign Institutional Investors (FIIs) (investment
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By FIIs would be within the limit set for their investments by the Securities and Exchange Board of India (SEBI)). Bonds Issued for a minimum maturity of 3 years. In respect of bonds having call / put or both options, the Same would not be exercisable before the expiry of one year from the date of issue of bonds. The coupon on The bond may be fixed or floating (linked to a mutually acceptable 'reference rate'). All the above instruments currently enjoy the highest safety rating from CRISIL, ICRA and Fitch. Distributors with proven track record can empanel with the Bank for arrangement of term deposits.
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CHAPTER - 11 LETTER OF CREDIT INSURANCE TO OTHER BANKS
11.1 Summary
The EXIM Bank Letter of Credit policy can reduce a banks risks on confirmations and negotiations of irrevocable letters of credit issued by overseas financial institutions for the financing of U.S. exports. This policy affords commercial and political coverage against the failure of an overseas financial institution (issuing bank), whether sovereign or private, to make payment or reimbursement to the insured bank on an irrevocable letter of credit. Coverage is also provided for the insured bank's refinancing of payments under a sight irrevocable letter of credit of the issuing bank.
11.2 What is covered?

The policy applies to irrevocable letters of credit which conform with the Uniform Customs and Practice for Documentary Credits (UCP), 1993 revision, publication number 500 of the International Chamber of Commerce where the insured has a relationship with the foreign issuing bank. The policy is not applicable to revocable, back-to-back, red clause or conditional letters of credit. Coverage applies to irrevocable letter of credit sales for goods produced in and shipped from the United States during the policy period, and for services Performed by U.S. personnel either in the U.S. or in a host country. Receivables for products, which are less than 50% U.S. content, excluding mark-up, and certain defense products, are not eligible for cover.
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Terms up to 180 days from the date of first presentation of documents may be extended for consumer goods, spare parts and raw materials. On a case-by-case basis, agricultural commodities, fertilizer and capital equipment may be insured on terms up to 360 days. Principal amounts are covered up to the maximum insured percentages stated below or as specified in the policy declarations. Documented interest is covered up to 180 days after the date of the issuing bank's default (or fewer days when the claim is settled earlier). On letters of credit that are payable in U.S. dollars, the insured interest rate is generally prime rate minus 0.5% or the rate stated in the credit agreement, whichever is less. EXIM Bank uses the prime rate published in the Wall Street Journal, under the table "Money Rates." The policy specifically excludes coverage for those transactions in which there is an unresolved documentary dispute between the insured and the issuing bank. Additionally, coverage is specifically excluded in situations in which the issuing bank refuses documents at the time of presentation and seeks a refund from the insured bank to which a reimbursement has already been made.
11.3 ELIGIBLE INSURED BANKS

The policy may be issued to any bank doing business in the United States in accordance with applicable federal or state banking laws and regulations. An application, form EIB92-34, is required. The insured bank must act under the terms of the UCP as the paying, accepting, or negotiating bank for the insured transaction.
11.4 PERCENTAGES OF COVER

The Bank Letter of Credit policy provides coverage against losses caused by events such as war, revolution, expropriation or confiscation by a governmental authority, cancellation of import or export licenses, and foreign exchange inconvertibility, and commercial losses caused by events such as insolvency of the foreign issuing bank, and failure to reimburse or to pay for other reasons.
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Equalized coverage for commercial and political risks (comprehensive cover), or political only coverage is available at the following maximum percentages
11.5 HOW THE POLICY WORKS

The policy affords coverage for eligible issuing banks in 2 ways: 1) As determined by EXIM Bank based on the insured's submission of an issuing bank credit limit (IBCL) application, form EIB92-36, for the overseas financial institution and issuance by Ex-I Bank of a written credit approval in form of a policy endorsement. The application requires disclosure of all relevant financial information on the issuing bank.
High credits may be extended up to the amount specified in the IBCL, which generally remains valid for a maximum period of 12 months. Once issued, the IBCL becomes a revolving credit approval limited only to the approved issuing bank with specified terms and tenor. EXIM Bank has published its Short-Term Credit Standards (EIB99-09) - Buyers, for Letter of Credit Transactions that may be consulted to determine the likelihood of approval of the confirming bank and the issuing bank. 2) By use of a Discretionary Credit Limit (DCL) given to the insured bank. The DCL requires the insured bank to have specified documentation of the issuing banks creditworthiness, such as a short-term debt rating or minimum net worth and profitability. Alternately, the insured bank may evidence satisfactory experience with the issuing bank. Under the DCL, political risks coverage is provided against those of the country of the issuing banks head office. If the insured bank wants coverage against the political risks of the country of the issuing bank, when different from the country of the issuing banks head office, it must specifically apply for that cover (see IBCL above). The insured bank is required to obtain an Exporter Certificate, form EIB94-07, certifying, among other things, that a letter of credit has been established in support of the described transaction and that the goods are manufactured or produced in and
shipped from the United States. If the beneficiary of the letter of credit is an entity other than the exporter, a Beneficiary Certificate, forms EIB92-37, is required.
11.6 PRE-PRESENTATION AGREEMENT

Prior to the presentation of documents on the insured bank under a letter of credit and at the time an insured bank commits to finance or pay, the insured may obtain a prepresentation agreement under which Ex-Im Bank agrees not to withdraw coverage, add, delete, or amend any policy condition, credit limit or other limitation, including the country limitation schedule for a period of up to 90 days. The policy also sets forth a method by which this optional agreement may be used and extended for additional time under the Discretionary Credit Limit.
11.7 WHAT THE INSURED AGREES TO DO

The insured agrees:
To submit reports to EXIM Bank, form EIB92-30, listing appropriate bank commitments and insured transactions, with payment of the corresponding premiums (which will vary from month to month with the level of activity);
To report all amounts past due (insured and uninsured), form EIB92-27, from the foreign issuing bank;
Not to enter into an insured transaction with an issuing bank that is 30 days or more past due; To obtain EXIM banks prior written approval for rescheduling or accelerating any insured transaction;
To make written demands for payment on the foreign issuing bank within 30 days after default; To exercise reasonable care to minimize or prevent loss;
To maintain evidence of the documents or experience used to exercise a Discretionary Credit Limit
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11.8 CLAIMS AND PAYMENTS
Claims may be filed no earlier than 60 days and no later than 120 days after the date of default. Prior to claim submission, the insured is required, within 30 days of default, to make written demand for payment on the issuing bank.
The insured is required to file a release and assignment form with EXIM Bank, transferring any rights to the defaulted receivables and any security when the claim is paid, so that recovery may be attempted.
EXIM Bank will pay claims within 60 days of receiving a satisfactorily completed and documented proof of loss, form EIB92-39.
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CHAPTER - 12 CONCLUSION
Many economists argued that EXIM Bank sector represented the new beginning of the international capitalism. They traced the evolution of the EXIM Bank sector to the development of transnational corporations. In this context the evolution of the international banking came as a response to the modern phenomenon of capital which obviously goes beyond national borders. At the same time the rapid growth and boom of the technology sector gave a great incentive and facilitated the creation of the international EXIM Bank area. This permitted global access of world market information and subsequently its management and control. Under the traditional national and international sectors there were several constraints which gave the possibility for offshore activity to grow. These are: the extension of national tax bases; intermittent fiscal and monetary instabilities; the existence of foreign exchange controls and fluctuations; limiting cross-border controls; conservative banking laws and regulations with regard to foreign and domestic industrial entry, systems of supervision and liquidity requirements, constraints on the issue of foreign and domestic bonds, the admission of securities to capital markets, stock exchange, insurance regulations ; company laws which restricted business. Also it has to be mentioned from the international perspective there was a lack of coherent set of international fiscal principles and laws in which transnational company could operate across border. The evolution of the EXIM Bank center is described from the perspective of its tax and banking functions. More recently, however, other constraints onshore have served as an incentive element which pushed for offshore investment and have emphasized the importance of that investment. These include: the need to provide for what is seen as the vulnerability of professionals and investors to creditors; the desire to avoid onshore laws and regulations which mandate the reservation of assets to spouses and heirs; the need for savings and investment vehicle for ordinary persons. EXIM Bank center came with innovative solutions to all these constraints that were mentioned above. Let us refer for example to taxation. There are 3 models of EXIM Bank centers from the perspective of taxation: with zero-tax (here even residents do not pay taxes); with low-tax; tax at normal rates but exemption or other
preferential treatment is granted to non-resident investors or investment for certain categories of income. Notwithstanding the fact that the above categories refers only to tax aspects of EXIM Bank activity, it clearly shows the scope of such centers.
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CHAPTER - 13 BIBLIOGRAPHY
Websites:
www.eximbankofindia.com www.rbiorg.in www.commerce.nic.in www.eximbankagro.com www.eximcomm.com
Books:
International Banking ICFAI - Macmillian International Banking K Viswanathan Deepak Abhyankar Banking Theory and Practice Sundaram and Varshney
Practice and law of Banking - B. S. Khubehandani Export Import Financing Gerhard W. Scheider
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