1

ABOUT THE STUDY

This study covers the major aspects of the EXIM bank including the products and services offered by the
bank, its role in developing the Indian economy by way of helping foreign trade growth since its inception in
1982, the crucial role it plays in the Asian EXIM banks forum and also throws some highlight onto the recent
initiatives taken by the bank and the recent results that it has achieved. Moreover, certain examples have also
been provided in the end so as to give evidence to the essential role that the bank plays.

Objective of the study

EXIM bank, as mentioned previously, is the apex institution providing foreign trade finance.
This study will throw light on the working of this apex institution and its contribution to the Indian
economy so far.
The objective of this study is to understand the vastness involved in foreign trade and financing
foreign trade; and how the EXIM bank has played a role in facilitating foreign trade.
The study also provides information about the evolution of the EXIM bank and it talks about the
Asian EXIM banks forum too, so as to provide insight into the role EXIM bank plays on a global
scale.
This study gives a birds-eye-view of the EXIM bank, covering the essential aspects of the bank.

Hence, as the topic suggests, the objective of this study is to understand and give importance to the role
played by the EXIM bank of India in the growth of foreign trade and the developmental role played in
facilitating enhanced regional trade.

Research methodology

Type of research of this study is a descriptive one.

The source of data collection is secondary; the internet and annual reports published by the bank.



2

1. INTRODUCTION

1.1 What is EXIM bank?

A financial institution acts as an agent that provides financial services for its clients or members. Financial
institutions generally fall under financial regulation from a government authority. Common types of financial
institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and
similar businesses.

Institutional credit support plays a catalytic role in accelerating the pace of economic development of a
country. In the context of developing economy of India, bank finance plays a crucial role in pushing the
economy on to the progressive pathway and helping develop India.

There are 3 apex institutions in the country, which deal with major economic activities, viz. industry,
agriculture and foreign trade. The Industrial Development Bank of India extends term industrial loans; the
National Bank for Agricultural loans; and the Export Import Bank extends term loans for foreign trade. All
these institutions are wholesale banks. They work closely with commercial banks and other state level
financial institutions that operate the retail banking system in the country. The Export Import bank of India
(EXIM Bank) functions as the apex financial institution which provides economic assistance to importers and
exporters and has constantly strived to contribute towards Indias globalization efforts. The main objective of
EXIM Bank is to promote foreign trade and particularly increase exports from India.


1.2 Indias foreign trade

India's exports are growing with a positive outlook. A key part of India's sizzling economic miracle is its
trade with the rest of the world, including the United States. The export potential of certain commodities in
India has not been fully tapped. There is a growing need and importance of exports for our country. That is
where export finance comes into picture and so do financial institutions providing export finance. Also,
recent years have witnessed the emergence of developing countries as Indias import sources. The following
statistics and charts give an insight into Indias growth of exports and imports.








3


Foreign trade growth for the past years is shown as below: (in Rupees Crore)



4


Trends in Indias Merchandise Trade(shown graphically) (in Rs. billion)


Indias exports, region wise (in US $ billion)



Buoyancy in Indias foreign trade can be attributed to the enhanced trade with other developing countries,
and with Asian region in particular. Indias total exports to developing countries are now higher than exports
to industrial countries. Consequently, developing countries now account for a larger share in Indias total
exports, as compared to that for industrial countries.
5



Indias Imports, region wise (in US $ billion)





Recent years have also witnessed the emergence of developing countries as Indias import sources. Indias
imports from other developing countries are now larger than imports from industrial countries. Sustained
rise in imports from the Asian region has underlined this trend. In fact, Indias imports from the Asian
region rose from US$ 2.7 billion in 1990 to US$ 48 billion in 2006 an 18-fold rise.

Active engagement in global trade has become one of the key factors in the growth of firms and the
prosperity of countries. This is true not only in the case of major trading nations, but also with respect to
developing countries like India. Liberalization of the foreign trade sector has been a cornerstone of the
reforms of the Indian economy, with the result that the countrys share in global trade has been rising in
recent years, as also the contribution of the foreign trade sector to the overall Indian economy.

6

2. HISTORY AND PROFILE OF EXIM BANK


Export Import Bank of India, also known as EXIM Bank of India, was established by an Act passed by the
Indian Parliament in September 1981. Export Import Bank of India is fully owned by the Indian
government and it started its operations in March 1982.

Capital
The authorised capital of the EXIM Bank is Rs. 200 crore and paid up capital is Rs. 100 crore, wholly
subscribed by the Central Government. The bank can raise additional resources through:
(i) Loans/grants from Central Government and Reserve Bank of India ;
(ii) Lines of credit from institutions abroad ;
(iii) Funds raised from Euro Currency markets ;
(iv) Bonds issued in India.

It is; An Act to establish a corporation to be known as the Export-Import Bank of India forproviding
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 country's international trade and for matters connected therewith or incidental
thereto.

2.1 Vision, Mission and Objectives of the bank

The bank has evolved its vision in the following way:



From financing,
facilitating and
commercially
promoting Indias
foreign trade target.
To creating export
capability by
arranging
competitive
financing at various
stages of the export
cycle.
To developing
viable relationships
with set of
externally oriented
companies by
offering them a
comprehensive
range of products
and services, aimed
at enhancing their
internationalization
efforts.
7

EXIM Banks mission is to facilitate globalisation of Indian Business. Their mission statement: To develop
commercially viable relationships with externally oriented companies by supporting their internationalisation
efforts, through a diverse range of products and services.

Functions of exim bank
The main functions of the EXIM Bank are as follows:
(i) Financing of exports and imports of goods and services, not only of India but also of the third world
countries;
(ii) Financing of exports and imports of machinery and equipment on lease basis;
(iii) Financing of joint ventures in foreign countries;
(iv) Providing loans to Indian parties to enable them to contribute to the share capital of joint ventures in
foreign countries;
(v) to undertake limited merchant banking functions such as underwriting of stocks, shares, bonds or
debentures of Indian companies engaged in export or import; and
(vi) To provide technical, administrative and financial assistance to parties in connection with export and
import.


The objectives of EXIM bank are:

To translate national foreign trade policies into concrete action points

To provide alternate financing solutions to the Indian exporter, aiding him in his efforts to be
internationally competitive

To develop mutually beneficial relationships with the international financial community

To initiate and participate in debates on issues central to India's international trade

To forge close working relationships with other export development and financing agencies,
multilateral funding agencies and national trade and investment promotion agencies

To anticipate and absorb new developments in banking, export financing and information
technology

To be responsive to export problems of Indian exporters and pursue policy resolutions.


8

2.2 Ownership and Management Structure


The EXIM Bank, as mentioned earlier, is fully owned by the Government of India and is managed by a
Board of Directors with representation from the Government, financial institutions, banks and business
community.

The Bank is professionally run with a staff which is drawn from six major streams: commercial and
development banking, engineering, economics, accountancy, computer technology and business school
graduates.

Currently, the EXIM bank has a high-powered Board of Directors comprising of the following professionals:

A Deputy Governor of Reserve Bank of India,

Chairmen of IDBI (Industrial development bank of India),

Personnel from ECGC (Export credit Guarantee Corporation),

Representatives of the Ministries of Finance, Commerce, Industry, External Affairs and
Planning,
Chairmen of scheduled banks and professionals from trade and industry.

What they all have in common, however, is an underlying passion for professional excellence. The creative
synergy produced by a brain trust composed of individuals with vastly different styles of thinking has helped
the Bank to constantly innovate, and come up with original solutions - solutions beyond banking.

Hence, the board of directors consists specifically of the following 16 personnel:


Chairman and Managing Director
5 Directors from Government of India
3 Directors from Scheduled Banks
4 Directors who are other Professionals/Experts
1 Director nominated by RBI
1 Director nominated by IDBI
1 Director nominated by ECGC





9

Over the last decade the staff at EXIM bank has increased from 147 personnel to 222.

EXIM Bank offers a congenial and challenging work environment. The work environment at the Bank
emphasizes on office automation, open office system, an independent 'doer's' work culture, minimization of
hierarchical constraints in organizational functioning, and multi-disciplinary inputs in decision making.

Also, skill upgradation is a continuing process in the Bank. The professionals undergo training in areas of
relevance to the Bank in India and abroad and the corresponding training programmes are chosen and
designed to develop technical and managerial skills in the professionals and an ability to initiate and
innovate.

2.3 Global Footprint of EX IM Bank of India

EXIM Bank of India has consciously sought to create a network of alliances with multilateral agencies,
export credit agencies, development banks, and trade and invesment promotion bodies to create an enabling
environment for economic cooperation. The Banks Head Office is in Mumbai. It has nine regional offices in
India including Ahmadabad, Bangalore, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai, New Delhi an d
Pune.

DOMESTIC OFFICES

It also has five offices overseas in Dubai, Johannesburg, London, Singapore and Washington D.C. The
representative office in Washington, D.C. exists since 19 85.
Over the years, EXIM Bank has developed 35 lending programmes covering all stages of the export cycle
namely Import of Technology, Export Product Development, Export Production, Export Marketing , Pre-
shipment, Post-shipment, Investment A broad.

10

2.4 Corporate philosophy

EXIM Banks corporate philosophy is built on two pillars: People-orientation & Customer-focus. The Bank
believes that its people are its key resource. Therefore, the Bank seeks to develop its human resources by
motivating them through ugh challenging assignments, upgrading their skills through training programmes,
and recognizing professional excellence. The Banks high level of office automation and a lean and multi-
skilled staff enables optimum efficiency and profitability. Also, customer-responsiveness is germane to the
Banks philosophy. The Bank constantly seeks to innovate and improve its product s, processes and delivery
mechanisms, and thereby minimize response time and maximize customer equity. Their interactive mode of
analysis and decision-making, through multidisciplinary cross-functional groups ensures that the best
possible business solution is offered to the customer.

Hence, with strong business fundamentals, and in line with the increasingly competitive global trading
environment, the Bank proactively seek s to enhance the competitive edge of Indian companies through a
comprehensive range of financing programmes and advisory and support services which encompass all
stages of the export business cycle. Towards facilitating globalization, the Bank is also involved in
creating export capability in small and medium enterprises, grassroots business enterprises and agro
industries. Indias project exports have evolved over the years to exhibit expertise in a wide range of
activities thereby reflecting technological maturity, industrial capabilities, and growing sophistication of
Indian exports, and the Banks pioneering and pivotal role in this direction has served to catalyze such
exports. With India increasingly emerging as a major global investor, the Banks endeavors in this
direction can be assessed from the fact that as man y as 176 Indian ventures set up by over 147 companies
in 54 countries, in bot h industrial and developing as well as emerging economies, have been supported,
with the Bank taking direct equity participation in select cases to enhance such ventures.

Moreover, a distinct feature worth mentioning is the EXIM bank logo:



The EXIM Bank aims to promote India's international trade. The logo reflects this. The logo has a two-
way significance. The import arrow is thinner than the export arrow. It alsoreflects the aim of value
addition to exports.

11

3. THEORETICAL PERSPECTIVE

3.1 Export financing

Export financing is an important area of export business. It refers to the credit facilities extended to the
exporters. In India, the export credit facilities are generally provided directly by commercial banks. RBI and
EXIM bank offer refinance to the commercial banks. EXIM bank, in certain cases, participates with
commercial banks in extending medium and long-term credit to exporters.

Export financing can be divided into pre-shipment and post-shipment facilities:


- Pre-shipment: Pre-shipment finance includes a loan to an exporter for financing the purchase of
raw materials/components, processing and manufacturing or packing of finished goods meant for
exports to overseas markets. Pre-shipment finance is offered in the form of (i) Packing credit (ii)
Advance against incentives and (iii) Pre- Shipment Credit in Foreign Currency (PCFC). Packing
credit facilities are provided to the exporters for making necessary arrangements for executing
export contracts.

- Post-shipment: Post-shipment credit is extended after the shipment of goods till the date of
realisation of export proceeds. This would include discounting of export invoices after the goods
have been shipped.

Medium and short term loans: Finance short or medium term, is provided exclusively by the Indian
and foreign commercial banks which are members of the Foreign Exchange Dealers Association. The
Reserve Bank of India functions as refinancing institutions for short and medium term loans
respectively, provided by commercial banks.


EXIM bank of India, in certain cases, participates with commercial bank in extending medium term loans
to exporters. Commercial banks provide finance at a concessional rate of interest and in turn are
refinanced by the Reserve Bank and the EXIM Bank of India at concessional rates. In case they do not
wish to avail refinance, they are entitled for an interest rate subsidy.
Export Credit & Guarantee Corporation (ECGC) also plays an important role through its various policies and
guarantees providing cover for commercial and political risks involved in export trade.


3.2 Import financing

Imports play an important role in the economy of every country, rich and poor alike. Rich countries need to
import capital goods, raw materials and technology to ensure an optimum utilization of their production
capacity. They need to import a wide variety of consumer goods to enable their people to enjoy a high
standard of living. Poor countries need to import technology and capital equipment and sometime strategic
12

raw materials to develop industries for accelerating pace of their development. In India the pace of
industrialization, level of exports and consequently the rate of economic growth are heavily dependent upon
imports. A low level of imports usual1y indicates low purchasing power of its people and also emergence of
recessionary trends in economy.

India followed a restricted import policy till mid-eighties. Nothing could be imported without a license
involving cumbersome procedures along with intricate documentation. Although some liberalization
measures were taken in second half of eighties, real breakthrough came only in 1991. Steady progress was
made in nineties in replacement of quantitative restrictions, licensing and discretionary control over imports
by deregulation, simplification of procedures and protection through tariff and exchange rates. Export Import
policies of 1992-97, 1997-2002 and 2002-07 were the steps in this direction. It is against the background of
nature and significance of Indias import trade, it is important to know import financing methods and
techniques.

Import financing involves making payment to foreign entities for the goods purchased from them. From the
management decision making viewpoint, it means making decision regarding terms of payment.

This would involve:

Choosing one among several alternatives such as financing import under letter of credit,
financing against bills under collection, financing imports against deferred payment, financing
under foreign credit or taking import loans by export-import bank of India
Arranging funds

Choice of financial institution

Choice of instrument to be used for making payment

Choice of intermediary, through whom the payment is to be made.


3.3 The Regulatory Frame Work

The principal objectives of Indias Export Import Policy are to accelerate the countrys transition to an
internationally oriented economy with a view to derive maximum benefit from the expanding global market.
Various policy objectives are achieved basically through three legislations.

These are:

- Foreign Trade (Development and Regulation) Act 1993,

- Foreign Exchange Management Act 1999 and

- Indian Customs and Excise Act 1962.
13

3.4 Methods of Import Finance

The methods of import financing include:

- financing under L/ C

- financing against bills under collection,

- financing against deferred payment,

- financing under foreign credit and

- finance by EXIM Bank of India


Generally, in international trade, clean credit is rare. The supplier and buyers are geographically very far and
may not trust each other. The supplier either insists on advance payment or a guarantee for payment. At the
same time, the buyer would also like to protect his interest and ensure that he gets the ordered goods. This is
solved by a Letter of credit opened through a bank.

In this method, importer can request his banker to open a letter of credit in favour of his supplier. The L/C
would include all details of goods (quantity, quality, description, etc.) and various other commercial terms
and conditions. Upon shipment of goods, the supplier submits full set of documents to the bank and gets paid
as per the terms of L/C if all documents are as per the L/C terms; importer obtains release of these documents
from the bank either upon payment or debit to his loan account as per his arrangement with the bank.
Importer gets the goods from the shipping line/forwarder against the submission of original documents
received through the bank. Importer gets a loan from the bank either on Trust Receipt or hypothecation of
imported goods to pay for the imports.

Where an importer contracts to pay installments, permission of RBI needs to be taken. He can obtain a loan
from the bank to pay for the installment.

Imports under credit extended international financial institutions and foreign governments can be financed
either through commitment (i.e. Government of India commits a part of loan to the importer and gets paid in
Indian rupees) or reimbursement method i.e. after paying the supplier, the bank gets reimbursed by loan
giving agency.

Also, the EXIM bank of India lends to importers to finance their export related imports.


14

4. ROLE OF EXIM BANK

4.1 An overview

The 3 aspects where the EXIM bank stands out and plays an important role are;

EXIM banks strategy which involves catering to Indian enterprises across all sections of the economy.

Its aim to start from the Grassroot Rural Enterprises to SMEs, large Corporates & finally Line of credits
to Developing Countries.

Their endeavor to support enterprises in their globalisation efforts as also to help in poverty alleviation
through export linkages.

The Banks functions are segmented into several operating groups including:

Corporate Banking Group which handles a variety of financing programmes for Export Oriented
Units (EOUs), importers, and overseas investment by Indian companies.

Project Finance / Trade Finance Group which handles the entire range of export credit services such
as suppliers credit, pre-shipment credit, buyers credit, finance for export of projects & consultancy
services, guarantees, forfeiting.

Lines of Credit Group - Lines of Credit (LOC) is a financing mechanism that provides a safe mode
of on-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective
market entry tool. EXIM Bank extends LOCs to sovereign governments, central banks, regional
development banks, overseas financial institutions and other entities overseas, to enable buyers in
those countries, to import equipment, goods and services from India, on deferred credit terms.

Agri Business Group, which has been put in place to spearhead the initiative to promote and support
Agri-exports. The Group handles projects and export transactions in the agricultural sector for
financing.

Small and Medium Enterprises Group has been established to cater to the specific financing
requirements of export oriented SMEs. The Group handles credit proposals from SMEs under
various lending programmes of the Bank.

Export Services Group offers a variety of advisory and value-added information services aimed at
trade and investment promotion.

Apart from these, there are the Support Services groups, which include: Research & Planning, Corporate
Finance, Loan Recovery, Internal Audit, Management Information Services, Risk Management, Information
Technology, Legal, Human Resources Management and Corporate Affairs.
15

Four- pronged role: EXIM Bank plays a four-pronged role with regard to Indias foreign trade: those
of a coordinator, a source of finance, consultant and promoter.

Coordination Role:EXIM Bank is the Coordinator of the Working Group Mechanism for clearance of
Project and Services Exports and Deferred Payment Exports (for amounts above a certain value -
currently US$ 100 million). The Working Group comprises EXIM Bank, Government of India
representatives (Ministries of Finance, Commerce, and External Affairs), and Reserve Bank of India,
Export Credit Guarantee Corporation of India Ltd. And commercial banks that are authorised foreign
exchange dealers. This inter-institutional working group accords clearance to contracts (at the post-
award stage) sponsored by commercial banks or EXIM Bank, and operates as a one-window
mechanism for clearance of term export proposals. On its own, EXIM Bank can now accord clearance
to project export proposals up to US$ 100 million in value.

Financing Services:EXIM Bank offers a diverse range of financing services for the Indian exporter,
including a variety of Export Credit facilities, and Finance for Export Oriented Companies.

The role the bank plays as a promoter and a consultant are explained in the next chapter under the sub- topic
Value- added services.

4.2 The products and services offered by EXIM bank

A broad classification of the products and services offered by EXIM bank is shown in the chart
below:

This shows the presence of EXIM bank across all stages of the business cycle.


Pre-
Shipme
nt
Post-
Shipme
nt
Investmen
t Abroad
Advisory
Services
Import
Finance
Export
Product
Developme
nt
Export
Productio
n
Export
Marketin
g
16

Further, as shown in the chart below, the banks major programs are further divided into Export credit,
Finance for export-oriented units and value- added services. Also, detailed services are classified as shown
below. This data is as per the 2007-08 annual report of EXIM bank.

17


A) Export credit facilities

EXIM Bank offers the following Export Credit facilities, which can be availed of by Indian companies,
commercial banks and overseas entities.

For Indian Companies executing contracts overseas

o Pre-shipment credit

EXIM Bank's Pre-shipment credit facility, in Indian Rupees and foreign currency, provides access to finance
at the manufacturing stage - enabling exporters to purchase raw materials and other inputs.

o Supplier's Credit

This facility enables Indian exporters to extend term credit to importers (overseas) of eligible goods at the
post-shipment stage.

o For Project Exporters

Indian project exporters incur Rupee expenditure while executing overseas project export contracts i.e. costs
of mobilization/acquisition of materials, personnel and equipment etc. EXIM Bank's facility helps them meet
these expenses.

For Exporters of Consultancy and Technological Services

EXIM Bank offers a special credit facility to Indian exporters of consultancy and technology services, so that
they can, in turn, extend term credit to overseas importers.

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.

They also offer Refinance of Supplier's 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.
Other Facilities for Indian Companies

Indian companies executing contracts within India, but which are categorized as deemed exports in the
Foreign Trade Policy of India or contracts secured under international competitive bidding or contracts under
which payments are received in foreign currency, can avail of credit under the banks Finance for Deemed
Exports facility, aimed at helping them meet cash flow deficits.

18


For Overseas Entities

o Buyers Credit

Overseas buyers can avail of Buyers Credit from EXIM Bank, for import of eligible goods from India on
deferred payment terms.

Buyers Credit is a unique programme of EXIM Bank under which the Bank facilitates Indian exports by
way of extending credit facility to the overseas buyers for financing their imports from India. Under Buyers
Credit Programme, EXIM Bank makes payment of eligible value to Indian exporters, without recourse to
them. Buyers credit is a safe and non-recourse mode of financing option available to Indian exporters,
especially to small and medium enterprises, and motivates them to enter overseas markets.

o Lines of Credit

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 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.

o 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.


B) Finance for export- oriented units

According to EXIM bank, for the purpose of 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.

Many types of finance services are offered by the EXIM bank under this program. They are as follows:

Project Finance

o For Setting up EOUs

EXIM Bank offers term loans for setting up new projects, and for acquisition of assets for modernization /
upgradation / expansion of existing units. The Bank also extends 100% refinance to commercial banks, for
term loans sanctioned by the lending bank to an EOU.
19


o For Textile and Jute Industries

The Bank also extends finance to eligible units in textile and jute industries under the Technology
Upgradation Fund Scheme, to enable them to upgrade their manufacturing facilities.

o For Software Industry

The Bank offers a comprehensive financing / services package for the software industry. These include
project / equipment finance, working capital finance, overseas investment finance, besides support for
obtaining product / process certification, export marketing, and export product development. Also, 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).

o For Indian Companies involved in Port Development and related activities

EXIM Bank extends terms 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.
Equipment Finance

Finance for Production Equipment:To cater to the non-project related capital expenditure of EOUs, EXIM
Bank offers a line of credit for acquisition of imported / indigenous equipment, including equipment for
packaging, pollution control.

For Vendors of EOUs:Under the Export Vendor Development Finance facility, the Bank offers term loans to
vendors of EOUs, to enable them to acquire plant and machinery and other assets required for increasing
export capability.

Working Capital Finance

EXIM Bank provides term loans (of 1 year, 1-2 years, and upto 5 years tenor) to eligible EOUs, to help them
meet their working capital requirements.

o For Exporting Companies

1) Funded

Working Capital Term Loans [less than 2 years]
Long Term Working Capital [upto 5 years]
Export Bills Discounting
Export Packing Credit
Cash Flow financing
20



2) Export Finance

Pre-shipment Credit
Post Shipment Credit
Buyers' Credit
Suppliers' Credit [including deferred payment credit]
Bills Discounting
Export Receivables Financing
Warehousing Finance
Export Lines of Credit (Non-recourse finance)
Equity Participation (In Indian Exporting Companies)To part finance project
expenditure(Project, inter alia, includes new project/ expansion/ acquisition of
business/company/ brands/research & development)

3) Non-Funded

Letter of Credit Limits
Guarantee Limits

o For Non- Exporting Companies

A few important aspects here are:

a. EXIM financing is available in Indian Rupees and in Foreign Currency

b.Term finance, except for long term working capital, is available for periods up to 10 years [in select
cases 15 year finance can also be made available]

c. For interest rates there are fixed & floating options

o Overseas investment finance or Finance for Ventures 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.

In short, EXIM bank provides:

Finance for Indian Company's equity participation in the overseas Joint Venture/ Wholly Owned
Subsidiary
21


Direct Finance (Term & Working Capital) to the overseas Joint venture / Wholly Owned Subsidiary

Finance (for equity/debt component) for acquisition of overseas businesses / companies including
leveraged buy-outs including structured financing options

Direct Equity by EXIM Bank in the overseas Joint Venture/ Wholly Owned Subsidiary of an Indian
Company.
For example:
Mumbai based United Phosphorus, with support from EXIM Bank, has acquired the manufacturing facility
of 'AdvantaSemillas', Argentina, a company producing hybrid seeds of sunflower, corn, sorghum etc.

C) Value added services

EXIM bank believes that financial programs need to be supplemented with certain advisory services,
knowledge building initiatives and information.


22

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.


Advisory services include:

Multilateral agencies funded projects overseas (MFPO)

Information and support services to Indian companies are provided to help improve their prospects
for securing business in multilateral agencies funded projects.

This includes the following:

- Dissemination of business opportunities in funded projects

- Providing detailed information on projects of interest

- Information on Procurement Guidelines, Policies, Practices of Multilateral Agencies

- Assistance for Registration with Multilateral Agencies

- Advising Indian companies on preparation of Expression of Interest, Capability Profile

- Bid Intervention

Promoting Indian consultancy: The bank has tie-ups with:

- International Finance Corporation, Washington D.C.

- Eastern & Southern African Trade & Development Bank (PTA Bank)

- African Management Services Company (AMSCO), Netherlands


Examples of these are:

Gems &Jewellery Study Zambia, Financial Training Mission Kenya, Cement Project Cameroon,
Software Madagascar, Wool Knitting Vietnam, Textile Nigeria, Refrigeration Ghana and
Financial Training Poland.

23

EXIM bank as a consultant

It has acted as a consultant for:

Feasibility study for establishment of an export credit and guarantee facility for Gulf Cooperation
Council countries.
Regional cooperation in export finance and export credit guarantees for ESCAP.
Study on promotion of international competitiveness and exports of manufactured goods for ESCAP.
Setting up the Afrexim Bank
Designing of Export Financing Programmes - Turkey
Setting up an EXIM Bank in Malaysia
Designing of Export Marketing Seminars for SMEs in Vietnam
Export Development Project: Ukraine
Enterprise Support Fund: Armenia
Establishing an Export Credit Guarantee Company in Zimbabwe
Advisory services to Industrial Development Corporation of South Africa for international finance
products
Study on Projecting Mauritius as an Investment Hub for Indian Firms
Blue Print for setting up of an EXIM Bank in Zimbabwe

Knowledge building includes:

Eximius centres for learning in Ahmedabad, Bangalore and Pune

EXIM bank organises seminars and workshops in areas such as international trade & investment,
export marketing, quality, packaging, business opportunities in multilateral agencies funded projects,
sector and country specific programmes

It also involves guest faculty from network partners such as World Bank, UNIDO, Asian
Development Bank, African Development Bank.

Research studies
The bank undertakes research studies on products, sectors, countries, macro-economic issues relevant
to international trade and investment.

Sector Studies
EXIM bankalso undertakes sector studies in the following:Petroleum products, floriculture,
medicinal plants, vanilla, biotechnology, machine tools, textiles, horticulture products, chemicals,
pharmaceuticals, leather and plantation.

Macro-Economic Environment Studies
EXIM bank has written essays on globalization and wages in developing countries and has done an
analysis about the transaction costs of Indian exports.
24







25



Information

The bank provides information about:

Exporters/importers, industry/market reports, trade regulations & laws, country reports, international quality
standards, partner identification and product display.


Examples of Information Services are:


Hungarian Pharmaceutical Sector

Importers of Sanitary ware, Castings in North America

Importers of Agro-chemicals in Eastern Europe

Study for ear buds market in Hungary

Study of the Indian Wine market for a Hungarian Company

Partner identification for an Italian Sanitary ware manufacturer

Study of the Indian Crane Industry for a Finnish company

Regulatory Framework for setting up a Pharma Project in China

Market report for Computer Monitors in India for a Singaporean firm

Study on Bicycle market in Eastern Europe for Indian Cycle exporter

Market Potential for Denim in South East Asia

Study on India's Food Sector
Other facilities
o 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 environmental
standards, and to help them develop and / or commercialize new product / process
applications.

o Finance for Services Sector: Services sectors financed by EXIM Bank include entertainment,
26

health care, hospitality and shipping.

o Acquiring Natural Resources: EXIM Bank selectively provides terms 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 acquisition 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.

o 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.

o 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 canalised 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 and

c) Guarantees in favour of commercial banks / lending institutions abroad on behalf of Indian exporters.

Export Marketing Services

The Bank provides assistance to Indian companies, to enable them establish their products in overseas
markets through its Export Marketing Services, starting from identification of prospective business
partners to facilitating placement of final orders.
The Export Marketing service leverages the Banks high international standing, in-depth knowledge and
understanding of the international markets and well established institutional linkages, coupled with its
physical presence, to support Indian companies in their overseas marketing efforts on a success fee basis.

They offer service offered across sectors such as marine products, textiles - yarns, fabrics, apparels, food
processing - ready to serve, spices and condiments, office stationery and Ayurveda medicines/cosmetics.

27

4.3 Project Exports

The growth of Project Exports from India over the last three decades and the growing recognition of Indian
expertise in the global market. The analysis is based on extensive data available within EXIM Bank of India
as the principal financial institution for promoting Indian Project Exports.

Project Exports from India have been increasing steadily over the years, indicating the growing stature of
Indian expertise overseas in a wide range of activities, and upward movement in the value chain of its export
performance. From a modest beginning in the early seventies, Indian companies have made impressive
progress in a number of areas like civil construction projects (road, railways, dams, airports, etc.), turnkey
projects (power generator, transmission and distribution, industrial plants, etc.), technical services
(engineering design, project engineering, operation and maintenance of industrial plants, etc.) and earned a
niche for themselves in the developing country markets. Major policy initiatives since the past decade have
been instrumental in preparing India for a period of rapid export growth as also becoming a major player in
an increasingly inter-dependent world economy.

Status

Towards the end of 2004, there were 140 project export contracts valued at over Rs. 17,800 crore
(approximately US$ 4 billion) under execution in 39 countries across Asia, Africa and Europe by 31 Indian
companies. The projects ranged from building hydroelectric power stations in Bhutan, transmission line
projects in Tunisia to operations and maintenance of cement plant in Saudi Arabia. Many of these projects
are funded by MFAs (multilateral funding agencies) and the contracts have been won by the Indian
companies against stiff international competition.

The following graph shows the trends in project exports from India supported by EXIM Bank from the years
2000 to 2004

28


Project Export contracts under execution as on 31
st
March, 2008, supported by EXIM bank




29

5. OTHER INITIATIVES TAKEN BY THE EXIM BANK

5.1 Film finance
Brief about the Indian film industry:
The Indian film industry is an integral part of the Indian socio-economic psyche and the most popular source
of entertainment in the country. Indian film industry was conferred Industry Status in the year 2000 and is
mainly private funded. Indian Film industry is the world's biggest film industry in terms of the number of
movies produced and released in a year. The total number of admissions (people attending movies) is almost
over 3 billion, which is almost double the US markets and three times that of the rest of Asia. The Indian film
industry comprises of a cluster of regional film industries, like Hindi, Telugu, Tamil, Kannada, Malayalam,
Bengali etc. This makes it one of the most complex and fragmented national film industries in the world.
The EXIM Bank has till date (upto the year 2007) sanctioned loans more than Rs 33.15 crores for film
production. The first three films financed by EXIM Bank have been commercially successful across India
and overseas markets.
Nature of Finance:
- Cash flow financing for film production.
- Cash flow financing for film distribution/exhibition in overseas markets.
- Term loans for fixed assets finance.
- Term financing for export market development.

Examples of some films financed by EXIM Bank are:
Honeymoon Travels Pvt. Ltd., Kabul Express, Dhoom -2, Don, Fanaa, BuntyAurBabli, Salaam Namaste,
Veer Zaara, The Rising, Dhoom, Hum Tum, CheeniKum, ThodaPyaarThoda Magic, BachnaAeHaseena.

5.2 SME &Agri- finance
Recognizing the criticality of the agriculture sector for India's economic growth in general, and growth in
exports in particular, EXIM Bank of India has launched a series of new initiatives for the promotion of
India's agro-exports. It undertakes/provides support for the following:
i) Fair Trade Certification
Fair Trade is an organized movement which promotes equitable standards for international labour,
environmentalism, and social policy in areas related to the production of labeled and unlabelled goods, which
may range from handcrafts to agricultural commodities. The movement focuses in particular on exports from
developing countries to developed countries.
Fairtrade offers an alternative vision of right trade and production practices and clearly demonstrates that
30

trade can play an important part in contributing to poverty reduction and achieving sustainable development.
The Fairtrade certification system covers a growing range of products, which includes non-food products
such as handicrafts and sports balls, and food products such as bananas, honey, coffee, oranges, cocoa,
cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and
wine. Companies offering products that meet the Fairtrade standards can apply for licenses to use the
International Fairtrade Certification Mark for those products.

ii) Good Agricultural Practices (GAP)
The concept of Good Agricultural Practices (GAP) has evolved in recent years in the context of a rapidly
changing and globalising food economy.
According to the Food and Agriculture Organization (FAO), GAP is the application of available knowledge
to address environmental, economic and social sustainability for on-farm production and post-production
processes, resulting in production of safe and healthy food and non-food agricultural products. Many farmers
in developed and developing countries already apply GAP through sustainable agricultural methods such as
integrated pest management, integrated nutrient management and conservation agriculture. These methods
are applied in a range of farming systems and scales of production units, facilitated by supportive
government policies.
Presently, GAP is formally recognised in the international regulatory framework for reducing risks associated
with the use of pesticides, taking into account public and occupational health, environmental and safety
considerations.
Several supermarkets, retailers and Government bodies around the world have GAP in addition to their own
codes of practice, which their suppliers need to satisfy. This trend of increasing adoption of GAP by both
public and private sectors may create incentives for its adoption by farmers by minimising the risk of
contamination, right from pre-planting stage of crop to post-harvest stage of the crop and by opening new
market opportunities, provided they have the capacity to respond.
GAP applies to a broad section of food/agricultural commodities, which include fruits and vegetables,
livestock, flowers and ornamental plants, medicinal/aromatic plants, and aquaculture.

31


iii) Active and Intelligent Food Packaging
The main purpose of food packaging is to protect the food from microbial and chemical contamination,
oxygen, water vapor and light, promotion of convenience and providing product information. The type of
packaging used therefore has an important role in determining the shelf life of a food. The various packing
concepts include, passive packaging, active packaging and intelligent packaging.
With changes in the way food products are produced, distributed, stored and retailed, reflecting the
continuing increase in consumer demand for improved quality and extended shelf life for packaged foods, are
placing greater and greater demands on the performance of food packaging. Considering these aspects,
innovative active and intelligent packaging concepts are being developed.
iv) Organic Dairy Farming
Organic milk is defined as the milk produced by cows reared on system of inputs with no chemical,
pesticides, fungicides, fertilizers and use of medicines. Use of sewage sludge is alsoprohibited.
With the increase in incidences of livestock diseases such as Bovine Spongiform Encephalopathy (BSE) and
foot-and-mouth disease (FMD), and other pesticide contamination in food and milk products, interest in
organic dairy farming have been considerably increasing all over the world. The main objective of organic
dairy farming is food safety, consumer protection, animal health and welfare and sustainability.
Moreover,
www.eximbankagro.com is the premier portal for information and links on agro-exports.
EXIM Bank brings out a bi-monthly publication namely 'Agri Export Advantage'.
This publication is being brought out in English, Hindi and all major regional languages. The publication
seeks to provide the stakeholders of Indian agribusiness with news from international perspective to make
them aware of the competitive global agri-environment. The bi-monthly newsletter also includes market
analysis of agri-products, government schemes and assistance, region-specific agri-business updates,
coverage of important international events, WTO related updates and EXIM Bank's activities on
agribusiness.
5.3 Rural initiative
EXIM banks rural initiative is a departure from the traditional role that it plays.
Its objectives for such a rural initiative are to reduce poverty through Export Linkage and to provide benefit
of globalisation to grassroot rural enterprises
Also, these objectives were brought into picture because:
In India, 70% of the population lives in rural areas and 30% lives in urban areas. In comparison, the
global average is 30% rural and 70% urban.
Moreover, only 1 out of 4 enjoys globalization benefits. Hence 75% of the population is out of the
globalization process. So, globalization has become very urban centric in India.
32

EXIM Bank believes that there is a strong linkage between export development and poverty reduction. For a
country like India, with a large (70%) rural population, creation of export capability in rural grassroot
enterprise is a must. Globalization will be successful and acceptable only if benefits reach the rural
population. Rural enterprises suffer from various handicaps including image, quality, capacity, packaging,
delivery, etc. NGOs and SHGs are the front for rural enterprises. Through proper guidance and support, rural
grassroot enterprises can access the global market and realize better prices for their products thereby
contributing to poverty reduction. EXIM Bank's experience in working with NGOs/SHGs and rural
enterprises is encouraging. EXIM Bank is leveraging its presence in both India as well as overseas, which is
facilitating linkage between rural grassroot enterprises and corporates and with overseas buyers and agencies
with the objective of bringing the benefits of globalization to the rural population.
The Bank is also actively involved in extending export market access support to rural products through
innovative export marketing services, effectively utilizing its overseas offices and institutional linkages as
also by the provision of Lines of Credit facility to overseas buying houses and departmental stores for
importing a variety of products from India. EXIM Bank has thus been able to leverage such lines of credit to
promote export of agro and rural products, and has procured orders from Singapore, South Africa, Hungary
and USA for such products.
The Bank has earmarked funds for setting up the Rural Technology Export Development Fund to promote
exports as also enhance the export-worthiness of rural grassroots innovative technologies from India. Thus,
EXIM Banks efforts are not only aimed at facilitating the visibility of rural products in the international
market but also to find alternative channels through partnership arrangements with institutions and corporates
in India.
The core objectives/ operations of EXIM banks rural initiative are:
Creation of Export Capability in Grassroot Enterprises
Enhance purchasing power of bottom of the pyramid
Spin off benefit to other sectors of economy.

5.4 Promotional Programmes
Award for Business Excellence:
EXIM Bank, in association with Confederation of Indian Industry (CII), presents an 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 TQM in the
companys journey towards Business Excellence.
Support to Indian Consultants for undertaking services abroad:
Under an arrangement with 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,
Indian consultants can avail of our support for undertaking specific assignments in select countries including
Africa, Eastern Europe, CIS countries, China, South Asia, and the Mekong delta region.
33

Global Trade Finance
Global Trade Finance Limited (GTF) is the only provider of international factoring, domestic factoring and
forfeiting services under one roof in India. GTF has established itself as a market leader in international
factoring providing value added services to its clients. GTF is headquartered in Mumbai with six regional
offices - one each in New Delhi,Bangalore, Chennai, Hyderabad, Ahmedabad and Kolkata. GTF aims to be
the premier export and import solution provider in India offering professional quality services on an e-
commerce platform.
GTF commenced operations in September 2001, as a joint venture promoted by the EXIM Bank of India;
West LB, Germany; and IFC, Washington (the private sector arm of World Bank). In December 2004, the
shareholding pattern became 40% with EXIM Bank; 38.5% with FIM Bank, Malta; 12.5% with IFC,
Washington; and 9% with Bank of Maharashtra. The current shareholding pattern since March 2008 is
92.03% with State Bank of India and 7.97% with Bank of Maharashtra. An independent Board of 7 Directors
manages GTF. It has received the necessary licenses and Authorized Dealer status from RBI for conducting
export and import factoring and forfeiting business and foreign currency operations in India. GTF is a
member of Factors Chain International, a global association of international factoring companies Established
in 1968, FCI has played a major role in bringing factoring into most countries and today has a membership of
216 factoring companies operating in 62 countries. GTF also has arrangements with credit insurers over the
world for providing credit protection.
International trade, on the basis of LC's is gradually becoming extinct. "Open Account" and "Extended
Credit" is becoming a pre-requisite for increasing sales volume in global market. GTF helps this need with its
export factoring product that provides credit assessment, credit protection, financing, and collection services
to exporters for regular sales on open account terms. GTF uses a high end customized IT platform to process
and deliver its services. With a short turnaround time in approval of facilities, GTF is the only factoring
company in India to offer online web access to its clients for accessing their accounts. GTF's "Client Access"
module is custom made to suit its business profile and caters to client requirements.

34

Global Network of EXIM Banks and Development Finance Institutions
The Global Network of EXIM Banks and Development Finance Institutions (G-NEXID), was set up in
Geneva in March 2006 through the Banks initiative, under the auspices of UNCTAD. With the active
support of a number of other EXIM Banks and Development Financial Institutions from various developing
countries, the network has endeavored to foster enhanced South-South trade and investment cooperation,
characterized among others, by the launching of the G-NEXIDs website (www.gnexid.org) and annual
meetings of the Forum. Observer Status in UNCTAD underscores support for the Forum, while
acceptanceof the vision of the Forum by developing countries can be assessed from the fact that the
membership of the Forum has reached 23 by March 2008.
5.5 Eximius Display Centre
Eximius, from the Latin language means 'set apart and eminent'.Product display facilities of
international standards are offered to Indian companies in India and abroad by the bank.The display centre at
the Head office was set up in mid-1994. It exhibits a range of products manufactured and exported by Indian
companies to discerning markets including USA and Japan. Around 50 companies whose products are
displayed at the head office are among the five hundred that have been financed and nurtured by Bank. The
products represent three broad categories: industrial products, consumer durables and consumer products.
Their offices in Budapest and London have display centers which allow Indian companies to display their
products for longer periods.

5.6 Eximius Centre for Learning: A Place of Global Excellence
Concept
It is EXIM bank's initiative which is addressed at enhancing the capabilities of the industrial and financial
communities in India and other developing countries, and bringing proposals of trade and investment to
them. It offers them access to contemporary thinking in international trade and finance, entry to markets and
technologies, and support in joining the global economy.The programmes are result-oriented and practical,
designed to ensure that concrete outcomes emerge from every meeting.
The eventual aim is to establish an international hub of information interchange between industries and
institutions, and amongst industries in different countries;, a beacon for all developing counties and a place of
global excellence, in learning and in business.
Activities carried out:
The Centre aims to keep the companies, which wants to go global, abreast of the changing global
scenario. It conducts two events viz., organizes meeting between industry groups in different
countries and businesspersons in India and involves skill building through interactive workshops and
seminars that involve the participant in the learning process thus enhancing the competencies of the
participants. "Virtual Faculty"- a concept which enables it to source the best available instructors to
address the issues of the day.
The Centre has tailor-made courses for the officials of the export credit agencies in other developing
35

countries. It has also holds in-house programmes.
Apart from organizing the above programmes, it also conducts research on issues of importance to its
constituency that focuses on generating information, its usefulness and its immediate implementation
within reasonable time frame.

5.7 Non-funded activities undertaken:
EXIM Bank issues following guarantees directly or in participation with other banks, forproject export
contract.
Bid Bond
Bid Bond is generally issued for a period of six months.

Advance Payment Guarantee
Exporters are expected to secure a mobilization advance of 10-20% of the contract value which is normally
released against bank guarantee and is generally recovered on a pro-rata basis from the progress payments
during project execution.

Performance Guarantee
Performance guarantee for 5-10% of contract is issued, valid upto completion of maintenance period
normally one year after completion of contract period and/or grant of Final Acceptance Certificate (FAC) by
the overseas employer. Format of guarantee is expected to be furnished by exporter, at least four weeks
before actual issue, to facilitate discussions and formal approval.

Guarantee for Release of Retention Money
This enables the exporter to obtain the release of retention money (normally 10% of contract value) before
obtaining Final Acceptance Certificate (FAC) from client.

Guarantee for Raising Borrowings Overseas
Bridge finance may be needed at the earlier phases of the contracts to supplement the mobilisation advance.
Bridge finance up to 25% of the contract value may be raised in foreign currency from an overseas bank
against this guarantee issued by a bank in India. Request for overseas borrowings must be supported by
currency-wise cash flows, also indicating the outstanding letters of credit and L/C drawal schedule.

36

5.8 EXIM bank in the United States of America
The U.S. forms one of the most important markets for Indian companies. Being the leading economy of the
world, it offers tremendous potential to Indian companies for expanding their business. EXIM Bank of India
offers a wide range of financial and advisory services to Indian companies to facilitate bilateral trade and
investment between India and the U.S. As mentioned previously in the profile of the bank; EXIM Bank of
India has a representative office in Washington, D.C. since 1985 and the activities of the office include:
Interaction with international banks; multilateral institutions such as the World Bank, International
Finance Corporation, Multilateral Investment Guarantee Agency, International Monetary Fund;
export credit agencies such as Export-Import Bank of the United States, other US Government
agencies, industry associations as well as U.S. based corporations;
Advising and helping structure financial support for Indian companies setting up joint
ventures/subsidiaries in the United States and other countries in the Americas (North, Central, South
America and the Caribbean);
Advising and assisting Indian companies seeking to secure procurement business in World Bank
financed projects;
Assisting Indian exporters and importers in forming business relationships with entities in the United
States and other countries in the Americas; and
Identifying, appraising and negotiating with banks in the Americas for extending lines of credit to
enhance trade between India and North and South America and the Caribbean.
In the US, some recent examples of overseas investments / projects by Indian companies thathave been
facilitated by the Bank include:
i. Acquisition of a coffee company
ii. Funding of joint venture in the pharmaceuticals sector;
iii. Acquisition of a glassware manufacturing facility;
iv. Acquisition of a drug store;
v. Acquisition of a company providing geo-spatial mapping services;
vi. Acquisition of a BPO service provider;
vii. Acquisition of an auto ancillaries unit.


37

6. FINANCIAL HIGHLIGHTS OF EXIM BANK


(Data as per annual report of 2007-08) (Rs. in million)

2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
Cumulative
(2003-08)
LOANS
Approvals 78283 92657 158535 204887 267662 328045 1240877
Disbursements 53203 69575 114352 150389 220760 271587 963362
Loan Assets 87736 107751 129104 175931 228862 287767 1235328
GUARANTEES
Approvals 9328 10792 15887 43264 49978 21994 165848
Issuance 7275 5743 16602 21959 16972 20386 100333
Guarantee
Portfolio
16133 15769 23727 34023 35360 34556
RESOURCES
Paid- up Capital 6500 6500 8500 9500 10000 11000
Reserves 13171 14933 16625 17703 18741 21064
Notes, Bonds &Debentures 64902 76701 98972 126727 154230 179273
Deposits 9121 21922 82 454 702 2839
OtherBorrowings 16467 21583 21064 32909 61684 111149
Total Resources 123189 155192 156922 210401 262439 349397
PERFORMANCE
Profit Before Tax(PBT) 2686 3042 3144 3769 3909 5334 31816
Profit After Tax(PAT) 2066 2292 2579 2707 2994 3330 22522
Balance of net profits
transferred/ transferable to
Central Government
450 470 654 868 956 1008 5886

38


Calculation of Ratios (In terms of %)
Ratios/ Year 2003-04 2004-05 2005-06 2006-07 2007-08
PBT to Capital 46.8 41.9 41.9 40.1 50.8
PBT to Net worth 14.2 13.5 14.4 14.0 17.5
PBT to Assets 2.2 2.0 2.1 1.7 1.7


During the year, the Bank received share capital of Rs. 1 billion from the Government of India. As at March
31, 2008, the Banks total resources comprising paid-up capital of Rs. 11.00 billion and reserves of Rs. 21.06
billion, aggregated to Rs. 325.32 billion. EXIM Banks resource base includes bonds, certificates of deposit,
commercial paper, term loans and foreign currency deposits/ borrowings/ long term swaps.

During the year, the Bank raised borrowings of varying maturities aggregating to Rs. 140.4 billion
comprising rupee resources of Rs. 89.05 billion and foreign currency resources of US$ 1.28 billion
equivalent. Foreign currency resources of US$ 1.08 billion equivalent were raised through bilateral / club
loans and US$ 197 million by way of FRNs. As on March 31, 2008, the Bank had a pool of foreign currency
resources equivalent to US$ 3.53 billion. Capital Adequacy

The Capital to Risk Assets Ratio (CRAR) was 15.13 per cent as on March 31, 2008, as compared to 16.38
per cent as on March 31, 2007, as against the minimum 9 per cent norm stipulated by RBI. The Debt-Equity
Ratio as on March 31, 2008 was 8.97:1, as compared to 7.34:1 as at March 31, 2007.

39

7. RECENT INITIATIVES TAKEN BY THE EXIM BANK

According to the chairman, T.C. Venkat Subramanians statement (Annual report 2008);

The share of India in global merchandise exports has surpassed 1 per cent and the country has continued its
impressive performance in the global exports of commercial services with a share of 2.7 per cent. This
optimism has also been reflected in the Foreign Trade Policy which has set a target of achieving a 5 per cent
share of world trade in both goods and services by the year 2020.

Hence, as the countrys premier export finance institution and in line with the Government of Indias foreign
trade policy coupled with the increasingly competitive global environment, EXIM Bank proactively
endeavors to enhance the competitive edge of Indian companies in their internationalisation efforts by
constantly bringing about a change in the comprehensive range of financing programmes and advisory and
support services at all stages of the export cycle.

7.1 Business, Social initiatives and Research studies


A. Business initiatives

i) To enhance market diversification, the Bank has laid special emphasis on extension of Lines of Credit
(LOCs) as an effective market entry mechanism especially for small and medium enterprises. During
the year 2007-08, 17 LOCs were extended aggregating US$ 704 million to support export of projects,
goods and services from India. The Bank now has in place 89 LOCs covering 89 countries in Africa,
Asia, CIS, Europe and Latin America with credit commitments aggregating US$ 3.0 billion. The
Bank is also proactively seeking to expand geographical reach and volumes under the LOC
programme.
40


ii) The Bank has played a pivotal role in supporting Indias project exports and renewed focus in this
direction has seen 147 Indian exporters securing 977 contracts amounting to Rs. 326.8 billion
covering 92 countries. This clearly demonstrates the increasing competitiveness and capabilities of
Indian consultants, suppliers and contractors to execute diverse range of projects.With Indian
companies increasingly venturing overseas to mark their global presence, the Bank has endeavored to
provide a further impetus to the global aspirations of Indian corporates. Banks focus in this direction
is evident in its support to 41 corporates who were sanctioned funded and non-funded assistance
during the year for part financing their overseas investments in diverse sectors covering different
markets. The Bank has so far supported 223 ventures set up by over 180 companies in 61 countries,
both in industrial countries and developing and emerging markets.

iii) EXIM Bank signed an agreement with International Finance Corporation (IFC), Washington, under
the Global Trade Finance Program (GTFP). Under this arrangement, EXIM Bank will be able to
confirm Letters of Credit, guarantees and other trade instruments issued by approved banks in more
than forty developing countries. Some of the countries have a higher risk profile due to absence of a
proper credit enhancement mechanism for carrying out documentary credit trade. The role of EXIM
Bank as Confirming Bank would enable Indian exporters to access such markets without payment
risks.

41

iv) To enhance support provided to the SME sector, a vibrant and important sector of the Indian
economy, the Bank has entered into a cooperation arrangement with International Trade Centre,
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 globalisation
efforts. 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.
v) Finance for imports- bulk import finance under bulk import finance programme, sanctions and
disbursements amounted to Rs. 8.11 billion and Rs. 9.40 billion, respectively.Moreover under import
finance programme, companies were sanctioned term loans aggregating Rs. 8.15 billion.
Disbursements amounted to Rs. 4.78 billion.

Seminars conducted

During the year, the Banks Eximius Centre for Learning conducted 39 programmes on a wide range of
topics to keep Indian companies abreast of developments in the global market. These included eleven
country/region specific Business Opportunities seminars. A seminar series on the opportunities for
investment in British Midlands Region was organised at Kochi, Pune and Jaipur. Similar seminars were
organised at Coimbatore, Kochi and Thiruvananthapuram on the opportunities in the kingdom of Bahrain;
and at Pune, Ahmedabad, Ludhiana, Chennai and Hyderabad on the business and investment opportunities in
the State of Victoria in Australia. Also, three seminars on Business Opportunities in Asian Development
Bank Funded Projects were conducted at Mumbai, New Delhi and Kolkata.

New offices opened

During the year, the Bank opened a representative office in Dakar, Senegal, West Africa. The Dakar office of
EXIM Bank is expected to play a key, catalytic role in enhancing trade and investment between India and the
West African Region in general and with the Francophone countries in particular. The Dakar office has been
conferred special status Accord de Siege by the government of Senegal on par with multilateral institutions
located in Senegal.

Also, the Banks endeavors to create an enabling environment through synergies has been strengthened by
Memoranda of Cooperation signed with a number of trade and investment promotion agencies, export credit
agencies, banks and financial institutions such as African Export-Import Bank; CBI Netherlands;
CorporacionAndina de Fomento, Venezuela; Export Finance and Insurance Corporation, Australia; Gulf
Investment Corporation, Kuwait; The Ceylon Chamber of Commerce, Sri Lanka; as also in India with the
Ministry of Panchayati Raj, which aims at enhancing its export promotion activities through the Rural
Business Hub initiative; with Small Industries Development Bank of India (SIDBI) and REPCO Bank to
further cooperation and to provide support to grassroot enterprises and SMEs.


42



Asian EXIM Banks Forum meeting

Conceived and initiated by EXIM Bank of India in 1996, the 13th Annual Meeting was held in Bali,
Indonesia, in November 2007. (Details about the Asian EXIM bank forum are given in a later sub topic)

EXIM Bank of India, with the support of a number of other EXIM Banks and Development Finance
Institutions (DFIs) from various developing countries in Asia, Africa, CIS and Latin America, has facilitated
a Global Network of EXIM Banks and DFIs called G-NEXID in Geneva, under the auspices of UNCTAD, to
boost South-South cooperation in trade and investment. G-NEXID has been granted observer status by
UNCTAD which underscores support for the Forum, while acceptance of the vision of the Forum by
developing countries can be assessed from the fact that the membership of the Forum has reached 23 by
March 2008.

B. Social initiatives

As part of its endeavors in supporting social causes, EXIM Bank is supporting the Rugby Team of the
Kalinga Institute of Social Sciences (KISS), which won the Under-14 International School Rugby
Championship held in London, UK, in September 2007. KISS provides education for more than 5000 tribal
children of Orissa with focus on formal and livelihood education and scope for all-round development.
EXIM Banks support would encompass training facilities with associated infrastructure, participation in
select domestic/ international tournaments.

Towards facilitating inclusive globalisation, and in line with the Government of Indias focus on village and
rural sectors, the Bank has in place an innovative facility to support globalisation of rural industries through
its Grassroots Initiative. The programme seeks to address the needs of relatively disadvantaged sections of
society while creating expanded opportunities for traditional crafts persons and artisans, and rural
entrepreneurs of the country. Towards this end, the Bank has consciously sought to establish, nurture and
foster a variety of institutional linkages with select non-governmental organisations (NGOs) / Self Help
Groups (SHGs), with a view to assisting their members with capacity building, training and access to
national and global markets.

The Bank has earmarked separate funds for setting up Rural Technology Export Development Fund to
promote exports as also enhance the export worthiness of rural grassroots innovative technologies from India.
Thus, EXIM Banks efforts are not only aimed at facilitating the visibility of rural products in the
international market but also to find alternative channels through partnership arrangements with institutions
and corporates in India.


43

C. Research studies

Research studies brought out by the Bank during the year include:

Trade and Environment: A Theoretical and Empirical Analysis

Indian Pharmaceutical Industry: Surging Globally

Regional Trade Agreements: Gateway to Global Trade

Knowledge Process Outsourcing: Emerging Opportunities for India

Indian Mineral Sector and its Export Potential


The Bank also brought out a publication titled Healthcare Tourism: Opportunities for India which
highlights opportunities and challenges and outlines strategies for India to emerge as a major healthcare
tourist destination.

7.2 Recent results achieved by the EXIM bank of India

The robust economic growth and buoyancy in Indias external sector has been reflected in the Banks
business performance which has exhibited distinct growth. Loan approvals aggregated Rs. 328.1 billion, an
increase of 23 per cent over the previous year, while disbursements at Rs. 271.6 billion also registered a rise
of 23 per cent. Loan assets of the Bank have risen to Rs. 291.5 billion, a rise of 25 per cent over the previous
year.

Profit after tax amounted to Rs. 3.33 billion as compared to Rs. 2.99 billion in the previous year. Capital to
Risk Assets Ratio stood at 15.13 per cent, while net NPAs to net loan assets decreased to 0.29 per cent as on
March 31, 2008. During the year, the authorised capital was increased by Central Government from Rs. 10
billion to Rs. 20 billion. The Bank also received share capital of Rs. 1 billion from the Government of India,
increasing the paid-up capital to Rs. 11 billion.


Institutional interactions

The Bank has developed relationships, both structured and informal, with agencies and institutions involved
in promotion of trade and investment which have served to supplement the various endeavors of the Bank.
CII, FICCI, ASSOCHAM, NASSCOM, FIEO, EEPC, Project Exports Promotion Council of India (PEPC),
The Council of EU Chambers of Commerce in India, other Export Promotion Councils, Chambers of
Commerce and Economic Research Institutes have been a valuable source of learning and support. The Bank
has also received strength and value from interaction with industry, banks, financial institutions, Export
Credit Guarantee Corporation of India Ltd., Ministries of Government of India, particularly the parent
Ministry of Finance, Reserve Bank of India and Indian Missions overseas.
44

7.3 Some examples where EXIM bank plays a role in financing or advising:

Line of Credit of US$ 20 million was extended by EXIM Bank to Government ofRwanda to finance
construction of a hydro power project in Rwanda.

Line of Credit agreement of US$ 30 million extended from EXIM Bank of India to Afrexim bank.


A Line of Credit of US$ 35.20 million for financing infrastructure projects in water supply and power
sectors in Cambodia was signed.

Tractor Assembly Plant in Mali (W. Africa) was financed under EXIM Bank Line of Credit of US$
30 million to Government of Mali.


A turnkey project for fuel tanks for a petroleum company in Sharjah, UAE is under execution by
Vijay Tanks and Vessels Ltd., Vadodara, with financial support from EXIM Bank.

A project supported by EXIM Bank for an NGO, Trust for Village Self Governance at
Kuthambakkam Village in Tamil Nadu, aimed at generation of employment for rural poor women
was undertaken.

Mid-sized company manufacturing auto forgings in Birmingham, U.K., was acquired byEl Forge
Ltd., Chennai, with financial support from EXIM bank.

ABG Shipyard Ltd., Surat, one of Indias major private sector shipbuilders is supported by EXIM
Bank for its export business through long term export credit and guarantee facilities.

Seminar on Business Opportunities with Asian Development Bank (ADB) was jointly organised by
EXIM Bank of India and Federation of Indian Export Organizations, in collaboration with ADB, in
Mumbai to encourage more Indian companies to participate in ADB (Asian development bank)
funded projects overseas.

45

8. AML/PML MEASURES OF EXIM BANK


At EXIM bank there exists a summarized policy framework on know your customer (KYC), anti-money
laundering (AML) and prevention of money laundering (PML) measures of the bank. The Bank has framed
the KYC policies incorporating the following key elements:

a) Customer Acceptance Policy

The banks customer acceptance policy, as given on their web-site is as follows:

The Bank would not establish any business relationship with anonymous or fictitious entities/ shell
banks

The Bank would keep the customer profile as confidential and details contained therein shall not be
divulged for cross selling or any other purposes without the concurrence of the customer.

The Bank would not establish business relationship or close an existing business relationship where
the Bank is unable to apply appropriate customer due diligence measures i.e. the Bank is unable to
verify the identity and /or obtain documents required as per the risk categorization due to non-
cooperation of the customer or non-reliability of the information furnished to the Bank.

The Bank would exercise due care before admitting new borrowers so as to ensure that the identity of the
borrower does not match with any person with known criminal background or banned entities.

b) Customer Identification Procedures

EXIM Bank has a detailed Customer Identification Procedure in place and obtains the documents
depending upon the status of the customer.

c) Monitoring of Transactions

All the disbursements made to the customers and all the receipts from the customers would be by way of
crossed cheques /demand drafts and through other proper Banking channels such as account transfers
only.
Moreover, the Bank generally would not undertake any cash transaction except for very small value
transactions for administrative purposes.

d) Records containing information

EXIM Bank would maintain records of all 'suspicious transactions'. 'Suspicious transactions' means a
transaction whether or not made in cash which, to a person acting in good faith -

46

1. Gives rise to a reasonable ground of suspicion that it may involve the proceeds of
crime;

2. Appears to be made in circumstances of unusual or unjustified complexity; or
3. Appears to have no economic rationale or bonafide purpose.


The records pertaining to suspicious transaction would contain the date on which the transaction was
conducted, the nature of the transaction, the amount and the currency in which the transactions was
executed.

e) Procedure and manner of maintaining information

EXIM Bank would maintain information in respect of transactions with its client referred to above in
hard and soft copies in accordance with the procedure and manner as may be specified by RBI and SEBI,
as the case may be, from time to time. The Bank would observe the procedure and the manner of
maintaining information as specified by RBI or SEBI, as the case may be.

f) Retention of records

The records referred to in above in Records containing information would be maintained for a period of
ten years from the date of the transaction.

g) Appointment of Principal Officer

Officer in the rank of general manager is appointed as principal officer of EXIM Bank who is responsible
for monitoring and reporting of all transaction and sharing of information as required under the law for
the purpose of KYC, AML and also for PML.

47

9. ASIAN EXIM BANKS FORUM

The Asian EXIM Banks Forum was initiated by Export-Import Bank of India (EXIM India) in 1996
for enhancing regional cooperation & forging a stronger link among member institutions.

Over the years, a number of export credit agencies were created during the course of economic development
of many Asian countries in line with their governments' export-oriented strategy.

It could also be seen that EXIM Banks and export credit agencies had evolved and are still evolving into
widely different financial institutions depending upon the business environment in the respective countries,
their foreign trade profile, country risk considerations, development of local financial markets.

Hence, to enhance cooperation and forge a stronger link among its member institutions, the first meeting of
Asian EXIM Banks was held in India, at the initiative of the EXIM Bank of India in 1996, which led to the
formation of the Asian EXIM Banks Forum.

Its member institutes consist of:

The Export-Import Bank of China, PT Bank Ekspor Indonesia, EXIM Bank of Korea, Philippine export-
import credit agency, export-import bank of India, Japan bank for international cooperation (JBIC), export-
import bank of Malaysia Berhad, the export import bank of Thailand, the export finance and insurance
corporation.

At the Asian EXIM banks forum annual meetings are held to:

Serve as a forum for discussing a wide range of issues

Focus - fostering common understanding and sharing information.

Endeavour -

- To meet the challenges faced as an export credit agency in Asia

- To explore possible areas for further regional cooperation.


Hence it can be seen now, that with the help of the Asian EXIM banks forum, there has been a significant
rise in trade with developing countries. The following graph shows the same:


48

Asians regions exports (US $ billion)



There has been a reorientation of Asian regions trade towards developing countries. While Asias exports to
industrial countries have risen five-fold from US$ 259 billion in 1990 to US$ 1.2 trillion in 2006, Asias
exports to developing countries have risen eight-fold from US$ 188 billion to US$ 1.6 trillion. Moreover,
underlying this trend has been the sharp rise in intra-Asian exports. Increased intra-Asian exports have
boosted regional trade in the Asian region.

Asian Region's imports (US $ billion)


49

Since 2000, Asias imports from developing countries have surpassed Asias imports from industrial
countries, with the trend increasing in subsequent years. While Asians imports from industrial countries rose
from US$ 554 billion in 2000 to US$ 957 billion in 2006, imports from developing countries rose much
faster from US$ 616 billion to US$ 1.6 trillion. There has also been a sharp rise in intra-Asian imports, from
US$ 481 billion in 2000 to US$ 1.18 trillion, has boosted Asias overall imports from developing countries.

Important outcomes of past endeavors of the Asian EXIM Banks Forum include the following:

Signing of the Memorandum of Understanding

Multilateral Letter of Credit Confirmation Facility Agreement

Bilateral Letter of Credit Confirmation Facility Agreements

Feasibility of a framework for establishment of a Regional Export Credit Agency for Asia for trade
refinance/reinsurance facilities

Web Portal of Asian EXIM Banks Forum www.asianeximbanks.org

Creation of a Pan-Asian EXIM Bond that would utilise the regional capital markets to raise capital
by bundling Asian bonds (under discussion)

Training Committee

EXIM banks around the world

EXIM banks around the world are a creation of the developed world and are gaining considerable
significance in developing countries. While DFIs are losing relevance in developed countries, EXIM Banks
are gaining increasing significance in current environment.
Some facts:

The EXIM bank in USA first came up for small business enterprises

The one in Japan now has a broader role through its merger with OECF (Overseas Economic
Cooperation Fund)

The Korean EXIM bank is now supporting Chaebols (trading houses) & overseas investment

Moreover, in all these countries the EXIM Banks exist as specialized focused institutions beyond commercial
Banks, have a key role to play in national development and are operating in a competitive global
environment.
The EXIM bank of India is in fact one of the first EXIM Banks for a developing country. Others who have
since set up EXIM Banks include Nigeria, Malaysia, Turkey, and China. These EXIM banks operate as
commercially viable & profitable organizations.
50

10. Exim Banks Buyers Credit under NEIA Programme

Introduction

Over three decades ago, in 1982, the Government of India launched a new institution in the form of Export-
Import Bank of India (Exim Bank), with a mandate to enhance exports and integrate Indias international
trade and investment with its economic growth.

While the mandate was demanding, what really set the Bank apart was the strategy adopted to fulfil it, which
essentially involved introduction of innovative products andservices and proactive adaptation to new
challenges.

Commencing operations as a purveyor of export credit, Exim Bank today plays an important role in
partnering Indian industries in their globalisationefforts through a comprehensive range of financing and
advisory support programmes encompassing all stages of the export business cycle.

Exim Bank has played a pioneering role in promoting project exports from India and has been actively
encouraging Indian firms to participate in overseas project opportunities. With Exim Banks support many
Indian companies have been executing projects in overseas markets.

The achievements of the past three decades provide a strong foundation to Exim Bank from where it will
continue to catalyse Indias international trade and investment. The Bank is committed to go beyond
traditional financing and facilitate exports of a varietyof products and services which have the potential to go
overseas, by creating a niche for them in the international market.

This brochure is on one of the principal lending programmes of Exim Bank viz. BuyersCredit under
NEIA, and is for dissemination of information to various Indian projectexporters, as also prospective
overseas borrowers viz. Foreign Governments or theirnominated government-owned entities.

Buyers Credit under NEIA is a unique financing mechanism that provides a safe mode ofnon-recourse
financing option to Indian exporters and serves as an effective market entrytool to traditional as well as new
markets in developing countries, which need deferredcredit on medium or long term basis.

Recently, the honorable Minister for Commerce, Industry and Textiles, Mr. Anand Sharmahas announced the
introduction of a pilot scheme of 2% Interest Subvention for ProjectExports through Exim Bank for
countries of the SAARC region, Africa and Myanmar.Mr. Sharma mentioned that the scheme will be
operational immediately for a combinedworth of US$ 500 million to begin with. The interest subvention
would be linked to theBuyers Credit Scheme which was introduced in the last financial year being
implementedthrough Exim Bank, ECGC and the National Export Insurance Account.


51

Background

Export-Import Bank of India (Exim Bank) is the coordinator and facilitator for the promotionof project
exports. The Bank serves as the focal point of the Working Group1 on projectexports, and plays a pivotal
role in supporting Indian companies in execution of projectsby offering both funded and non-funded facilities
for overseas industrial turnkey projects,civil construction contracts, supplies as well as technical and
consultancy service contracts.Project exports from India have been increasing steadily over the years,
indicating thegrowing stature of Indian expertise overseas in a wide range of activities, and upwardmovement
in the value chain of its export performance.

Project exports are broadly divided into four categories:

1. Civil construction:
Construction projects involve civil works, steel structural work,and erection of utility equipment and
include projects for building dams, bridges, airports,railway lines, roads and bridges, apartments, office
complexes, hospitals, and hotels.
2. Turnkey:
Turnkey projects involve supply of equipment along with related services andcover activities from the
conception stage to the commissioning of a project. Typicalexamples of turnkey projects are: supply,
erection and commissioning of boilers,power plants, transmission lines, sub-stations, plants for
manufacture of cement,sugar, textiles, chemicals, and desalination plants.
3. Consultancy Services:
Services contracts, involving provision of know-how, skills,personnel and training, and operations and
maintenance are categorised as consultancyprojects. Typical examples of services contracts are: project
implementation services,management contracts for industrial plants, hospitals, hotels, oil exploration, and
charterhire of rigs and locomotives, supervision of erection of plants, and IT solutions and systems.
4. Supplies:
Supply contracts involve primarily export of capital goods and industrialmanufactures. Typical examples
of supply contracts are: supply of stainless steel slabsand Ferro-chrome manufacturing equipments,
diesel generators, pumps, compressors,and vehicles.

Buyers Credit under NEIA

In order to provide further impetus to project exports from India, especially in theinfrastructure sector, Exim
Bank, in April 2011, in conjunction with Export Credit GuaranteeCorporation of India Limited (ECGC),
introduced a new product / initiative, viz., BuyersCredit under Government of India (GOI)s National
Export Insurance Account (NEIA), underwhich the Bank finances and facilitates project exports from India.

Buyers Credit NEIA is a unique financing mechanism that provides a safe mode of nonrecoursefinancing
option to Indian exporters and serves as an effective market entry toolto traditional as well as new markets in
developing countries, which need deferred crediton medium or long term basis.

52

NEIA is a Trust, set up by the Ministry of Commerce and Industry (MOCI), Governmentof India, for
providing medium to long term export credit insurance cover for promotingproject exports from India,
administered by ECGC.

Exim Bank also extends Buyers Credit, on medium term, to overseas borrower withoutNEIA cover to
finance export of capital goods, plant and machinery, industrial manufactures,consumer durables and any
other items eligible for being exported under the ForeignTrade Policy of the Government of India.

Supporting Project Exports

The Indian project exporter, under the Buyers Credit NEIA Programme, is backed by atailored financing
package that meets the funding needs of the project, without impactingthe balance sheet of the Indian project
exporter. Consequently, while the Indian companyremains responsible for timely and satisfactory execution
of the project, it is free fromcommercial and political risks arising out of the financing.Buyers Credit
NEIA is extended by Exim Bank to the governments of recipient countries orto the parastatal project
authorities backed by sovereign guarantee. NEIA, through ECGC,provides cover upto 100% for the facility
and also cover for exchange rate fluctuation tillrepayment of the credit, as the insurance cover is denominated
in Indian Rupees at thestart of the cover. Presently, a positive list of 40 countries have been identified by
ECGCfor which Indian exporters can avail Buyers Credit under NEIA, which include countriesbelonging to
SAARC, ASEAN, Africa, Central Asia, Eastern Europe, Latin America and the
Caribbean. The list could be suitably expanded / modified on receipt of credit requests forprojects from other
countries.

Eligibility and Mechanism

The eligibility of the project for covering under Buyers Credit NEIA, inter-alia, focuses on
(i) Country risk perception,
(ii) Track record and sound financials of Indian project exporterand overseas borrower, and
(iii) Conformity with the Reserve Bank of Indias Memorandumof Instructions on Project and Service
Exports.

It is envisaged that Indian project exportersof repute with good track record will be supported under the
Programme.

The amount of the loan is generally not more than 85% of the contract value, with thebalance 15% being paid
by the project authority as advance or down payment. Highercredit amount can be considered on case to case
basis. The interest rate is linked to EximBanks cost of funds plus a spread. The credit period would usually
be 8 to 12 years, andlonger credit period would be considered on the merits of the proposal. The
securityincludes a sovereign guarantee where the borrower is other than the foreign government,
a guarantee from the central bank of the borrowers country, as applicable, and any othersecurity as may be
stipulated on a case-to-case basis.

53

The project is placed for approval of the Committee of Directions under the Departmentof Commerce, MOCI
for export credit insurance cover under NEIA. Exim Bank extends thecredit directly to the overseas buyer of
projects from India without recourse to the Indianexporter.

The broad terms and conditions, flowcharts, and broad steps to be folllowed under theProgramme are given
overleaf.

Broad Terms and Conditions

Programme Buyers Credit Programme of the Export-Import Bank of India
(Exim Bank) under Government of India (GOI)s National
Export Insurance Account (NEIA)
Eligible Borrowers Sovereign governments and their nominated government- owned
entities for financing their import of eligible goods and services
from India on deferred payment terms.
Eligible Goods Project Exports from India
Eligible Indian
companies
Indian exporters with satisfactory track record and
soundfinancials.
Quantum of Credit The Buyers Credit would not normally cover more than 85%of
the contract value, with the balance 15% being paid by theproject
authority as advance or down payment. Higher creditamount can
be considered on case to case basis.
Rate of Interest The rate of interest will be a tenor based commercial rate
ofinterest linked to Exim Banks cost of funds plus a spread.
Charges / Fees
payable by the
Indian company
The charges and fees payable by the Indian company will
bedetermined on the basis of an assessment of the proposaland
terms and conditions of the loan.
Premium on
Insurance cover
Quoted by ECGC on a case-to-case basis and is to be borne bythe
overseas borrower / Indian company, as may be agreed.
Usually the cover is obtained for 100% of principal and
interestportion plus cover for exchange rate fluctuation till
repaymentof the credit, as the insurance cover is denominated in
IndianRupees at the start of the cover.
Tenor / Repayment
(Credit) Period
Credit period would usually be 8 to 12 years, and longer
creditperiod will be considered on merits of the proposal.

54

Security Sovereign guarantee where the borrower is other thanthe foreign
government;
Guarantee from Central Bank of borrower, as applicable;
Any other security as may be stipulated on a case-to-casebasis
by the Committee of Directions.
Nature of Projects
to be covered under
the Programme
Projects covering sectors, where Indian companies have established
expertise, would be covered for support under the Scheme. Such
sectors may, among others, include:
Power (generation, transmission, distribution), covering thermal,
hydro, solar and wind;
Transportation [(i) Railways (including rail lines, bridges,
signalling, rolling stock); (ii) Roads (including flyovers and
bridges, toll plazas); (iii) Vehicles and related equipment
(including heavy commercial vehicles, passenger
vehicles)];
Capital and engineering goods;
Housing, hospitals and related civil infrastructure;
Water (treatment, distribution, sanitation, irrigation).
Eligible Countries ECGCs positive list of countries under NEIA. The list could be
suitably expanded / modified on receipt of credit requests for
projects from other countries.
Lenders engineer For large value projects, a lenders engineer may be appointed
with the role and responsibilities covering the review of the
detailed project report and design, monitoring of implementation,
evaluation of operations and maintenance, and post-
commissioning stages of a project.

A certification confirming post-commissioning annual
maintenance arrangements to be submitted by the overseas buyer,
as acceptable to Exim Bank. The cost of the lenders engineer
would be covered in the overall cost of the project.
Indian Content Goods and services for minimum 75% of the value of goods and
services covered under the Scheme must be of sourced from India.
A suitable relaxation may be considered for exceptional reasons,
especially in case of projects having civil construction.
55

Approval process


Contract Execution and Disbursement


56

Broad Steps to be followed

1. The Indian Exporter approaches Exim Bank to seek support under Buyers Credit NEIA and terms
thereof.
2. Exim Bank approaches Export-Credit Guarantee Corporation of India Ltd. (ECGC) for indicative
premium rates.
3. Exim Bank conveys in-principle commitment along with indicative terms.
4. Once contract is secured, Exim Bank conducts detailed review and obtains necessary internal
approvals.
5. For cases where credit requirement exceeds USD 20 million, Exim Bank approaches the Working
Group to seek approval. Upon due consideration, the Working Group accordsapproval.
6. Exim Bank approaches the Committee of Directions under MOCI. The Committee ofDirections,
based on merits of the proposal, considers approval of the proposal forcoverage under NEIA.
7. ECGC, upon approval of the Committee of Directions for export credit insurance coverunder NEIA,
conveys approval and premium rate.
8. Negotiation and finalization of terms of the Buyers Credit Agreement.
9. Final terms are conveyed to ECGC and Department of Commerce.
10. Exim Bank accords approval of Buyers Credit to the Overseas Borrower.
11. Exim Bank may consider appointing a Lenders Engineer for large-value projects withthe role and
responsibilities covering review of the detailed project report and design,monitoring of
implementation, evaluation of operations and maintenance, and post commissioning stages of a
project. The cost of the lenders engineer would be coveredin the overall cost of the project.
12. The Indian company signs commercial contract with the Overseas Buyer.
13. Exim Bank and Overseas Borrower sign the Buyers Credit Agreement, and the Government of the
Overseas Borrower issues the sovereign guarantee.
14. Exim Bank and ECGC sign the Buyers Credit Policy Agreement.
15. The Indian company executes the contract.
16. Exim Bank makes disbursement of eligible amount under the contract to the IndianExporter under the
Buyers Credit upon receipt of acceptable shipping documents asstipulated under the Letter of Credit
and / or payment authorisation from the OverseasBorrower.
17. On due dates and till maturity of the loan (until fully repaid), the Overseas Borrowerpays interest and
principal dues and related charges under the loan as per the termsand conditions of the loan sanction.
57

11. CONCLUSION


An EXIM bank is one of the most vibrant banks for all developing countries all over the world.

EXIM bank of India is one of the premier banks playing a crucial role for development of foreign trade in
India. Providing a comprehensive range of products and services to Indian companies in their
internationalization efforts has been at the core of EXIM Banks endeavor. The pioneering and pivotal role
that the Bank plays in financing, facilitating and promoting Indias project exports, overseas investment by
Indian corporates for acquisitions or greenfield ventures abroad, extending Lines of Credit to other
developing countries to promote South-South cooperation, providing financial and business advisory support
to externally-oriented Indian firms, among others, are manifestations of the Banks endeavors in this
direction.

The role played by the EXIM bank would perhaps be best reflected by the fact that the Bank, in its journey
spanning a quarter century, has been partnering and sharing its experience with other developing and
emerging economies.

The significant role of the Bank in facilitating enhanced regional trade through the setting up of the Asian
EXIM Banks Forum serves to highlight the continuous evolution of the Banks endeavors in meeting global
challenges.

Looking at the role played by the EXIM bank in international trade and other areas, it can be seen that its
existence for several years proves that it has served its purpose and will continue to maintain its upward track
record.


58

EXECUTIVE SUMMARY

A bank acts as an agent that provides financial services for its clients or members. Banks are generally
private sector or public sector organizations as well as co-operative societies. But, in India there are 3 apex
institutions which deal with major economic activities which are the Industrial Development Bank of India,
the National Bank for Agricultural loans; and the Export Import Bank of India (EXIM bank of India).

The EXIM Bank functions as the apex financial institution which provides economic assistance to
importers and exporters and also promotes foreign trade of our nation. The EXIM Bank of India established
by an Act in September 1981 became fully operational in March 1982.

The major role played by the EXIM bank can be seen through the functions it carries out by way of the
products and services provided by it at all stages of a business cycle.

The EXIM bank has not only functioned as a foreign trade financial institution for India but also has
played an all-important role in assisting certain other developing countries.

Besides the help provided in the form of export-import financing and advisory help for the same, EXIM
bank has also taken up some innovative initiatives such as film financing, grass-root level assistance,
agricultural financing and other promotional programs. These initiatives have not only benefitted traders but
also have enhanced the countrys economic growth.

EXIM bank of India is also the initiator for the Asian EXIM banks forum which in-turn has proved to be
very essential to the growth of foreign trade in the developing Asian economies.

EXIM banks journey spanning over a quarter of a century tells us that it has achieved path-breaking
results in the development of Indias foreign trade and its economy as whole. The bank has played a major
role in our countrys development.

As quoted by Jawaharlal Nehru from a poem by Robert Frost, And miles to go before Isleep, EXIM
bank too has a long way to go in order to be one of the pillars in achieving ournations status as a fully-
developed economy all over the globe.