Baishalee

Chakrabarti
SOURCES OF IPBM

FINANCE
TABLE OF CONTENTS

S No. PARTICULARS PAGE NO.

1. DEVELOPMENT FINANCIAL INSTITUTION 2-3

2. ABOUT THE BANK 4-6

3. FUNCTIONS 7-8

4. OBJECTIVES 9

5. PRODUCTS AND SERVICES 10-21

6. IMPORTANCE 22

7. FINANCIAL PERFORMANCE 23-26

8. IMPACT ON ECONOMY 27-30

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DEVELOPMENT FINANCE BANK
A development finance institution (DFI) or development bank is a financial institution that
provides risk capital for economic development projects. They are often established by
governments or charitable institutions to provide funds to projects that would otherwise not be
able to get funds from commercial lenders. Some development banks include socially
responsible investing and impact investing criteria into their mandates. Governments often use
development banks to form part of their development aid.
DFIs can include multilateral development banks, bilateral development banks, microfinance
institutions, community development financial institution and revolving loan funds. These
institutions provide a crucial role in providing credit in the form of higher risk loans, equity
positions and risk guarantee instruments to private sector investments in developing countries.
DFIs are typically backed by countries with developed economies.
As of 2005, total commitments (as loans, equity, guarantees and debt securities) of the major
regional, multilateral and bilateral DFIs totaled US$45 billion (US$21.3 billion of which went to
support the private sector). DFIs often provide finance to the private sector for investments that
promote development and to help companies to invest, especially in countries with various
restrictions on the market.
Development banks include:
 Community development banks which fund low-income areas in the United States
 International financial institutions conducting development-oriented finance on a bilateral
or multilateral basis
 National development banks are government-owned financial institution that provides
financing for economic development.
 Multilateral development bank are development banks set up by a group of countries and
often operate under international laws.
Development Finance Institutions (DFIs) are specialized development banks that are usually
majority owned by national governments. DFIs can be bilateral, serving to implement their
government’s foreign development and cooperation policy, or multilateral, acting as private
sector arms of International Finance Institutions (IFIs) established by more than one country.
DFIs invest in private sector projects in low and middle-income countries to promote job
creation and sustainable economic growth. They apply stringent investment criteria aimed at
safeguarding financial sustainability, transparency, and environmental and social accountability.
DFIs source their capital from national or international development funds or benefit from
government guarantees which ensures their credit-worthiness. The financial support they bring to
relatively high-risk projects helps mobilizing the involvement of private capital, bringing in such
diverse actors as commercial banks, investment funds or private businesses and companies.

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CLASSIFICATION OF DFI

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ABOUT EXIM BANK
Export–Import Bank of India is a finance institution in India, established in 1982 under Export-
Import Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst
and a key player in the promotion of cross border trade and investment. Commencing operations
as a purveyor of export credit, like other export credit agencies in the world, Exim Bank India
has, over the period, evolved into an institution that plays a major role in partnering Indian
industries, particularly the Small and Medium Enterprises, in their globalization efforts, through
a wide range of products and services offered at all stages of the business cycle, starting from
import of technology and export product development to export production, export marketing,
pre-shipment and post-shipment and overseas investment . In a rapidly shifting financial
landscape, we are a catalyst and key player in the promotion of cross border trade and
investment. By instilling a powerful culture of innovation and foresight, they help India
maximize its potential and meet and exceed its vision.
The Exim Bank has a 17-member Board of Directors, with Chairman and Managing Director as
the chief executive and full-time director. The Board of Directors consists of the representative
of the Government of India, RBI, IDBI, ECGC, commercial banks and the exporting community.
The authorised capital of Exim Bank is Rs. 200 crores, of which Rs. 75 crores is paid up. The
banks have secured a long-term loan of Rs. 20 crores from the Government of India. It can also
borrow from the RBI. It is empowered to raise resources in domestic and international markets.
The Bank began its lending operations from March, 1982. Till June, 1982, it has extended
assistance up to Rs. 133 crores to the export sector in various ways.
The establishment of Exim Bank may be regarded as a right step in the export promotion policy
and programmme of the Government.
During 1984, the Exim Bank sanctioned various programmes of funded assistance of Rs. 430
crores. It also launched a new programme to provide term finance for export-oriented units,
under which assistance was provided through a consortium for establishing a 100 per cent export
unit in the ceramics industry.
The Exim Bank also extended its financial assistance to Indian exports through letters of credit,
re-lending facility, export bills rediscounting, overseas investment finance, facilities for deemed
exports and assistance to hundred per cent export units and units in free trade zone.
At the end of December 1984, the Exim Bank’s outstanding underfunded and non-funded
assistance amounted to Rs. 415 crores and Rs. 510 crores, respectively.
In 1984, the Exim Bank signed a loan agreement to borrow one billion yen from the Japanese
commercial yen market.
In June 1986, the Exim Bank introduced a new programme called the Export Marketing Fund
(EMF), under which finance is made available to Indian companies for undertaking export
marketing activities. The programme also covers activities like desk research, minor product

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adaptation, overseas operations and travel to India by buyers overseas. During 1986, Rs. 78 lakhs
were sanctioned, while Rs. 3.4 lakhs have been utilised under the EMF.
On whole, the Exim Bank concluded an agency credit line of US $ 15 million with the
International Finance Corporation (IFC).
During 1994-95, Exim Bank sanctioned Rs. 2,466 crore and disbursed Rs. 2,130 crore of
financial assistance under various lending project.
ORGANISATION-
Exim Bank is managed by a Board of Directors, which has representatives from the Government,
Reserve Bank of India, Export Credit Guarantee Corporation of India, a financial institution,
public sector banks, and the business community.
The Bank's 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 handles the entire range of export credit services
such as supplier's credit, pre-shipment Agriculture Business Group, to spearhead the
initiative to promote and support Agricultural exports. The Group handles projects and
export transactions in the agricultural sector for financing.
 Small and Medium Enterprise: EXIM Bank India handles credit proposals from SMEs
under various lending programmes of the Bank.
 Export Services Group offers variety of advisory and value-added information services
aimed at investment promotion.
 Export Marketing Services Bank offers assistance to Indian companies, to enable them
establish their products in overseas markets. The idea behind this service is to promote
Indian export. Export Marketing Services covers wide range of export oriented
companies and organizations. EMS group also covers Project exports and Export of
Services.
 Besides these, the Support Services groups, which include: Research & Planning,
Treasury and Accounts, Loan Administration, Internal Audit, Management Information
Services, Information Technology, Legal, Human Resources Management and Corporate
Communications.
LEADERSHIP-
Shri. R.C. Shah was the first Chairman and Managing Director (CMD) from 1982 - 1985. His
extensive commercial and international Banking experience built a strong decision-making
muscle that pushed us towards our objectives. His vision nurtured our organizational culture
from being flat and nonhierarchical to being multi-disciplinary and problem solving in approach.
Shri. Kalyan Banerji succeeded him from 1985 - 1993. His complex commercial banking
experience with conducive exposure to international banking helped drive transformational
change at Exim Bank.

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Ms. Tarjani Vakil led the Bank from 1993 - 1996, with an unrelenting focus on export capability
creation to accelerate growth at multiple levels. Ms. Vakil has the distinction of being one of the
first women to head a financial institution in India.
Shri. Y.B. Desai, Shri. T.C. Venkat Subramanian and Smt. Ravneet Kaur, then Joint Secretary
(IF) Department of Financial Services, Ministry of Finance, held the reins from 1997 - 2001,
2001 - 2009 and 2009 - 2010 respectively.
Shri. T.C.A. Ranganathan took charge to implement mission-driven organisational changes till
2013. Shri. Anurag Jain, Joint Secretary, Department of Financial Services, Ministry of Finance
held the interim charge of CMD till early 2014.
Shri Yaduvendra Mathur, IAS, took charge as Chairman & Managing Director of the Bank for a
tenure of three years, from February 2014 to February 2017.
Shri David Rasquinha was appointed the Managing Director of Exim Bank from August 2017.
HISTORY OF EXIM BANK-
For a long time, the need for a separate institution for export finance was not felt in the country
due to the closed market conditions and India’s limited share in world export. It is only during
the 1980s, the need to increase India’s export was felt, owing to increased foreign debts, which
compelled India to go for an Apex institution and the Export Import Bank (Exim Bank) was set
up in 1982.
FEATURES OF EXIM BANK-
 Non-hierarchical culture
 Multi-disciplinary approach to problem solving
 Quick access to the latest technology
 Climate for innovation

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FUNCTIONS OF INDIA-
Exim bank performs many functions. The bank’s functions are segmented into several operating
groups namely-
Finance for exports and Imports: Exim bank helps by providing finance for exports and imports
of goods as well as services from India. One of the major export policies adopted by government
of India is the export of value added items. For example, all along we have been exporting Hades
and skins from India. Now, it is ‘processed leather’ in the form of leather goods. So, the exporter
who was earning 1 or 2 dollars while exporting Hades and skins will now earn 25 to 30 dollars
when he exports in the form of leather goods. Similarly, import of raw materials such as gold
will be financed by Exim bank, since it will be exported as jewels which is again a value added
export.
2. Finance on deferred basis: Exim bank provides finance on deferred basis for importing capital
equipment and other machinery. The cost of capital equipment in foreign countries will be more
and the Indian importer cannot afford to pay lump sum payment in foreign exchange. The Exim
bank provides guarantee on behalf on the importer and enables the importer to make payment on
installment basis to the foreign exporter. Or, the bank itself may pay in bulk to the foreign
exporter and receive installment payments from the Indian importer.
3. Lease Finance: It provides lease finance for importing capital equipment. Under cross border
leasing, the lessor may be in a foreign country, while the lessee will be in India. The Exim bank
helps the Indian lessee in obtaining the capital equipment on lease by making the lease payment
in terms of foreign exchange. It also helps for import leasing, wherein both the lessor and lessee
will be Indians but the equipment imported on lease may be from U.S. A or U.K.
4. Finance to export projects: Export projects in Third World countries are financed. India has
taken up various export projects in Third World countries, such as railway project in Tanzania.
Similarly, projects on some of the oil wells in Kuwait and Iraq taken up by Oil and Natural Gas
Commission (ONGC) are also financed by Exim bank. All the necessary equipment and the
manpower required for such projects will be financed by the Exim bank.
5. Line of credit: The Exim bank provides line of credit to foreign importers so that exports from
India can increase. Under line of credit, exim bank will provide finance to the Central bank of
the borrowing country which in turn will provide to the commercial bank and ultimately the
credit will reach the importer. This kind of credit is safe as there is guarantee of funds at every
stage.
6. Refinance in foreign exchange: The Exim bank obtains bulk loan in foreign currencies in the
foreign exchange market and provides refinance to the financial institutions, providing export
finance. Different types of exporters may require different foreign currencies and these are
obtained by the Exim bank at a competitive interest rate and are given to commercial banks for
lending to exporters. It is due to this, the commercial banks are able to provide pre-shipment and
post-shipment finance to different exporters.

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Contribution to Equity fund: The Exim bank also contributes to the shares, debentures of Indian
companies involved in exports. Export companies while raising capital, may issue shares which
may be partly financed by Exim bank. The bank may extend this facility as a temporary finance
as it will not retain the shares permanently. As a part of investment policy or by way of portfolio
investment, it may invest in the shares and debentures of companies involved in exports.
8. Consultancy Services: The Exim bank also provides technical, administrative and other
assistance to exporters. Export projects are analyzed by the Exim bank from the point of view of
technical, managerial, marketing and financial feasibility. When it finds a project viable, on the
above grounds, it will not hesitate to fund it.
Other functions are-
Corporate Banking Group: - This group handles variety of financing programmes for Export
Oriented Units (EOU’s), Importers, and overseas investment by Indian companies.
Project Finance/ Trade Finance: - This group handles the entire range of export credit services
such as supplier’s credit, pre-shipment Agri-business Group etc. The group handles projects and
export transactions in the agricultural sector for financing.
Export Services Group: - This group offers variety of advisory and value-added information
services aimed at investment promotion.
Export Marketing Group:- This group offers assistance to Indian companies, to enable them to
establish their products in overseas markets.
Support Services Group: - The services which are rendered by this group includes the Areas of
research and planning, Corporate Finance, Loan Recovery, Internal Audit etc.
Apart from the above assistance, it is also providing discounting facilities for export bills. There
is also export finance for computer software exports. The exporters are provided with market
development assistance so that they can undertake advertising and sales promotion activities in
foreign countries. The bank signed a memorandum of understanding (MOU) with European
Bank for Reconstruction and Development. The total assistance provided by the Exim bank has
exceeded more than Rs. 3,000 crores. In the coming years, the bank is likely to play a major role
in the export of automobiles and other non-traditional items.

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OBJECTIVES-
Their objective include providing financial assistance to exporters and importers and 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.
They act on business principles with due regard to public interest.
EVOLVING GOALS-
Exim Bank's Vision has evolved from a product-centric approach with Export Credits and Export
Capability Creation, to a more customer-centric approach by offering a comprehensive range of
products and services to empower businesses at all stages of a company's business cycle. Today,
they develop commercially viable relationships with a target set of externally oriented companies
through a comprehensive range of products and services, aimed at enhancing their
internationalization efforts. Going ahead, they aspire to utilize the leadership and expertise in
Export Finance to make a lasting difference to Indian companies with global aspirations. The
Bank's Mission is to facilitate globalization of Indian Business.
1982-1985- Export Credit
Provides government-backed loans, guarantees and insurance to ventures to do business overseas
1985-94- Export Capability Creation
Empowers all the strata of the society to use their skills and create business opportunities
overseas.
1994- Today- Comprehensive Products and services
Offers a gamut unique products and need based services that boost Indian businesses across the
globe.
 To ensure and integrated and coordinated approach in solving the allied problems
encountered by exporters in India
 To pay specific attention to the exports of capital goods;
 Export projection
 To facilitate and encourage joint ventures and export of technical services and
international and merchant banking
 To extend buyers’ credit and lines of credit;
 To tap domestic and foreign markets for resources for undertaking development and
financial activities in the export sector.
 Financing of exports and imports of goods and services not only of India but also of other
countries
 Financing of JV, R&D and technological services
 Co-financing global and regional development agencies.

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FINANCIAL PRODUCTS AND SERVICES
Exim Bank offers a spectrum of financial services that cater to businesses across strata to explore
new lands and extend their business boundaries. It identifies their business goals and inspires
them to compete in the international market. They address the financial needs of corporates,
MSMEs and enterprises at grassroots level to promote all round development of the economy.
Over the years, Exim Bank has also enabled Indian ventures to secure contracts across the world
and supplement the development objectives of other nations.
BUYERS CREDIT
Buyer's Credit is their unique credit facility programme that motivates Indian exporters to
explore new geographies. Through this programme, the overseas buyer can open a "letter of
credit" in favour of the Indian exporter and can import goods and services from India on deferred
payment terms. While on one hand, the exporter enjoys reduced transaction costs and
complexities of international trade transactions, on the other hand, the Indian exporter gets to
compete in the international market and can continue to put his working capital to good use to
scale up operations. While Indian companies avail of buyers credit from other international
financial institutions in order to finance their imports at competitive LIBOR rates, buyer's credit
that we provide can only be used for the export of Indian goods or services.
FEATURES-
 Facilitates exports for SMEs by providing credit to overseas buyer to import goods from
India
 Offered for financing capital goods or services on deferred payment terms
 Provides non-recourse finance to Indian exporters by converting deferred credit contract
into cash contract
 Extended as advance payments to Indian exporters on behalf of the overseas buyer
 Can be a transaction specific financing or a revolving/renewable limit
 Can be extended to more than one overseas subsidiaries of any Indian company
 Since it is a non-LC transactions, it saves LC charges
BENEFITS TO FOREIGN CUSTOMERS-
 Medium and long-term financing facilities for smooth execution of projects
 Competitive and attractive rates of interest available against host country's high
borrowing cost

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ELIGIBILITY-
 Buyer's credit is extended to a foreign project company that intends to award the project
execution to an Indian project exporter.
 The financing will be available to all kinds of projects and service exports from India.
 The facility is available for development, upgrading or expansion of infrastructure
facilities; financing of public or private projects such as plants and buildings; professional
services such as surveyors, architecture, consultations, etc.
EXIM ADVANTAGE-
 Enables overseas buyers to obtain medium and long-term financing
 Competitive interest rate against host country's high cost of borrowing
 Encourges Indian exporters to enter international markets
 Allows Indian exports to utilize their working capital for scaling up their core business
LIST OF DOCUMENTS REQUIRED
 Request letter from Indian exporter for disbursement, specifying the remittance details
where the disbursement amount is to be remitted.

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  Non-negotiable copy of shipping documents
 Promissory note covering the eligible value (disbursement amount) of export contract
 Trust receipt covering value of consignment financed by disbursement under the Buyer's
Credit facility
 Authorization letter from borrower to disburse the eligible value under the Buyer's Credit
facility and remit it to the Indian exporter.
BUYERS CREDIT UNDER NEIA-
National Export Insurance Account (NEIA) is a trust set up by the Ministry of Commerce and
administered by Export Credit & Guarantee Corporation of India (ECGC). We provide Buyer's
Credit under NEIA for promoting India's project exports to traditional as well as new markets in
developing countries which need deferred credit on medium or long-term basis. Under this
unique financing programme, we extend credit to overseas sovereign governments and
government owned entities for import of Indian goods and services from India on deferred credit
terms for a medium to long-term period.
ELIGIBILITY
 Exim Bank extends the credit directly to overseas buyer of projects from India without
recourse to Indian exporters.
 The borrower should be overseas sovereign governments or a government owned entity.
 Amount of loan should generally not be more than 85% of the contract value.
 Sovereign guarantee is needed where the borrower is other than the foreign government.
 Guarantee from Central Bank of borrower, as applicable.
 Any other security as may be stipulated on a case-to-case basis.
EXIM ADVANTAGE-
 Unique financing solution
 Works as an insurance cover for the Indian exporters
 Encourages Indian companies to test new markets
 Government-backed security
CORPORATE BANKING
They offer a range of financing programmes to enhance the export-competitiveness of Indian
companies. They provide 360 degree support to export-oriented units by catering to long-term
loan requirements that help exporters finance new projects, expand, modernize or purchase new
equipment or carry out R&D; and cater to their working capital and overseas investment
requirements.

They have played a catalytic role in building "brand India" by partnering with micro, small and
medium enterprises (MSMEs) and enhancing their global footprint. Not only that, we have made
significant strides in contributing towards economic development through our Grassroots

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Initiative and Development programme. Their aim is to strengthen the export capabilities of our
rural enterprises and ensure all-round economic development and to enhance the purchasing
power from the bottom of the pyramid.
FINANCE FOR CORPORATES-
Research & Development Finance For Export Oriented Units
Their objective is to encourage Indian exporters to invest more in their R&D spend to develop
new products and processes that will enhance export capabilities. With the need to bridge the
funding gap of Indian exporters in the research space at our core, we have a dedicated R&D
Financing Programme. Under this programme, financing can be extended to any export oriented
company. Alternatively, a special purpose vehicle promoted by the company can be created
irrespective of the nature of the industry.
Pre-Shipment/Post-Shipment Credit Programme:
They understand that a primary obstacle for Indian exporters is the lack of a dependable source
of financing. We attempt to bridge this gap by extending export credit to Indian exporters to
meet a wide range of their trade financing requirements. They provide working capital finance
by way of pre-shipment credit and post-shipment credit. They also extend non-fund based limits
including issuance of Letters of Credit (both foreign & inland) and Bank Guarantees (both
foreign & inland) as part of our export credit assistance to clients. The credit limits are generally
operated as a running account facility. The facilities can be drawn in either Indian Rupee or
Foreign Currency.
Lending Programme for Export Oriented Units:
In order to enhance international competitiveness and the capabilities of export-oriented Indian
companies, we provide term loans to finance various capital expenditures including certain soft
expenditures of such companies. Loans or guarantees are extended for the expansion,
modernization, upgradation or diversification projects. This includes acquisition of equipment,
technology export marketing, export product development and setting up of Software
Technology Parks.
Import Finance Programme
They offer a comprehensive range of products and services covering financial needs of borrower
companies at all stages of business cycle to enhance the competitiveness of Indian companies.
The Companies involved in manufacturing/services, having only domestic operation and no
exports, are eligible for financing from Exim Bank for import of equipment/machineries for
domestic projects. Financing is done towards bulk import of machineries, services for capacity
expansion, modernization and infrastructure projects.
Production Equipment Finance Programme
They extend credit to eligible export oriented enterprises to enhance the export capability
creation through financing non-project related equipment procurement. They offer loan for

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acquisition of plant and machinery, purchase of ancillary equipment including equipment for
packaging, pollution control, utilities, quality assurance etc. The loans are flexible and can be
extended for equipment procurement for balancing, replacement, modernization and capacity up-
gradation.
FINANCE FOR SME
They have been partnering with SMEs for their financing, capacity building and market advisory
support. With a view to have a focused approach in providing financial and advisory services to
the SME sector, Exim Bank setup a separate SME Group in 2004. Exim Bank offers a holistic
package, distinct from commercial banks, that is focused on export capability creation among
SMEs, through enhancing their export production, export marketing and international
competitiveness.
SME Group
SME Group has been established to cater to the specific financing requirements of export
oriented SMEs. The financing programmes for SMEs cater to requirements at various stages of
the export business cycle of Indian SME exporters/forex earners covering import of technology,
export product development, export production, export marketing, export credit at post-shipment
stages, and investment overseas. In addition to various lending programmes for Corporates,
SMEs can also avail financing under following services/programmes from Exim Bank.
For Clusters of Indian SME EOUs:
Besides providing financial assistance to individual SME EOUs, they also provide financial
assistance to Special Purpose Vehicles (SPVs) of a cluster of SMEs. Term loans are provided to
such clusters of SME units for the following activities:
 Development of new geographically contiguous cluster/industrial park, involving
creation and maintenance of common infrastructure and common facilities. This includes
construction of buildings and civil works and the acquisition of assets or the requisite
technology, for the benefit of industrial units within the cluster/industrial park.
 Development of an industrial estate, by industrial users, industry associations and/or
Government bodies.
 Up-gradation of an existing industrial cluster or industrial estate.
 Development of specific infrastructure, including common effluent treatment plant,
captive power plant, transportation linkages, hazardous waste disposal.
 Development of Common Facilities Centers like testing centers, cold storages, for
industrial clusters, industrial estates, or a group of industries with common interests.
EXIM ADVANTAGE-
 All round financing for SMEs at competitive rates
 Access and ability to leverage the large international network of Exim
 Boosting entrepreneurial spirit and skill of young India
 Special focus on creative industries and efforts to enhance their export capabilities

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FINANCE FOR GRASSROOTS ENTERPRISES
They believe in promoting all round development of the economy and have thus lent our hand of
support to enterprises based out of rural areas of the country through our GRID programme.
Through this initiative, they promote grassroots initiatives/technologies, particularly those
having export potential. They seek to help artisans/producer groups/clusters/small enterprises
across the country to realize remunerative return on their produce essentially through facilitating
exports from these units.
They understand the needs of such organizations and offer tailor-made financial products to cater
to their needs. They work towards developing a robust, vibrant and holistic approach by
providing assistance at various stages of product development / business cycle. The broad areas
that we support include capacity building, matching grant support for product/process
certification and design and packaging enhancement, working capital finance, term lending for
development of common facility centres, construction of raw material bank, technology up
gradation and creation of export capability.
LINES OF CREDIT
From our inception they have been extending Lines of Credit (LOC) to enable Indian exporters
to enter new geographies or expand their business in existing export markets without any
payment risk from overseas importers. They put special emphasis on extending LOC as an
effective market entry tool as well as a means of market diversification for Indian exporters.
They extend LOCs to overseas financial institutions, regional development banks, sovereign
governments and other entities overseas, to enable buyers in those countries to import
developmental and infrastructure projects, equipments, goods and services from India, on
deferred credit terms. They extend LOCs on their own and also at the behest and with the support
of Government of India.
GOVERNMENT OF INDIA SUPPORTED LOCs-
In 2003-04, The Government of India (GOI) formulated the Indian Development Initiative (IDI),
now known as Indian Development and Economic Assistance Scheme (IDEAS) with the
objective of sharing India's development experience through:
 capacity building and skills transfer,
 trade, and
 infrastructure development,
By extending concessional LOCs routed through Exim Bank, to developing partner countries,
towards creating socio-economic benefits in the partner country.
The Ministry of External Affairs (MEA) has now set up the Development Partnership
Administration (DPA) Division to deal with India's development assistance programmes abroad,
including LOCs routed through Exim Bank. These LOCs are increasingly being extended to
partner countries for large-scale and complex projects (project exports from India).

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Both, bilateral and multilateral assistance, typically follow a sequence of standard procedures:
 project identification and preparation,
 review and approval of the project proposal,
 offer of the loan, acceptance and execution of loan agreement,
 project implementation, monitoring and supervision, and
 socio-economic impact assessment after project completion
Lessons learned from the impact assessment / evaluation act as a feedback to the preparation,
review and implementation of future projects. This process forms the 'project cycle'.

Requirement as to import of goods and services from India

 These loans are for project exports and the import of goods and services from India.
 Goods and services (including consultancy services) for minimum 75% value of the
contracts covered under these loans must be sourced from India. (A relaxation of 10%
may be considered on a case-to-case basis)
 LOCs may finance upto 100% value of contract on FOB/CFR/CIF/CIP basis.
 Soft loans under the scheme shall be free from all kinds of taxes and duties of any nature
whatsoever levied in the recipient country (including all corporate/personal/value added
taxes, import/custom duties, special levies and social security contributions) for

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 temporary employees deputed by Indian exporters in relation to the project execution in
the recipient countries.
EXIM BANK’S OWN LINE OF CREDIT-
To promote Indian projects, products and services they have been extending LOCs to various
countries. Their own LOCs are offered to economically strong and developing countries. We
finance all items eligible for being exported under the "Foreign Trade Policy" of the Indian
Government. Their LOCs are typically linked to LIBOR rates and carry a tenor up to seven
years.

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EXIM ADVANTAGE-
 Increase export of goods, services and projects from India
 Improving bilateral trade relations with other developing nations
 Eliminating payment risk for importers
 Streamlined processing and quick turnaround
OVERSEAS INVESTMENT FINANCE-
For over three decades, they have enhanced export opportunities for India and driven the
economic growth of the nation. They have attempted to integrate foreign trade and investment
opportunities to build value over the long term. At a time when India is readying to make a mark
on the global arena as a manufacturing hub, to invest abroad for seeking resources, markets,
efficiencies or even strategic assets, we encourage Indian companies to invest abroad and are
here to facilitate conditions for that.
EXIM ADVANTAGE-
 Knowledge of exporters requirements
 Capability to leverage extensive international network
 Lending in both INR and foreign currency
 Competitive rates of interest and flexible repayment schedules
PROJECT EXPORTS
In recent years, Indian project exporters have secured diverse contracts exemplifying their
versatility and technological capabilities. They have been one of the prime movers in
encouraging project exports from India; and have enabled Indian companies to secure contracts
across various geographies over two decades and supplement the development objectives of host
countries.
They have been providing a steady stream of support to project activities in engineering,
procurement, construction (civil, mechanical, electrical or instrumental). This includes the
provision of specific equipment related to supplies, construction and building materials,
consultancy, technical know-how, technology transfer, design, engineering (basic or detailed).
We also support existing or new projects, plants or processes that require additional assistance in
processes such as international competitive bidding: including multilaterally funded projects in
India.

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They extend funded and non-funded facilities to export of projects and services categorized as-

Export Project Cash Flow Deficit Finance (EPCDF)

Export Project Cash Flow Deficit Finance (EPCDF) facility is provided to Indian Project
exporters executing project export contract overseas. The facility (available in domestic and
foreign currency) helps take care of temporary cash flow deficits during contract execution
period.
EXIM ADVANTAGE-
 Knowledge of exporters requirements
 Capability to leverage extensive international network
 Lending in both INR and foreign currency
 Competitive rates of interest and flexible repayment schedules
SERVICES PROVIDED
Economists and strategists at Exim Bank are at the heart of the various services offered to
businesses venturing in international trade. Exim Bank aims at empowering exporters to evaluate
international risks and tap export opportunities skillfully.
MARKETING ADVISORY SERVICES
Exim Bank's Marketing Advisory Services (MAS) Group plays a promotional role to create and
enhance export capabilities and international competitiveness of Indian companies. The Group
leverages the Bank's high international standing, in-depth knowledge and understanding of the
international markets and well established institutional linkages. Its physical presence supports
Indian companies in their overseas marketing initiatives on a success fee basis. The fees for

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MAS is payable in Indian Rupees and applies to the subsequent orders from the client introduced
by the Bank for a period of at least 2 years.
Key roles of Marketing Advisory Services:
 To help Indian exporting firms in their globalisation efforts by proactively assisting in
locating overseas distributors/buyers/partners for their products/services
 To identify opportunities overseas for setting up plants or projects or for acquisition of
overseas companies
Exim Bank has successfully placed a range of products in overseas as well as domestic markets.
Products like handmade paper, handicrafts, vegetables and fresh fruits, garments, home décor,
marine products, spices and agri-equipments are placed in Singapore, Africa, Brazil, Middle
East, and US. The MAS Group also organizes workshops and supporting events to facilitate
design, and package their products for the international markets.
RESEARCH AND ANALYSIS-
At the helm of Exim Bank's Research & Analysis Group (RAG) is a team of experienced
economists and strategists who steer the group with in-depth insights on international economics,
trade and investment through qualitative and quantitative research techniques.
The Group skillfully monitors trends in global and domestic economies to analyse their impact
on Indian and other developing economies. Besides catering to the constituents within the Bank,
the Group also connects with the Government, RBI, exporters/importers, trade & industry
associations, external credit agencies, academic institutions and researchers.
The Group envisages avenues to enhance India's international engagement and implements the
research under a broad classification of regional, sectoral and policy related studies; which are
then published as Occasional Papers, Working Papers, Books, etc.
Further, the Group prepares exposure limit for countries of business interest to the Bank, and
tracks development in the key industries for the benefit of the Bank's business exposure in these
industries. On behalf of interested companies, the Bank undertakes customised research in the
sphere of establishing market potential, defining marketing arrangements and specifying
distribution channels. It assists these companies to develop export market entry plans.
With an objective to provide up-to-date information to Indian traders and investors, the Group
publishes various bulletins regularly with information on export opportunities and highlights
developments that have a bearing on Indian exports. They include:
'Eximius: Export Advantage' - a quarterly bulletin
The newsletter comprises regional and industry outlooks, activities of the Bank, opportunities in
multilateral funded projects and contract awards, review on select traded currencies and
countries, and a section on the happenings during the quarter. As a free publication, it is
effectively distributed to a wide network of scholars, economists, institutions, Government of
India offices, and export promoting organisations.

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'Agri Export Advantage' - a bi-monthly publication
It provides stakeholders of Indian agri-businesses with updates on global agri-environment and
markets, research reports on agri-commodities, international issues, prospective areas,
agricultural trade and policies, regulatory issues in international trade, WTO Government
schemes and assistance, latest international news brief and Bank's activities to promote agri-
export from India. It is published in English, Hindi and 10 regional languages including
Assamese, Bengali, Gujarati, Kannada, Marathi, Malayalam, Oriya, Punjabi, Tamil, and Telugu.
EXPORT ADVISORY SERVICES-
The Export Advisory Services Group [EAS] offers a diverse range of information, advisory and
support services, which enable exporters to evaluate international risks, exploit export
opportunities and improve competitiveness. Value added information and support services are
provided to Indian projects exporters on the projects funded by multilateral agencies.
Developing export market entry plans, facilitating accomplishment of international quality
certification and display of products in trade fairs and exhibitions are other services provided.
The Bank provides a wide range of information, advisory and support services, which
complement its financing programmes. These services are provided on a fee basis to Indian
companies and overseas entities. The scope of services includes market-related information,
sector and feasibility studies, technology supplier identification, partner search, investment
facilitation and development of joint ventures both in India and abroad. During the year, the
Bank provided a range of services to companies. Information in the form of a list of importers /
exporters across different industries and sectors was provided to Indian firms active in
international trade

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IMPORTANCE OF EXIM BANK-
Once our economy opened up post liberalization and globalization, the import and export
industry became a huge sector in our economy. Even today India is one of the largest exporters
of agricultural goods. And we import quite a few items as well. So to provide financial support to
importers and exporters the government set up the EXIM Bank.
Other than providing financial assistance, the Export and Import Bank of India bank is always
looking for ways to promote the foreign trade sector in India. In the early 1990’s EXIM
introduced a program in India known as the Clusters of Excellence. The aim was to improve the
quality standards of our imports and exports. It also has a tie-up with the European Bank for
Reconstruction and Development. It has agreed to co-finance programmes with them in eastern
Europe.
In order to promote exports EXIM bank also has schemes such as production equipment finance
program, export marketing finance, vendor development finance etc.
The Export-Import Bank enhances our country's competitiveness, helps create jobs and generates
money to reduce the deficit.

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FINANCIAL PERFORMANCE
Loan Asset-
The Bank approved loans aggregating 647.78 billion under various lending programmes during
FY 2016-17 as against 725.76 billion during FY 2015-16. Loan disbursements during FY 2016-
17 were ` 446.94 billion as against 518.22 billion during FY 2015-16, while loan repayments
during FY 2016-17 amounted to 371.14 billion, as against 398.17 billion in FY 2015-16. Net
loan assets as of March 31, 2017, were 1,026.41 billion, registering an increase of 3.56 per cent
over the previous year. Rupee loans and advances accounted for 31 per cent of the net loan assets
as on March 31, 2017, while the balance 69 per cent were in foreign currency. Short-term loans
accounted for 19 per cent of the net loans and advances as on March 31, 2017.
Income/Expenditure-
The Bank registered Profit Before Tax of ` 3.13 billion on account of General Fund during FY
2016-17, as against a Profit of ` 4.53 billion for FY 2015-16. After providing for income tax of `
2.71 billion, Profit After Tax amounted to ` 0.41 billion during FY 2016-17, as against ` 3.16
billion during FY 2015-16. Out of this profit, an amount of ` 0.37 billion is transferred to the
Reserve Fund. The balance of ` 0.04 billion will be transferred to GOI as provided in the Export-
Import Bank of India Act, 1981. Business income including interest on loans, exchange,
commission, brokerage and fees etc. during FY 2016-17 was ` 59.14 billion, as compared to `
55.65 billion in FY 2015-16.

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LOAN PORTFOLIO AS OF MARCH 31, 2017

RESOURCE/BORROWING

24
EXIM BANK’S PROGRAMMES AS OF MARCH 2017-

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PROFIT/LOSS ACCOUNT-

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IMPACT ON ECONOMY
India is faring reasonably well on the export front in spite of the global slowdown and Indian
companies are penetrating into new markets with the aid of the Exim Bank. They are extending
line of credit to many African countries and Asian countries and facilitating project exports and
other exports to those countries from India.
The role of Exim Bank would assume greater importance in future, as India gets integrated with
the world markets. The bank would also continue financing films, up to Rs 50 crores per film.
The Exim Bank was planning a tie-up with SBI Cap to help mid-cap Indian companies raise
resources through masala bonds. The response to such bonds in the market was good.
The Exim Bank has developed an in-house model to generate an ELI for India to track and
forecast the movement in its exports on quarterly basis.
The ELI gauges the outlook for the country’s exports and is essentially developed as a leading
indicator to forecast growth in total merchandise and non-oil exports if the country, on a
quarterly basis.
The bank’s Export Lending Index (ELI) has continued to show positive growth momentum
which indicates that India’s total merchandise exports and non-oil exports are increasing.
Exim Bank had supported Shapoorji Pallonji Mideast LLC in the FY 2014-15, for the Design,
Construction, and Operational Maintenance contract of the New AlSabah Hospital, Kuwait City
for the Ministry of Health, State of Kuwait, and valued KWD 179 mn by way of bank guarantees
aggregating KWD 46.20 mn. The project is nearing completion.

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VA Tech Wabag in the FY 2015-16, for the execution of Design, Construction, Operation and
Maintenance contract of Al Madina Al Shamaliya Sewage Treatment Plant in Bahrain valued
equiv. at ` 625.14 Crore by way of bank guarantees aggregating equiv. ` 124.92 crore

The Bank as on March 31, 2017 sanctioned USD 2.84 bn for 22 projects valued USD 3.07 bn. ▪
The Bank has also given in-principle commitments for supporting several projects and the
current active pipeline includes 41 proposals aggregating USD 5.34 bn under BC-NEIA, at the
behest of several leading Indian project exporters.
GOVERNMENT HAD TO STEP IN TO SUPPORT EXIM BANK-
The bad loan mess on the books of India’s listed public sector banks is now well documented.
But far lesser attention has been paid to the troubles brewing in another government owned
lender which plays a crucial role in the economy — the Export Import Bank of India or Exim
Bank.
On January 17, the government committed to infusing Rs 6,000 crore into the bank over two
years and agreed to double its authorised capital to Rs 20,000 crore.
The decision is intended to help Exim bank provide for bad loans which, like in the case of other
government lenders, have surged. More importantly, it will help the bank correct its leverage
ratio. The indicator, which reflects a bank’s total assets in relation to total capital, has surged to
over 17 times for Exim Bank compared to the regulatory limit of 10 times.
Exim Bank, a wholly-owned government bank, was set up in 1981 to provide financial assistance
and investment credit to exporters and importers. It also acts as the government’s official export
credit agency. As part of its primary focus on the export-import sector, Exim Bank also lends to
corporates building out export oriented facilities. Some of this lending happens directly while
some of it is routed through other domestic lenders. Between 2008 and 2013 Exim Bank loaned
heavily to large corporates which were building export facilities. This included loans of Rs 9,139
crore to companies currently undergoing insolvency proceedings. As the bad loan clean-up
began, Exim Bank saw gross non performing assets rise from 2.9 percent in March 2015 to 10.37

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percent at the end of March 2018. This ratio rose further to 12.93 per cent at the end of
September 30, 2018.

While risks have emerged in a number of Exim Bank’s business segments, the bank benefits
from loans given under government guarantees. These make up a third of the bank’s books.
As bad loans were recognised, Exim Bank was forced to step up provisioning, which led to large
losses. The bank reported a net loss of Rs 2,923.7 crore in 2017-18 as against a net profit of Rs
41.21 crore in 2016-17. For the half-year ended September 30, 2018, the bank reported a net loss
of Rs 507.92 crore. The bank’s ‘Capital to Risk Assets Ratio’ had fallen to 10.35 percent as of
March 2018,

In May 2018, Exim Bank presented a road map to the RBI and the government to bring its
leverage back to acceptable levels, according to rating agency reports. According to ICRA, based
on the projected profits of the bank, it would have taken at least three to five years to correct the
leverage ratio. Therefore, the leverage ratio of the bank would have fallen back within regulatory
limits only by FY2022. The bank had suggested in its roadmap that it would not take any fresh

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loans or borrow more. Instead, it would lend only to the extent of the repayments it received
from the existing borrowers, said ICRA. This plan would have constrained the ability of the bank
to lend and could have strained the export-import sector as well. It is not known whether the RBI
approved or rejected the plan. The government’s capital infusion, the largest for the bank in the
last 10 years, will speed up the process of cleaning up Exim Bank’s books, thereby ensuring that
lending activity to an economically important sector is not compromised.
“The infusion of capital into Exim Bank will enable it to augment capital adequacy and support
Indian exports with enhanced ability,” said the government in its release dated Jan.16.
The infusion will give an impetus to anticipate new initiatives like supporting Indian textile
industries, likely changes in Concessional Finance Scheme (CFS), likelihood of new LoCs in
future in view of India’s active foreign policy and strategic intent.

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