1.

EXIM BANK

The Exim Bank or Export-Import Bank of India is a finance institution which

was established in 1982 under the Export-Import Bank of India Act, 1981
– for acting as a financial assistance provider to importers and exporters
and for coordinating the functions of institutions engaged in export and
import functions – thus acting as a catalyst for cross-border trading and
investments.

2. HISTORY

The landscape of Indian trade witnessed significant changes from 1960s

onwards. During the fifties and sixties, Indian exports comprised mainly
of primary commodities and traditional manufacturers like cotton and
jute textiles. The perspective behind this was that the domestic demand
alone could amplify and increase India’s economic growth (mainly due to
limited export opportunities and lack of adequate export infrastructure).
The industrial revolution in India promoted a diversified industrial base
where emerging sectors proved to be internationally competitive. This led
to a change in India’s export profile by bringing in non-traditional
manufactured products.
By 1980, the engineering good exports constituted a humongous 13% of
India’s exports. With the rising export profile in India, there was a
requirement for a separate entity that could focus on exporters’
 requirements and also explore new ways of extending credit and finance
facilities on rational terms.
After a full-fledged debate in the Ministry of Finance regarding the need
of a separate institution for export and import industry and to promote
exports – on June 18, 1980, the then Finance Minister Shri R.
Venkatraman, announced the decision to establish the EXIM Bank.
The operations for the EXIM Bank finally commenced in March, 1982 with
Shri. R.C. Shah as the Chief Executive.
Currently, the EXIM Bank operates under the leadership of Mr. David
Rasquinha and is headquartered in Mumbai, India.

3. OBJECTIVES OF THE BANK

The objectives of the bank as highlighted under the Export-Import Bank

Act of India, 1981 are:

1) “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.”
2) “…Act on public interest with due regard to public interest.” (Export
Import Bank of India, 1981)

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 4. BUSINESS

EXIM BANK

Financial Services
Products

Buyers’ Credit Marketing

Advisory
Services

Corporate Research and

Banking Analysis

Lines of Credit
Export
Advisory
Overseas Services
Investment
Finance

Project Exports

The bank offers two main streams – Financial Products (Buyer’s Credit,
Corporate Banking, Lines of Credit, Overseas Investment Finance and
Project Exports) and Services (Marketing Advisory Services, Research and
Analysis Services, and Export Advisory Services).
Exim Bank comprises of two main business streams: first, the traditional
export finance which includes the export agencies around the globe and
secondly, financing of export-oriented units(non-traditional). Since its
commencement, Exim Bank has been the foremost budgetary
establishment in India for financing project exports and exports on
deferred credit terms. According to Memorandum PEM (MEMORANDUM
OF INSTRUCTIONS ON PROJECT EXPORTS AND SERVICE EXPORTS) of
Reserve Bank of India, the following include project exports:

a) Supply of goods / equipment on deferred payment terms

b) Civil construction contracts

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c) Industrial turnkey projects
d) Consultancy / services contracts

The bank also provides funded and non-funded facilities for overseas
turnkey projects, construction contracts and tender offers, technical and
consultancy contracts.
The turnkey projects include – supply of equipment and other services like
design, detailed engineering, civil construction, power transmission,
distribution, etc. Construction projects comprise of supply of construction
material, civil and steel structural work for infrastructure-based projects.
Technical and consultancy contracts include provision of skills, personnel,
technical and functional know-how and training of personnel. Supply
contracts include export of capital goods and manufactured products.

In addition to project exports, EXIM Bank also provides fund-based and

non-fund-based facilities to deemed export contracts as mentioned in
Foreign Trade Policy under Government of India, like:
a) Secured funding from multilateral funding agencies (World Bank, Asian
Development Bank.)
b) Contracts under international competitive bidding
c) Contracts in which payments are incurred in foreign currency.

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5. EXPORT FACILITIES
Exim Bank offers the following Export Credit facilities, its target audience
being Indian companies, commercial banks and overseas entities.

For Indian Exporters For Commercial Banks in India

 Export Project Cash Flow Deficit
Financing Program
 Pre-shipment Credit in Rupee and
Foreign Currency
 Finance for Deemed Export
contracts
 Capital Equipment Finance
 Letters of Credit / Guarantees
 Post-shipment Supplier’s Credit
 Finance for Export of Consultancy
and Technology Services
 Financing Deemed Export
contracts secured via structures
including but not restricted to BOT
/ BOO / BOOT / BOLT
 Risk participation in
funded / non-funded
facilities extended to
Indian exporters.
 Refinance of Export
Credit
For Overseas Entities
 Buyer’s Credit
 Buyer’s Credit under
NEIA

5.1. For Indian Companies executing contracts overseas

Pre-Shipment Credit

This enables exporters to purchase raw materials and other

required input materials and equipment by providing finance at the
manufacturing stage. This is done by exporters’ commercial banks
for a period of 180 days – with involved participation and
coordination by EXIM Bank.
The bank also offers short term pre and post shipment credit either
directly or through banks. It also considers extending the credit for
more than 180 days on merit and situational basis.

Suppliers’ Credit

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 This facilitates the Indian exporters to extend credit facility to
overseas importers at the post-shipment stage.
This can be extended to Indian exporters up to the extent of
deferred credit portion of the contract, in domestic or foreign
currency. The period depends on nature of goods, as mentioned in
List A and B of Memorandum PEM.

5.2. For Project Exporters

EPCDF – Export Project Cash Flow Deficit Financing Programme

The expenses incurred by exporters during the execution of

contracts (costs of acquisition, mobilisation of materials,
equipment, personnel) is facilitated via the EXIM Bank by:
a) Project Export Contracts
b) Contracts classified as Deemed Exports under Foreign Trade
Policy

CEPF – Capital Equipment Finance Programme

This has been offered by EXIM Bank in order to provide capital to

procure equipment which can be utilized across multiple facilities
and contracts. It also provides direct access for financing to eligible
domestic companies for procurement of indigenous and imported
equipment for implementing deemed export projects or
overseas projects.

5.3. Guarantee Facilities

EXIM provides guarantee facilities to Indian exporters having

overseas or deemed export contracts of different types to facilitate

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 required guarantees for smooth execution of export contracts and
other import transactions. They are:
a) Performance Guarantee: Up to 5-10% of contract value is issued
till the maintenance period is complete and Final Acceptance
Certificate has been provided by the client.
b) Retention Money Guarantee: Helps the exported to acquire the
release of retained payments from the client before the Project
Acceptance Certificate or Final Acceptance Certificate has been
issued.
c) Advance Payment Guarantee: Usually 10-20% of contract value,
this is provided to exporters to ensure project mobilisation – this
is recovered on pro-rata basis from the progress payment during
the execution period.
d) Other Guarantees: These include security deposits for
expatriate labour, security deposit for equipment, for customs
duty, etc.

5.4. For Overseas Entities

Buyers’ Credit

Overseas buyers can avail this for importing eligible goods under
deferred payment terms. RBI has authorised EXIM Bank to extend
this credit up to USD 20 million without seeking prior approval from
RBI.
This helps domestic exporters to expand their reach abroad in the
non-conventional markets. It also helps them stay competitive
while bidding and negotiation for overseas project contracts.
This enables foreign consumers to obtain medium- and long-term
financing and benefits them by providing competitive interest rates
against the usual high cost of borrowing in the host country.
The foreign companies that plan on awarding contracts to Indian
exporters are usually extended this credit, with the facility being
available for development, upgradation, expansion, financing PPE,
and other professional services like consulting and technology.

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 Buyers’ Credit under NEIA

A unique mechanism – this comprises of non-recourse financing

option to Indian exporters. This helps as an efficient tool for
entering a new market whether traditional, local or unconventional
and new.
EXIM Bank extends credit to overseas sovereign governments and
their entities for importing Indian goods and services on deferred
credit terms. The facility is available for project exports in need of
medium- and long-term deferred credit. The amount of loan is
usually not more than 85% of the contract value. A guarantee from
the government is required if the borrower is not the government
or a government-owned entity itself.

6. EXPORT CAPABILITY CREATION

The main objective of this being to increase borrower competitiveness

and to facilitate export production to boost Indian economy, the bank
offers a comprehensive range of products and services that help develop
commercial relationships and promote internationalization.
These loans can be broadly categorised into three categories as under:

6.1. Export Oriented Units

The bank offers financing programmes for EOUs aimed at overseas

investments that cater to the requirements of capital for
modernization, expansion, new project development, R&D and
working capital. The products are:

 Asset Creation – for Equipment financing and Project Finance

 Working Capital – Short-term and medium-term finance
 Special Products –
o Guarantees and Stand-By LCs
o Export Product Development Finance
o Export Marketing Finance
o Export Vendor Development Finance

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 o Finance for Indian educational institutions and for
setting up institutions overseas
o Project-related non-fund-based guarantees
o Creative Industry financing
o Research and Development Finance
Research and Development Finance
In order to encourage exporters to spend more on R&D to develop
new and better products and services and IPRs to enhance India’s
export capabilities. For this, the Bank has opened a new R&D
Financing Programme – which covers capital and revenue
expenditure including infrastructure for R&D, equipment and
technology, acquisition of technology at the “proof-of-concept” or
design stage, salaries of dedicated personnel, regulatory expenses,
and other costs incurred under R&D capability. This is generally
extended for up to 7 years to companies with over 5 crores of
exports or at least 10% of annual turnover as exports.

Pre-Shipment/Post-Shipment Credit Programme

Alongside providing credit for execution of export transactions, the
EXIM Bank provides working capital finance through pre and post
shipment credit programmes. It also extends non-fund-based limits
like LOCs and Bank Guarantees.

6.2. Overseas Investment

To encourage Indian companies to invest abroad for setup of

manufacturing units, for acquisition of foreign companies to gain
access to foreign markets, IPRs, etc. the bank provides:

a) Terms loans to Indian companies for part-financing

their equity investments in Joint Ventures and Wholly
Owned Subsidiaries (value up to 80% of equity
investment)

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 b) Term Loans for Indian Companies that have extended
loans to Joint Ventures and Wholly Owned
Subsidiaries
c) Term Loans to overseas Joint Venture and Wholly
Owned Subsidiaries for part financing for acquisition
of assets, working capital, equity investments,
brands/patents/IPRs
d) Guarantee to Joint Ventures and Wholly Owned
Subsidiaries for raising working capital term loans

6.3. Finance for Financial Intermediaries

This includes refinance to commercial banks, and export bills

rediscounting for commercial banks.

6.4. MSMEs

EXIM Bank extends multiple services to support micro, small and

medium enterprises.

SME ADB Line

EXIM Bank has arranged for a credit line from Asian Development
Bank for facilitating term loans in foreign currency to MSME
borrowers in certain states of India (Uttar Pradesh, Orissa,
Rajasthan, Madhya Pradesh, etc.). These loans can be utilised for
capital expenditure of the MSMEs in INR as well. This assistance will
aid in increasing the welfare of MSMEs and help in integration of
these economically backward states in the mainstream Indian
economy.

Alongside facilities to MSME EOUs, the bank provides financial aid

to SPVs for a cluster of MSMEs for following activities:
a) Development of new integrated clusters or industrial parks –
creation and maintenance of infrastructure facilities

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 b) Development of industrial estates by Government bodies
and others
c) Upgradation of existing estates
d) Development and upgradation of specific infrastructure like
treatment plants, power plants, hazardous waste disposal
e) Development of facilities like cold storage centres, testing
centres for a cluster(s) or for industries with common
operations and interests.

TIEID – Technology and Innovation Enhancement and

Infrastructure Development Fund
A fund of USD 500 million has been exclusively setup for MSMEs by
EXIM Bank to enable credit flow, to strengthen their export
capabilities and globalisation efforts, in collaboration with banks
and foreign institutions. TIEID aims at meeting long-term foreign
currency loan demands of MSME EOUs through refinancing of
Banks and FIs.

Lending for Creative Industries

The Creative Industry includes those that have individual creativity
and a potential for job creation and wealth creation, e.g.,
Architecture, Advertising, Designing, Film and Video, Arts and
Entertainment, Software and Computer Services, amongst others.
In order to provide a strategic focus to this sector, EXIM has devised
a programme specifically for this industry segment.

6.5. Finance for Grassroot Level Enterprises

Through its GRID programme, the bank aims to support the

globalisation of companies in rural areas. The goal of this
programme is to help small enterprises realise remunerative return
on their products by exporting them. This includes accepting credit
proposals from such enterprises and offer customized products for

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 their needs. The group has a holistic and robust approach at every
stage of the business development cycle.

6.6. Lines of Credit

A safe financing mechanism (non-recourse financing option to

exporters without payment risk from overseas importers) whereby
EXIM Bank extends aid for export of projects, equipment and goods
and services. These are extended by EXIM on its own and on behalf
of GOI to – foreign governments and nominated agencies, national
and regional development banks, overseas financial intermediaries,
commercial banks, and other entities. These LOCs usually carry
LIBOR-linked interest rates.

7. SERVICES

Apart from the multiple product offerings, EXIM Bank also provides a
multitude of services to its audience.

7.1. Marketing Advisory Services

Playing the role of a catalyst and promoter for Indian exports in

foreign markets, EXIM Bank helps export firms by proactively
participating in locating suitable overseas partners and clients for
the products and services. It also helps identify opportunities
overseas like plant setup, acquisition of foreign companies and
others. Using the EXIM Bank’s humongous international
reputation, knowledge resources, vast insights of international
markets and well-established connections, this group aids Indian
companies for overseas marketing programmes on a successive fee
basis.

7.2. Research and Analysis Services

Leveraging the bank’s team of highly experienced economists and

strategists, the group offers a broad range of research products.

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 They also offer insights on international investments, trade and
economics through exhaustive methods of qualitative and
quantitative research. They monitor the ongoing trends and their
effect on economies. Their audience comprises of both internal
divisions within the bank seeking research efforts as well as
external agencies like RBI, GOI, exporters/importers, commercial
banks, and credit agencies.

o The group undertakes country profiles providing an

economic outlook – assessing political, economic, forex and
credit risks involved – alongside identifying opportunities in
the particular country.
o A bi-monthly publication called “Agri Export Advantage” is
published by the bank in English, Hindi and 10 regional
languages – providing updates on international agriculture
markets, agri-commodities, agricultural trade and its
policies, WTO Government schemes and other activities to
promote agri-export from India.
o The Bank publishes Occasional Papers, Working Papers,
Books, etc. that identify avenues and prospects for furthering
India’s engagement globally. This includes studies on
regional, sectoral and policies.
o The group has a newsletter “Eximius:Export Advantage”
which consists of industry and regional perspectives, EXIM’s
initiatives, prospects and opportunities, reviews on traded
currencies. This is distributed free of cost to a network of
scholars, institutions, GOI offices, and export firms.

7.3. Export Advisory Services

This group provides a comprehensive range of information,

advisory and support services that help export firms in gauging
risks, utilizing opportunities and improve their international
standing.
The group does customised research for interested firms by
evaluating market potential, devising promotional arrangements
and identifying distribution channels. They also help in

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 development on market entry plans, accomplishing international
quality standards, and aid in displaying products in trade fairs and
expos.

These services are provided on a fee basis to the entities.

7.4. MFPO – Multilateral Funded Projects Overseas

The Bank aids Indian companies by providing information and

support services alongside securing business for them through
projects funded by Asian Development Bank, World Bank,
European Bank for reconstruction and Development and African
Development Bank.

7.5. Consultancy Services

EXIM’s experience in evolving as a highly regarded bank that

promotes international trade alongside its product offerings of
export credit lines is very significant in developing countries. Apart
from undertaking consultancy projects, the bank shares its
expertise through on-site exchange of personnel programmes
which is aimed at providing first-hand experience to institutional
partners.

7.6. Institutional Connections

Over the years, the bank has established a well-integrated network

of export credit firms, multilateral agencies, banks and financial
intermediaries, trade promotion bodies, and governments.
Through the bank’s initiative, the Global Network of EXIM Banks
and Development Financial Institutions(G-NEXID) was setup in
Geneva in 2006.

8. CONCLUSION

The EXIM Bank serves as a growth vehicle for Indian business abroad.
Setup to promote Indian trade, the bank’s philosophy emphasizes on

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 building competitive exporters through financial terms and alternative
financial solutions, provision of currency research and advice to enable
cost-effective exports, to identify avenues for exports in the global market
and aid Indian companies in exploiting these avenues, to provide
promotional and production finance to export firms, and to eradicate
challenges in Indian foreign trade by identifying apt solutions. Thus, the
bank acts in the interest of Indian companies and exporters in the rapidly
evolving financial landscape by behaving as the catalyst for cross-border
trade and investment.

9. REFERENCES

 https://www.eximbankindia.in/organisation
 https://www.eximbankindia.in/financial-products
 https://www.eximbankindia.in/services
 http://legislative.gov.in/sites/default/files/A1981-28.pdf
 https://business.mapsofindia.com/fdi-india/approvals/exim-bank-foreign-
investment.html
 http://www.iibf.org.in/documents/the-export-import-bank-of-india-iibf.docx
 https://financialservices.gov.in/banking-divisions/Financial-Institutions-and-
others/Export-Import-Bank-of-India-(EXIM-Bank)
 https://services.india.gov.in/service/detail/export-import-bank-of-india-
exim-bank-1
 https://economictimes.indiatimes.com/news/economy/finance/government-
to-infuse-rs-6000-crore-in-exim-bank-over-two-
years/articleshow/67556669.cms?from=mdr
 https://en.wikipedia.org/wiki/Exim_Bank_(India)
 http://www.yourarticlelibrary.com/banking/main-functions-of-export-
import-bank-of-india-exim-bank/40994
 http://www.yourarticlelibrary.com/banking/export-import-bank-of-india-
objectives-and-functions/24815
 https://www.ukessays.com/essays/economics/role-of-exim-bank-growth-of-
foreign-trade-economics-essay.php

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