Professional Documents
Culture Documents
(EXIM BANK)
BACHELOR OF COMMERCE-
SEMESTER V
2008-2009
SUBMITTED BY
SHILPA SONAWANE
ROLL NO: 55
PROJECT ON
BACHELOR OF COMMERCE –
BANKING & INSURANCE
SEMESTER V
SUBMITTED
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS
BY
SHILPA SONAWANE
ROLL NO: 55
CERTIFICAT
E
DECLARATIO
N
1I Miss.Sneha Sundrani, student of B.Com – Banking & Insurance
S
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SHILPA SONAWANEden
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Roll No-55
ACKNOWLEDGEMEN
T
Any accomplishment requires the effort of many people and this work is no
different.
This project would just not have been complete without the valuable
contributions from various people whom I have interacted with in the course
of its completion. I would first and foremost thank the Mumbai University for
designing such a specialized course. I am especially thankful to my project
guide Ms. Sapna Malya and our course co-coordinator Mrs. Heena
Thakkar for her encouragement, guidance and constant motivation which
served as a driving force in the successful completion of this project. I also
thank our reverend principal Dr. Mrs. Indu Shahani for giving me an
opportunity to present a creative work in the form of project.
I would like to thank all the five bank managers who provided me the
primary information. I also take this opportunity to express my sincere
gratitude to the library staff that has provided me right information and
study material at the right time.
Lastly I would like to thank my colleagues, my parents, my sister and all those
people who have lent me a helping hand in finishing this project, whose names
are too numerous to be mentioned here. It is said that “Gratitude is the hearts
memory”; well, the memory of all help and assistance acquired during the course
of this project will remain in my heart as gratitude forever………………….
ORIGIN AND HISTORY
History:
This Act extends to the whole of India. With effect from the date i.e. September
1981, as the Central Government by notification, appointed, a corporation Known
as the Export Import Bank of India was established for the purposes of this Act.
The Export Import Bank of India, commonly known as the EXIM Bank, commenced
operations in March 1982. It was set up so as to take over the operations relating to
export finance which the IDBI (Industrial Development Bank of India) had been
handling since the year 1970. Exim Bank acts as the apex financial institution
relating to financing for foreign trade. It provides financial assistance by way of direct
loans and advances for the purpose of export or import,
rediscounting of usance export bills for banks and finance for international
trade activities.
MISSION
Objective
The objective of the bank is-
“… shall act on business principles with due regard to public interest” as Stated
In the Export-Import Bank Act,1981.
OBJECTIVES
The Organization:
THE PEOPLE
Exim bank is a virtual melting pot of thriving minds from a variety of
disciplines. The bank has a total staff of 214 hailing from backgrounds as
diverse as banking, engineering, business management, information
technology, accountancy, economics and liberal arts. 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 the original solutions – solutions beyond banking.
CORPORATE PHILOSOPHY
Exim banks corporate philosophy is built on two pillars:
The Banks believes that its people are its key resource. Therefore,
the Banks seeks to develop its human resource by motivating them
through challenging assignments, upgrading their skills through
training programmes, and recognizing professional excellence.
GLOBAL NETWORKING
Bank;
2· Export credit agencies;
3· Trade and investment promotion agencies abroad; and
4· Trade and industry association in India.
The banks extensive global network, supported by the Indian missions abroad
and partners for overseas and domestic joint ventures. Further, our overseas
office enables us to garner economic and commercial intelligence on
countries, companies and projects, assess credit risks, review competitive
export practices and provide alerts on new export opportunities.
SOURCES OF
FUNDS…
As at March 31,2006,the bank had a paid up capital of Rs 9.5 billion,
and its net worth was rs27.20 billion. They also raise funds from
domestic and international markets.
ORGANISATIONAL SET-UP
Exim bank is managed by a Board of Directors, which has high
level representatives from the Government, Reserve Bank of India,
Export Credit Guarantee Corporation of India, public sector Banks,
academia and business community. With its headquarters in
Mumbai, the bank has nine regional offices overseas.
The banks functions are segmented into several operating groups including
Apart from these, there are Support Services Groups, which include:
lease basis.
Financing of joint ventures in foreign countries.
3) Providing loans to Indian parties to enable them to contribute to
the share capital of joint ventures in foreign countries.
4) Undertake limited merchant banking functions such as
underwriting of stocks, shares, bonds or debentures of
companies engaged in export or import; and
5) Provide technical administrative and financial assistance to
THE ROLE…
Exim bank plays a four-pronged role with regard to India’s 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 projects 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, External Affairs), and Reserve Bank of India; export
credit Guarantee Corporation of India limited and commercial banks that are
authorized 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 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 $100million in value.
EXPORT CREDIT.
Exim bank offers the following export credit facilities, which can be availed
of by Indian companies, commercial banks and international entities.
SUPPLIERS CREDIT
Guarantee facilities.
Indian companies can avail of these to furnish requisite guarantees to
facilitate execution and export contracts and import transactions.
Forfeiting.
Forfeiting is a financing mechanism that enables a company to convert
credit sale to cash sale, on “without recourse” basis. Exim bank acts as
facilitator for the Indian exporter, enabling him to access the services of an
overseas forfeiting agency.
2· Non-funded
1o Letter of credit limits
2o Guarantee limits
Import of Equipment
Export Finance.
P
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Post Shipment Credit
1· Buyers' Credit
2· Suppliers' Credit [including deferred payment credit]
3· Bills Discounting
4· Export Receivables Financing
5· Warehousing Finance
6· Export Lines of Credit (Non-recourse finance)
To part finance project expenditure (Project, inter alias, includes new project/
Direct Equity by Exim Bank in the overseas JV/ WOS of an Indian Company.
The SSI sector in India employs around with the product range varying from very
simple items produced with traditional technology to high tech products. At
present, the SSI sector accounts for over 90% of industrial units in the
country, 40% of value addition in the manufacturing output and approximately
35% of India’s exports. SSI sector in India has been exhibiting a striking
export performance. Barring few years, exports have grown double digit in the
last 10 years. Major sectors contributing to SSI exports include readymade
garments (27%), engineering goods (14.5%), chemicals & pharmaceuticals,
electronics & computers, and processed foods (11% each).
Exim Bank and SMEs:
AGRI FINANCE
The globalization and post-WTO scenario offers considerable scope for
exports of Indian agricultural products. Exim Bank has a dedicated Agri
Business Group to cater to the financing needs of export-oriented
companies dealing in agricultural products.
The Bank has strong linkages with other stakeholders in Agri sector such as
Ministry of Food Processing Industries, GoI, NABARD, APEDA, Small
Farmers' Agri-Business Consortium (SFAC), and National Horticultural Board
etc. Apart from financing, the Bank also provides a range of advisory services
to Agri exporters. Term loans with varying maturities are provided for setting
up processing facilities, expansion, modernization, purchase of equipment,
import of equipment/technology, financing overseas joint ventures and
acquisitions etc. The Bank has strong linkages with other stakeholders in Agri
sector such as Ministry of Food Processing Industries, Government of India,
NABARD, APEDA, Small Farmers' Agri-Business Consortium (SFAC), and
National Horticultural Board etc. Apart from financing, the Bank also provides
a range of advisory services to Agri-exporters. The Bank also publishes a
number of Occasional Papers, Working Papers on export potential of various
sub-sectors in agriculture and a bi-monthly publication in different languages
on global scenario in agri-business and opportunities therein.
Initiatives by Exim Bank for both Small and Medium Enterprises &
Agri finance:
3) Exim Bank along with BASIX to organise skill upgradation workshop for
overseas market.
Identification of suitable buyers / partners by Exim Bank for facilitating
export business of Uravu and its associates.
2) Exchange of information on international markets for various
products,
technology, trade, business and investing opportunities to facilitate
increased co-operation for commercial exploitation in overseas markets.
Recent
Developments :
EXIM’s focus on SMEs
Special Line of Credit from ADB: The Bank is negotiating a long term Line
of Credit of US$ 250 mn. From the Asian Development Bank, without
Central Government guarantee, for extending loans to SMEs . The Bank
will have an option to draw the funds in different currencies, as per the
needs of its customers.
Publications
FILM FINANCE
The bank has till date-sanctioned
loans more than Rs 33.15 crores for
film production .the first three films
financed by Exim bank has been
commercially successful across
India and overseas market.
FILMS FINANCED BY EXIM BANK.
5· Fanaa
1· HoneymoonTravels6· Bunty Aur
Pvt. Ltd. Babli
2· Kabul Express 7· Salaam
3· Dhoom -2 Namaste
4· Don - The Chase 8· Veer
Begins Again Zaara
EXPORT CREDITS
Exim bank offers the following Export Credit facilities, which can be availed
Indian companies executing contracts within India, but which are financed
by multilateral finance agencies, can avail of credit under our finance for
deemed exports facility, aimed at helping them meet cash flow deficits.
Buyer’s credit:
Overseas buyers can avail of Buyers Credit from Exim bank, for
import of eligible goods from India on deferred payment terms.
Line Of Credit
Introduction
Exim Bank extends Lines of Credit (LOCs) to overseas financial
institutions,
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. Exim Bank extends
LOCs, on its own, as well as, at the behest of Government of India.
2.Exporter checks with Exim Bank, available amount under the LOC and quantum of
service fee payable to Exim Bank, if any, and negotiates contract with Importer.
refers to Exim Bank for concurrence for inclusion of contract for being
financed under the LOC.
5.Exim Bank accords approval to the contract, if in conformity with the terms of
LOC. Exim Bank conveys contract approval to the exporter and the Borrower.
6.The Importer arranges remittance of advance payment to the Exporter and also
opening of a Letter of Credit, which states that the contract is covered under Exim
Bank's LOC to the Borrower and reimbursement will be by Exim Bank for the
Eligible Value of Credit, upon compliance with stipulated conditions therein.
9.Exim Bank reimburses the Negotiating Bank, on receipt of valid claim and
Under Exim Bank's LOCs, the Indian exporters can obtain payment of
eligible value from Exim Bank, without recourse to them, against negotiation
of shipping documents. The Indian exporter does not carry any credit risk
either on the importer or the importer's country, whilst the overseas importer
enjoys deferred credit facility. Thus, LOC is a safe mode of non-recourse
financing option to the Indian exporter and serves as a
market entry tool for India's exports. The Indian exporter can also increase his
export volumes by offering deferred credit, where required.
Exim Bank has been using the LOC mechanism for promoting India's exports
to the traditional as well as new markets in developing countries, which need
deferred credit for buying Indian machinery, goods and services. As the LOC
is extended by Exim Bank on internationally competitive terms, the overseas
importer of Indian goods is allowed access to the credit facility at competitive
interest rates. The overseas importer and the Indian exporter do not have to
negotiate credit terms separately as the credit arrangement between Exim
Bank and the overseas borrower financial institution is already in place.
The overseas importer of Indian goods has to approach the overseas borrower
financial institution/recipient of Exim Bank's LOC, for approval of his proposal for
import of Indian goods on deferred credit terms. The interest rate that the importer
will need to pay to the recipient of Exim Bank's LOC, will depend on various factors
such as the cost of fund, the currency of credit, tenor of credit, security offered by
the importer, the risk perception of the importer and the interest rate structure
prevalent in the country. It may however be mentioned that Exim Bank's
interest rates on LOCs being competitive, the importer would normally have to pay
interest rate lower than what he would otherwise pay to his Bank on similar credits.
In respect of certain LOCs, the Indian exporter has to pay a service fee to
Exim Bank. The exporter should check in advance with Exim Bank the
quantum/percentage of service fee payable. In respect of LOCs extended
by Exim Bank, at the behest of Government of India, no service fee is
normally payable by the exporter to Exim Bank.
Minimum value of contract for being eligible for coverage under the LOC
Generally, export of capital goods and plant and machinery is allowed on credit
terms of upto 5 years, whereas the export of industrial manufactures, consumer
durables, raw materials and commodities is allowed on credit terms of upto 2
years. However, the credit period allowed under each LOC could be different.
There are certain short-term LOCs which provide for credit period of 1 year, and
there are certain LOCs which permit credit period beyond 5 years. Exporters are
advised to check the details with Exim Bank, in advance. In respect of LOCs
extended by Exim Bank, at the behest of Government of India, credit period
ranges from 8 years to 20 years depending on the caegories of countries,
based on their levels of incomes and external debt.
The stage at which the Indian exporter should contact Exim Bank
The Indian exporter should contact Exim Bank before finalizing the price
negotiation with his prospective importer, if the transaction is intended to be
covered under Exim Bank's LOC. The exporter should ascertain details
such as the service fee payable to Exim Bank, the credit period permissible
under the LOC, the payment procedure involved and the contact
person/department in the overseas borrower institution/recipient of LOC. In
respect of certain LOCs especially those extended by Exim Bank, at the
behest of Government of India, sectors/projects could be pre-identified.
ECGC cover
New Delhi, March 20,2008: Exim Bank of India has signed an agreement
with the African Export-Import Bank or Afreximbank for a Line of Credit to the
tune of $30 million to be provided for financing India’s exports to Africa.
The agreement was signed at the 4th CII-Exim Bank conclave on India-Africa
Project Partnership 2008 in New Delhi on. The agreement was signed by Mr.
T C Venkat Subramanian, Chairman and Managing Director of Exim Bank
and Jean-Louis Ekra, President of Afreximbank. This agreement will facilitate
and boost India’s exports to member states of Afreximbank. The Line of
Credit affords a risk free, non-recourse export financing option to Indian
exporters. Exim Bank is a non-regional shareholder of Afreximbank which
represents 38 member-states across Africa.
With the signing of this LOC Agreement, Exim Bank has now in place 101
Lines of Credit, covering over 90 countries in Africa, Asia, Latin America,
Europe and the CIS, with credit commitments amounting to US$ 3.32 bn,
available for utilization for financing exports from India. Exim Bank's LOCs
afford a risk-free, non-recourse export financing option to Indian exporters.
Profile etc.
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documents, etc.