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CHAPTER 1
INTRODUCTION
INTRODUCTION
Export-Import Bank of India is the premier export finance
institution of the country, set up in 1982 under the Export-Import
Bank of India Act 1981. Government of India launched the
institution with a mandate, not just to enhance exports from India,
but to integrate the country’s foreign trade and investment with the
overall economic growth. Since its inception, Exim Bank of India
has been both a catalyst and a key player in the promotion of cross
border trade and investment. Commencing operations as a
purveyor of export credit, like other Export Credit Agencies in the
world, Exim Bank of India has, over the period, evolved into an
institution that plays a major role in partnering Indian industries,
particularly the Small and Medium Enterprises, in their
1
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.
a. The foreign trade policy for the year 2009-2014 was announced
on 27th august 2009 at a time when the world was emerging from
the shadow of challenging economic period, the worst India has
seen in the last 7 decades.
b. The key objective for the foreign trade policy was to arrest the
declining exports and reserve the trend.
c. Labour intensive sectors are being given special attention and the
policy parameters have been crafted to enhance the
competitiveness of the exports by supporting up graduation in
technologies.
1.1 ORIGIN
The Export-Import Bank Act, 1981
An act to establish a corporation to be known as the Export-Import
Bank of India for providing financial assistance to exporters and
importers, and for functioning as the principal financial institution for co-
ordinating the working of financial institutions engaged in financing the
export and import of goods and services with a view to promoting the
country’s international trade and for matters connected therewith and
incidental to.
2
1.2HISTOTY
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.
3
1.3 THE INSTITUTION
Policy announcements which are made this year, will help
achieving export target of US$ 200 billion in the fiscal year 2010-11 and
over the remaining 3 years of policy, India should be able to come back
on the high export growth trajectory of 25% per annum, and by 2014
there is expectations of India’s exports of goods and services getting
doubled.
1.4 MISSION
Exim Banks mission is to facilitate globalization of Indian
Business.
Exim Banks mission statement: “To develop commercially
viable relationships with externally oriented companies by
supporting their internationalization efforts, through a diverse
range of products and services.”
1.5 OBJECTIVE
The objective of the bank is-
“… for providing financial assistance to exporters and importers, and
for functioning as the principal financial institution for coordinating
the working of institutions engaged in financing export and import of
goods and services with a view to promoting the country’s international
trade…”
“… shall act on business principles with due regard to public interest”
as Stated In the Export-Import Bank Act,1981.
The primary objective of EXIM bank is to develop commercially
viable relationships with a largest set of externally oriented
4
companies by offering them a comprehensive range of products
and services, aimed at enhancing their internationalization efforts.
EXIM bank was set up for providing financial assistance to
exporters and importers, and for functioning as the principal
financial institution for coordinating the working of institutions
engaged in financing exports and imports of goods and services
with a view to promoting country’s international trade.
Exim bank plays four prolonged pole with regard to India’s foreign
trade: those of coordinator, a source of finance, consultant and
promoter.
5
1.6 EXIM BANK ACT
Completed 23 years of operations in march 2005
Set up by an act of parliament in September 1981
Commenced operations in march 1982
Wholly owned by government of India
Export import bank of India was set up for the purpose of financing,
facilitating and promoting foreign trade in India.
Exim is the principal financial institution in the country for
coordinating working for institution engaged in financial exports and
imports.
1.7 OFFICES
Head office: Mumbai
Domestic offices:
Ahemdabad, banglore, chennai, guwahati, hyderabad, kolkota, mumbai,
new Delhi, pune
Overseas offices:
Budapest, Johannesburg, London, Singapure, Woshington DC
6
1.8 CORPORATE PHILOSOPHY
Exim banks corporate philosophy is built on two pillars:
People orientation and customer focus.
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.
Customer-responsiveness is germane to the Banks philosophy. The Bank
constantly seeks to innovate and improve its products, processes and
delivery mechanisms, and thereby minimize response time and maximize
customer equity. Our interactive mode of analysis and decision-making,
through multi disciplinary cross-functional groups ensures that the best
possible business solution is offered to the customer.
1.9 THE INITIATIVES
Exim Bank of India has been the prime mover in encouraging project
exports from India. The Bank provides Indian project exporters with a
comprehensive range of services to enhance the prospect of their
securing export contracts, particularly those funded by Multilateral
Funding Agencies like the World Bank, Asian Development Bank,
African Development Bank and European Bank for Reconstruction
and Development.
The Bank extends lines of credit to overseas financial institutions,
foreign governments and their agencies, enabling them to finance
imports of goods and services from India on deferred credit terms. The
7
Bank’s Overseas Investment Finance programmers offers a variety of
facilities for Indian investments and acquisitions overseas.
The facilities include loan to Indian companies for equity participation
in overseas ventures, direct equity participation by Exim Bank in the
overseas venture and non-funded facilities such as letters of credit and
guarantees to facilitate local borrowings by the overseas venture.
The Bank provides financial assistance by way of term loans in Indian
rupees/foreign currencies for setting up new production facility,
expansion/modernization/up gradation of existing facilities and for
acquisition of production equipment/technology.
The Bank has launched the Rural Initiatives Programme with the
objective of linking Indian rural industry to the global market. The
programme is intended to benefit rural poor through creation of export
capability in rural enterprises.
In order to assist the Small and Medium Enterprises, the Bank has put
in place the Export Marketing Services (EMS) Programme. The
service is provided on success fee basis.
Exim Bank supplements its financing programmes with a wide range
of value-added information, advisory and support services, which
enable exporters to evaluate international risks, exploit export
opportunities and improve competitiveness, thereby helping them in
their globalization efforts.
8
1.10 RESOURCES/TREASURY
Bank raised borrowings of varying maturities aggregating to Rs. 7886
crore comprising Rupee resources of Rs. 4384 crore and foreign
currency resources of US$ 785 mn equivalent.
Market borrowings as on March 31, 2006 constituted 80% of the total
resources.
During the year, Bank received share capital of Rs. 100 crore from the
Government of India. Bank's paid-up capital increased to Rs. 950
crore as on March 31, 2006.
The Bank's domestic debt instruments continued to enjoy the highest
rating viz. 'AAA' from the rating agencies, CRISIL and ICRA. As on
March 31, 2006, outstanding Rupee borrowings including bonds and
commercial paper amounted to Rs. 11825 crore.
9
CHAPTER 2
THE ORGANISATION
.Exim bank is the coordinator of the working group mechanism for
clearance of project and services exports and deferred payment
exports(for amounts above a certain value currently US$100 million).
The working group comprises exim bank, government of India
representatives(ministries of finance, commerce, external affairs), reserve
bank of India, export credit guarantee corporation of India ltd. And
commercial banks that are authorized foreign exchange dealers. Now we
will see how Exim bank work as an organization:-
10
2.1 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;
Corporate banking group which handles a variety of financing
programmes for, Export Oriented Units (EOUs), importers, and
investment by Indian companies.
Project finance/trade finance group which handles the entire range
of export credit services such as suppliers credit, pre-shipment
credit, buyers credit, finance for export of projects and consultancy
services, guarantees, forfeiting.
Lines of credit group- lines of credit (LOC) is a financing
mechanism that provides a safe mode of non –recourse financing
option to Indian exporters, especially to SMEs, and serves and an
effective market entry tool.
Agri business group, which has been put in place to spearhead the
initiative to promote and support Agri –exports
Small and medium enterprises group has been established to cater
to the specific financing requirements of export oriented SMEs.The
group handles credit proposals from SMEs under various leading
programmes of the bank. Export services group offers a variety of
advisory and value- added information services aimed at trade an
investment promotion.
11
2.2:EXIM LINES OF CREDIT
INTRODUCTION Exim bank extends lines of credit (LOCs) to overseas financial institutions, regional development banks, sovereign government and other entities overseas, to enable buyers in those countries, to import goods and services from India on defferd credit terms. The Indian exporters can obtain payment of eligible value of exim bank, without recourse to them, against negotiation of shipping document. LOC is the 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.
How does it work?
1. Exim bank signs LOC agreement with overseas borrower institutions (borrower) and announces the availability of LOC for utilization, when the agreement becomes effective.
2. Exporter checks with exim bank, available amount under LOC and quantum of service fee payable to exim bank and negotiates contract with exporter.
3. Importer approaches the borrower for approval of the contract.4. The borrower appraises the proposal, if satisfied approves the
contract and refers to exim bank for concurrence for inclusion of contract for being financed under the LOC.
5. Exim bank accords approval to the contract, if in conformity with the terms of LOC. Exim bank conveys contract approval to the exporter and 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 banks loc to the borrower and reimbursement will be exim bank for the eligible value of credit.
7. Exporter executes the contract/ ships the goods/ provider services.8. Commercial bank in India, designed as the negotiating bank,
negotiates shipping documents and pays the exporter.9. Exim bank reimburses the negotiating bank, on receipt of valid
claim and service fees, by debit to the LOC account of the borrower.
Borrower pays exim bank on due dates.
12
2.3 EVOLVING VISION
FUNCTIONS:
1) Financing of exports and imports of goods and services, not
only of India but also of third world countries.
2) Financing of exports and imports of machinery and equipment
on lease basis.
3) Financing of joint ventures in foreign countries.
4) Providing loans to Indian parties to enable them to contribute
to the share capital of joint ventures in foreign countries.
5) Undertake limited merchant banking functions such as
underwriting of stocks, shares, bonds or debentures of companies
engaged in export or import; and
6) Provide technical administrative and financial assistance to parties
in connection with export and import.
13
2.4 THE MAIN FOCUS OF THE EXIM BANK IS ON
Market diversification
Technological up gradation
Support to status holders
Agriculture
Handlooms
Handicraft
Germs and jewelry
Lather, marine
Electronics and IT hardware electronics machinery manufacturing
industries
Green product
Export of products from north East
Sports goods and toys sector
1. Higher support to market and product diversification -
Additional benefits of 2% bonus over and above the existing
benefits of 5%/2% under focus product scheme, allowed for
around 135 existing products which have suffered due to
recession in exports. 256 new products added under FPS (at 8
digit level), which shall be entitled for benefits @ 2% of FOB
value of exports to all markets.
Nearly three digit products (at 8 digit level) from the readymade
garment sector incentivized under MLFPS for further 6 months
from October 2010 to march 2011 for exports to 27 EU
countries.
14
2. Support to technological up gradation-
Zero duty EPCG scheme, introduced in August 2009 and valid for
only two years up to 31.3.2011, has been extended by one more
year till 31.3.2012.The benefit of the scheme has been expanded to
cover paper & paperboard and articles thereof, ceramic products,
refractory’s, glass & glassware, rubber & articles thereof, Plywood
and allied products, marine products, sports goods and toys and
additional engineering products.
3. Benefit and flexibility to Status Holders-
Status Holders contribute to a substantial part of our exports. To
support them to upgrade their technology, 1% Status Holder
Incentive Scheme (SHIS) introduced in August 2009 and valid for
only two years upto 31.3.2011, has been extended by one more
year for 2011-12 exports.
4. Stability/Continuity of the Foreign Trade Policy-
The popular and exporter friendly Duty Entitlement Passbook
(DEPB) scheme has been extended beyond 31.12.2010 till
30.06.2011.
Advance Authorization for Annual Requirement shall also be
exempted from payment of anti-dumping & Safeguard duty in line
with the underlying principle that goods and services should be
exported and not the taxes and levies.
15
5. Procedural Simplification and Reduction of Transaction
Cost
Exporters shall now have the flexibility to get a high value EPCG
authorisation by filing their EPCG application on Annual basis,
without the need to file the application for individual capital goods
from time to time. It will reduce transaction time and cost.
Chartered Engineer Certificate for Advance Authorisation on self
declared basis has been dispensed with. This will reduce
documentation and the transaction cost.
6. Agriculture and plantation
Instant Tea and CSNL Cardinol included for benefits under
VKGUY @ 5% of FOB value of exports.
Oil Meals (Cotton, rape seed, and groundnut), Castor Oil
derivatives, Packed Coconut Water and Coconut Shell worked
items shall be entitled for benefits @ 2% of FOB value of exports
to all markets under FPS
7. Handlooms
Duty free import of specified trimmings, embellishments etc. shall
be available on Handloom made-ups exports @ 5% of FOB value
of exports.
Additional 2% bonus benefits over and above the existing benefits
under Focus Product Scheme would significantly benefit the
Handloom Sector.
16
8. Leather sector
Leather sector shall be allowed re-export of unsold imported raw
hides and skins and semi-finished leather from Public bonded
warehouses, without payment of any export duty. This will
facilitate the logistics for establishment of such warehouses and
easy access to raw material for the leather sector.
9. Textiles sector
Duty free import of specified trimmings, embellishment etc shall
be available @ 3% on exports of polyester made-ups in line with
the facility available to sectors like Textiles & Leather. It will
promote export of products such as micro cloth, which has become
popular in home textiles.
Readymade Garment sector granted enhanced support under
MLFPS for a period of further 6 months from October, 2010 to
March, 2011 for exports to 27 EU countries.
10. Gems & Jewellery sector
The list of items allowed for duty free import by Gems &Jewellery
sector has been expanded by Inclusion of additional items such as
Tags and labels, Security censor on card, Staple wire, Poly bag.
This will reduce the cost of the product to some extent.
17
11. Handicraft sector
The facility of duty free import of tools under Duty Free Import
scrips for Handicraft sector shall be made operational.
Additional 2% bonus benefits over and above the existing benefits
under Focus Product Scheme will significantly benefit the
Handicrafts and Silk Carpets sectors.
12. Service sector
Scrips issued under Served from India Scheme (SFIS) can now be
used for payment of duty on import of Vehicles, which are in the
nature of professional equipment.
13. Engineering and Electronics:-
A number of engineering items namely, Machine Tools,
Compressors, Iron & Steel Structures including Transmission
Towers and Scaffolding, LPG Cylinders, Ductile Tubes & Pipes
shall now be entitled for benefits @ 2% of FOB value of exports to
all markets under FPS instead of their exports to specific markets
under MLFPS earlier.
Telecom Equipments, Color TVs, Audio Systems, Optical Media,
Semi-conductors, Capacitors, Resistors, PCBs, LEDs, Conductors,
Desktops and Notebooks shall now be entitled for benefits @ 2%
of FOB value of exports to all markets under FPS instead of their
exports to limited market under MLFPS earlier.
18
14. Toys and Sports goods
Additional 2% bonus benefits over and above the existing benefits
under Focus Product Scheme will significantly benefit the Toys
and Sports Goods Sector.
Benefits under Zero duty EPCG and SHIS schemes will
significantly promote technological up gradation of Toys and
Sports Goods sectors.
2.5 EXIM BANK FACILITIES
Pre shipment credit exim banks pre shipment credit facility, in
Indian rupees and foreign currency.
For project exporters Indian project exporters incur expenditure
while executing overseas project export contracts.
For exporters of consultancy and technological services exim bank
offers a special credit facility to indian exporters of consultancy
and technology services.
Guarantee facilities Indian companies can evil of these to furnish
requisite guarantees to facilitate, execution of export contracts and
import transactions.
For commercial banks exim bank offers rediscounting facility to
commercial banks, enabling them to rediscount export bills of their
SSI customers, with usance not exceeding 90 days.
19
Finance for export oriented units exim bank provides term loan for
project finance, equipment finance, for import of technology etc.
Lines of credit exim bank extends lines of credit(LOC’s) to overseas
financial institutions, regional development banks, sovereign
governments and other entities overseas, to enable buyers in those
countries, to import goods and services from Indian deferred credit
terms. The Indian exporters can obtain payment of eligible value
from exim bank, without recourse to them, against negotiation of
shipping company
20
CHAPTER 3
FINANCING PROGRAMMES
3.1
EXPORT CREDIT FINANCE
Exim bank offers the following export credit facilities, which
can be availed of by Indian companies, commercial banks and
international entities.
PRESHIPMENT CREDIT.
Exim banks pre-shipment credit facility, in Indian rupees and
foreign currencies, provides access to finance at a manufacturing stage,
enabling exporters to purchase raw materials and other inputs.
SUPPLIERS CREDIT
This facility enables Indian exporters to extend term credit to
importers (overseas) of the eligible goods at the post shipment stage.
FOR PROJECTS EXPORTERS
Indian project exporters incur Rupee expenditure while executing
overseas project export contracts i.e. costs of mobilization/acquisition of
21
materials, personnel and equipment etc. Exim Bank's facility helps them
meet these expenses.
FOR EXPORTERS OF CONSULTANCY AND TECHNOLOGICAL
SERVICES.
Exim Bank offers a special credit facility to Indian exporters of
consultancy and technology services, so that they can, in turn, extend
term credit to overseas importers.
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.
3.2 FINANCE FOR EXPORT ORIENTED UNITS
TERM FINANCE FOR EXPORTING COMPANIES
Project Finance
Equipment Finance
Import of Technology & Related Services
Domestic Acquisitions of businesses/ companies/ brands
Export Product Development/ Research & Development
General corporate finance.
WORKING CAPITAL FINANCE FOR EXPORTING COMPANIES
22
Funded
o Working Capital Term Loans [< 2 years]
o Long Term Working Capital [up to 5 years]
o Export Bills Discounting
o Export Packing Credit
o Cash Flow financing.
Non-funded
o Letter of credit limits
o Guarantee limit
3.3 EXPORT CREDIT
23
FOR COMMERCIAL BANKS
Exim bank offers Rediscounting facility to commercial banks,
enabling them to rediscount export bills of their SSI customers, with
usance not exceeding 90 days.
We also offer Refinance of Suppliers Credit, enabling
commercial banks to offer credit to Indian exporters of eligible
goods, who in turn extend them credit over 180 days to importers
overseas.
OTHER FACILITIES FOR INDIAN COMPANIES
Indian companies executing contracts within India, but which
are financed by multilater al finance agencies, can avail of credit
under our finance for deemed exports facility, aimed at helping them
meet cash flow deficits.
FOR OVERSEAS ENTITIES
Overseas buyers can avail of Buyers Credit from Exim bank,
for import of eligible goods from India on deferred payment terms.
24
3.4 Overseas Investment Finance
Finance for Indian Company's equity participation in the overseas
Joint Venture (JV)/ Wholly Owned Subsidiary (WOS)
Direct Finance (Term & Working Capital) to the overseas JV / WOS
Finance (for equity/debt component) for acquisition of overseas
businesses / companies including leveraged buy-outs including
structured financing options.Direct Equity by Exim Bank in the
overseas JV/ WOS of an Indian Company.
3.5 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.
Financial assistance is provided by way of term loans, pre-shipment/post-
shipment credit, overseas buyers' credit, bulk import finance, guarantees
25
etc. Term loans with varying maturities are provided for setting up
processing facilities, expansion, modernization, purchase of equipment,
import of equipment/technology, financing overseas joint ventures and
acquisitions etc.
The Bank has strong linkages with other stakeholders in Agri sector such
as Ministry of Food Processing Industries, GoI, NABARD, APEDA,
Small Farmers' Agri-Business Consortium (SFAC), and National
Horticultural Board etc.
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.
Exim Bank has signed a Memorandum of Cooperation with
DHAN Foundation, Madurai (a leading NGO covering 3 lakh
families in 4 states) for advisory and financial support for
export related activities for their grass root enterprises
Set up units to produce value-added products from organic
tamarind grown in the area
Steps are on to set up an export oriented coco-peat projects
To market products made out of palm leaves and handmade
papers in Europe through our overseas offices.
26
3.6 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
Honeymoon Travels Pvt. Ltd.
Kabul Express
Dhoom -2
Don - The Chase Begins Again
Fanaa
Bunty Aur Babli
Salaam Namaste
Veer Zaara
27
3.7 PROJECT FINANCE
For setting up of EOUs
Exim bank offers term loans for setting up of new projects, and
acquisition of assets for modernization/upgradation/exansion of
existing units. The bank also extends 100% refinance to commercial
banks, for term loan sanctioned by the lending bank to an EOU.
For textile and jute industries
The bank also extends finance to eligible units in textile and
jute industries under The Technology Up gradation Fund Scheme, to
enable them to upgrade their manufacturing facilities.
For software industry
The bank offers a comprehensive financing /services package
for the software industry.
To address the perceived constraint in the availability of trained
software professionals, Exim Bank extends term loans to software
exporters for establishment/expansion of software training institutes.
28
Further, the bank also facilitates setting up of software technology
parks (STPs).
For Indian companies involved in port development and
related activities
Exim Bank extends term loans to Indian companies involved
in construction of ports/jetties, and for acquisition of fixed assets for
stevedoring, cargo handling, storage and related activities like dry
docks and ship breaking.
29
Chapter 4
Export Import Bank of India - Small & Medium Enterprises
& Agricultural finance
4.1 Definition of SMEs in India and World
In India the small and medium enterprises are not well defined. The
internal group set up by the Reserve Bank of India has recently
recommended that the units with investment in plant and machinery in
excess of SSI limit and up to Rs. 10 crores may be treated as medium
enterprises. The definitions of ‘small’ and ‘medium’ sized enterprises
differ from one country to another. SMEs have been defined against
various criteria such as the number of workers employed, volume of
output or sales, value of assets employed, and the use of energy.
Organization for Economic Cooperation and Development (OECD)
defines establishments with up to 19 employees as ‘very small’, between
30
20 and 99 employees as ‘small, from 100 to 499 employees as medium
and over 500 employees as large enterprises. However, many
establishments in some developing countries with 100 to 499 employees
are regarded as relatively ‘large’ firms. Multilateral Investment Guarantee
Agency (MIGA) has recently developed a guarantee programme, called
the Small Investment Programme (SIP) that is specifically designed for
SMEs. MIGA defines SMEs, for coverage under this programme, as
firms with not more than 300 employees, value of assets not exceeding
US $ 15 million and annual sales not exceeding US $ 15 million. The
European Union defines SMEs that have employees of less than 250, with
a turnover not exceeding Euro 50 million. Thus the definition of SME
varies from country to country and from region to region. The
importance of SME sector is well-recognized world over owing to its
significant contribution in achieving various socio-economic
objectives, such as employment generation, contribution to national
output and exports, fostering new entrepreneurship and to provide
depth to the industrial base of the economy. India has a vibrant SME
sector that plays an important role in sustaining economic growth,
increasing trade, generating employment and creating new
entrepreneurship in India.
4.2 Importance of the SME sector
The SSI sector in India employs around 26 million people and is
involved with the production of over 7500 industrial items 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
31
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).
4.3 Exim Bank and SMEs
Indian SMEs require business advisory services to enhance their
international competitiveness in a highly competitive globalising
world. The SMEs find the services of reputed national and
international consultants as not cost effective and often, not
adequately focused. Recognizing this knowledge gap, Exim Bank of
India has been endeavouring to provide a suite of services to its SME
clients. These include providing business leads, handholding during
the process of winning an export contract and thus assisting the
generation of export business on success fee basis, countries/ sector
32
information dissemination, capacity building in niche areas such as
quality, safety, export marketing, etc. and financial advisory services
such as loan syndication, etc.
In the past, Exim Bank has implemented a number of innovative
programmes focusing primarily on SMEs. The Bank, in the past, has
operated an Agency Line of Credit for IFC and an Export Marketing
Programme for the World Bank, which are targeted towards SME sector.
The Bank proactively assists SME units in establishing their products in
international markets. Exim Bank’s Lines of Credit help SMEs to offer
competitive credit term to the buyers and to explore newer geographical
markets. Recently, the Bank has signed a Memorandum of Cooperation
with the International Trade Centre (ITC), Geneva, to implement the
Enterprise Management Development Services (EMDS) programme, for
supporting SMEs in their globalisation efforts. This initiative is being
launched by ITC for the first time in any country.
33
CHAPTER 5
RECENT DEVELOPMENTS
5.1 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.
5.2 Innovative Programme for SMEs
The Bank has entered into a cooperation arrangement
with International Trade Centre (ITC), Geneva, for implementing a
unique Enterprise Management Development Services (EMDS)
program, which is an IT based solution provider to enable small
enterprises to prepare business plans with international market in
focus. This is a pioneering initiative for supporting SMEs and for
providing term loans and export finance facilities to the identified
units to help them in their globalisation efforts. The Bank has
partnered ITC in implementing this project. The Bank thus supports
small enterprises through capacity building and assistance in
formulation of viable proposals. It is envisaged that the learning
from this programme would be transferred to other developing
34
countries, and thus assist in capacity creation and institution building
in the global arena.
The Bank has partnered the Commonwealth Secretariat in the
Commonwealth – India Small Business Competitiveness
Development Programme. The objective of the programme is to
undertake capacity development initiative that promotes economic
development (increased employment, investment, trade and
economic activity) in Commonwealth member states by providing
competitive strategies and policies on SME development to
practitioners and policy makers, and to build and develop
institutional capacity.
5.3 ADFIAP Development Award
The Association of Development Financing Institutions
in Asia and the Pacific (ADFIAP) Development Award recognises
and honours ADFIAP member institutions, which have assisted
projects that have created a development impact in their respective
countries. Awardsare given to member institutions, which have
implemented or enhanced outstanding and innovative development
projects during the year. The Bank has been conferred the 2008
“SME Development Award”.
The Award is in recognition of the Bank’s “Enterprises
Management Development Services (EMDS)” programme, an IT
35
based solution provider to enable small enterprises to prepare
business plans with international market in focus
5.4 Debt restructuring scheme for small and medium
enterprises
Publications
Export Performance of Small and Medium Enterprises in India in
research brief.
Occasional Paper: Institutional Support to SMEs A Study of Trade
and Investment Potential
Occasional Paper: Institutional Support Systems for SMEs in India
and International Experiences
36
CHAPTER 6:
LINE OF CREDIT
Introduction
Exim Bank extends Lines of Credit (LOCs) to overseas financial
institutions, regional development banks, sovereign governments and
other entities overseas, to enable buyers in those countries, to import
goods and services from India on deferred 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.
37
6.1:- How does it work?
1. Exim Bank signs LOC Agreement with overseas Borrower Institution
(Borrower) and announces the availability of LOC for utilization, when
the Agreement becomes effective.
2. Exporter checks with Exim Bank, available amount under the LOC and
quantum of service fee payable to Exim Bank, if any, and negotiates
contract with Importer.
3. Importer approaches the Borrower for approval of the contract.
4. Borrower appraises the proposal. If satisfied, approves the contract and
refers to Exim Bank for concurrence for inclusion of contract for being
financed under the LOC.
5. Exim Bank accords approval to the contract, if in conformity with the
terms of LOC. Exim Bank conveys contract approval to the exporter and
the Borrower.
6. The Importer arranges remittance of advance payment to the Exporter
and also opening of a Letter of Credit, which states that the contract is
covered under Exim Bank's LOC to the Borrower and reimbursement will
be by Exim Bank for the Eligible Value of Credit, upon compliance with
stipulated conditions therein.
7. Exporter executes the contract/ships the goods/provides services.
38
8. Exim Bank/commercial bank in India, designated as the Negotiating
Bank negotiates shipping documents and pays the exporter.
9. Exim Bank reimburses the Negotiating Bank, on receipt of valid claim
and service fee, as applicable, by debit to the LOC account of the
Borrower.
10. Borrower repays Exim Bank on due dates.
6.2:- Procedural flow chart
39
Procedural flow chart:
1. Exim Bank signs agreement with Borrower and announces when effective.
2. Exporter checks procedures and Service fee with Exim Bank and negotiates contract with
Importer.
3. Importer consults borrower and signs contract with exporter.
4. Borrower approves contract.
5. Exim Bank approves contract and advises borrower and also exporter and commercial bank.
6. Exporter ships goods.
7. Commercial bank negotiates shipping documents and pays exporter.
8. Exim Bank reimburses Commercial bank on receipt of claim by debit to borrower.
9. Borrower repays Exim Bank on due date.
6.3:- Benefits to the Indian Exporter:
Under Exim Bank's LOCs, the Indian exporters can obtain payment
of eligible value from Exim Bank, without recourse to them,
against negotiation of shipping documents. The Indian exporter
does not carry any credit risk either on the importer or the
importer's country, whilst the overseas importer enjoys deferred
40
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.
6.4;- Benefits to Overseas Importer of goods and services:
Exim Bank has been using the LOC mechanism for promoting India's
exports to the traditional as well as new markets in developing countries,
which need deferred credit for buying Indian machinery, goods and
services. As the LOC is extended by Exim Bank on internationally
competitive terms, the overseas importer of Indian goods is allowed
access to the credit facility at competitive interest rates. The overseas
importer and the Indian exporter do not have to negotiate credit terms
separately as the credit arrangement between Exim Bank and the overseas
borrower financial institution is already in place.
6.5:- Credit period allowed under the LOC Eligible Goods:
Capital goods, plant and machinery, industrial manufactures, consumer
durables and any other items eligible for being exported under the 'Exim
Policy' of the Government of India.
6.6:- Interest rate the overseas importer of Indian goods has
to pay
The overseas importer of Indian goods has to approach the overseas
borrower financial institution/recipient of Exim Bank's LOC, for approval
of his proposal for import of Indian goods on deferred credit terms. The
interest rate that the importer will need to pay to the recipient of Exim
41
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.
6.7:- Charges payable by the Indian exporter to Exim Bank
In respect of certain LOCs, the Indian exporter has to pay a service fee to
Exim Bank. The exporter should check in advance with Exim Bank the
quantum/percentage of service fee payable. In respect of LOCs extended
by Exim Bank, at the behest of Government of India, no service fee is
normally payable by the exporter to Exim Bank.
6.8:- Minimum value of contract for being eligible for
coverage under the LOC
Most of the LOCs stipulate a minimum contract value as US$ 50000.
However, under certain LOCs, the minimum value of contract could be
different. Exporters would be well advised to check the particulars of the
individual LOC with Exim Bank.
Generally, export of capital goods and plant and machinery is allowed on
credit terms of upto 5 years, whereas the export of industrial
manufactures, consumer durables, raw materials and commodities is
42
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.
6.9:- 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.
6.10:-ECGC cover
As the LOC is a non-recourse financing option to the Indian exporter, he
does not have to obtain any ECGC cover.
43
CHAPTER 7
OTHER FACILITIES
7.1 Finance for R & D and Export Product Development
Exim bank offers term loans to EOUs, for development of new
technology to satisfy domestic and international environment and
standards, and to help them develop and/or commercialize new
product/process applications.
7.2 Finance for service sector
Services sectors financed by Exim Bank include
entertainment, health care, hospitality and shipping. Exim Bank has
entered into the business of film financing on a very selective basis
to cover, inter alia, film production and finance for distribution in
overseas markets.
7.3 Natural resources
Exim bank selectively provides term loans to Indian
companies in their endeavor to acquire overseas natural resources in
terms of acquiring mining/exploration rights in overseas locations.
Exim; finance will be available to Indian companies for acquisitions
of such rights either on its own or in joint venture with an overseas
partner, subject to a reasonable proportion of the resources being
destined for India.
44
7.4 Underwriting
Exim bank extends underwriting commitment to Indian
exporters, to help them raise finance from capital markets through
public/rights issues of equity shares /debentures.
7.5 Export Marketing Finance
Exim bank offers term loans to Indian companies, to aid them
in their efforts to penetrate and retain their presence in overseas
markets, particularly in developed countries.
7.6 Import loans
Exim bank finances bulk imports of consumable inputs and
canalized items undertaken by manufacturing companies.
7.7 Guarantee facility
Exim bank issues different kinds of guarantees for
EOUs.These include: a) export obligation guarantees; b) deferred
payment guarantees; c) guarantees in favor of commercial
banks/lending institutions abroad on behalf of Indian exporters.
45
7.8 Finance for venture overseas.
The bank has a comprehensive programme in terms of equity
finance, loans, guarantees and advisory services to support Indian
outward investment.
Exim bank offers term loans to Indian companies, both for
equity investment in their ventures overseas as well as for on lending
purposes.
Besides, Exim Bank also undertakes Direct Equity Stake in
Indian Ventures Abroad, to enable Indian companies to supplement
their equity with Exim Banks equity contribution.
46
CHAPTER 8
OTHER SERVICES
8.1 EXPORT SERVICES
Exim bank offers a diverse range of information, advisory,
and support services, which enable exporters to evaluate
international risks, exploit export opportunities and improve
competitiveness.
8.2 For Multilateral Agencies Funded Projects Overseas
(MFPO)
Exim bank offers value added information and support
services to Indian companies seeking business in business funded by
multilateral agencies such as World Bank, Asian Development Bank,
African Development Bank, European Bank for Reconstruction and
Development, and other official Development Agencies like the
Japan Bank for International Cooperation.
8.3 Services offered include
Identification of business opportunities in funded projects.
Details on specific project of interest.
Information on procurement guidelines, policies and practices of
multilateral agencies.
Advice on preparation of Expression of Interest, Capability, Profile
etc.
47
Advice on bids, with regard to bid evaluation, review of bid
documents, etc.
Apart from these we also offer support services, such as
liaising with Indian missions, monitoring bid performance,
assistance in prequalification etc.
8.4 Commercial services
Exim bank undertakes customized research on behalf of
interested companies, in areas such as establishing market potentials,
defining marketing arrangements, and specifying distribution
channels. We also assist companies in developing export market
entry plans, obtaining quality certifications and display of their
products in our overseas offices.
8.5 Country profiles
Exim bank also undertakes country profiles, which assess the
economic, political, currency and credit risks involved, along with
the export opportunities in the country concerned.
8.6 Financial counseling
Exim bank offer advice on how to access foreign currency
finance from multilateral institutions and import lines of credit, trade
finance alternatives, collection/payment systems, as well on the
credit worthiness of business entities and banks.
48
8.7 Internationalization support
Exim bank helps in identifying technology suppliers, partners,
and in consummation of domestic and overseas joint ventures,
through its network of alliances and its overseas offices. It also
advice companies on regulatory clearances, and facilitate tying-up
finance for equity and working capital.
8.8 Information access
Exim bank issues business opportunities alerts, which
communicate business leads, acquisition opportunities, industry
trends as well as collaboration opportunities.
8.9 Building export capability
Our Eximius Learning Centers in Banglore, Ahmedabad and
Pune organize training programmes, workshop and seminars for
exporters. These programmes, often on sector-specific issues, are
conducted buy international experts from trade promotion
organizations and multinational companies.
The bank also carries out research on issues related to
international trade, economics and sector/product/country studies,
which it publishes in the form of Occasional Papers and Working
Papers.
The bank disseminates information on export opportunities
and highlights development that has a bearing on Indian exports,
through its quarterly bulletin, Eximius: Export Advantage.
49
Besides, this publication also carries a regular feature, country
scan, which gives update on the trade/investment climate in various
countries.
The bank also brings out a bi-monthly publication titled “Agri
Export Advantage” in English, Hindi and 10 regional languages.
The bank supports three quarterly publications viz ‘Indo –
African business”, “Indo-LAC business” and “Indo-CIS
Business”. Exim Banks commitment to promoting and supporting
trade with the African, LAC CIS regions.
8.10 International merchant banking services
Exim bank provides advisory services to Indian exporters to enable them
to offer competitive financial packages when they bid for exports.
8.11 exim bank as an international consultant.
Exim bank shares its expertise in the creation and operation of
a financial institution in a developing country, with countries
endeavoring to set up institutional infrastructure for international
trade. Our activities in this regard includes:
Feasibility study for establishment of an export credit and guarantee
facility for Gulf Co-operation Council (GCC) countries.
Setting up the Afriexim Bank, Exim Bank in Malaysia, and the
export credit guarantee company in Zimbabwe.
Designing and operational sing of export financing programmes in
turkey and South Africa.
50
Inputs regarding export marketing/export development for Armenia,
Vietnam and Ukraine.
Feasibility study, undertaken on the behalf of the government of
Mauritius, for “projecting Mauritius as an investment hub for Indian
firms.
8.12:- JOINT VENTURES
Global procurement consultants limited (GPCL) is a successful
consultancy company, promoted by Exim bank in 1996,in partnership
with leading private and public sector consultancy firms in India. GPCL
provides procurement related services particularly related to multilateral
agencies such as World Bank, Asian development bank and African
development bank. Global trade finance limited (GTF), a joint venture
which had its shareholders, Exim bank; FIM bank, Malta; and
international finance corporation, Washington and bank of Maharashtra
commenced its business in September 2001.GTF offers factoring for
export and domestic receivables with credit protection. The focus of
GTF’S activities is on market driven export-financing solutions for small
and medium sized Indian firms.
51
CHAPTER 9
PROMOTIONAL PROGRAMMES
9.1 Promotional activities
Exim Bank conducts Research Studies on products, sectors,
countries, macro economic issues relevant to international trade and
investment. These include your,
a) Sector studies assessing export potential: the sectors covered
are Computer Software, Floriculture, Medicinal Plants, Steel,
Jute, Sports Goods, Machine Tools, Organic Products,
Chemical and Pharma.
b) Bilateral trade and investment studies: Kazakhstan,
Kyrgyz Republic, Uzbekistan- Trade Potential. Israel, Sri
Lanka, Australia & New Zealand -Trade & Investment Potential
c) International trade related studies: Transaction Costs of
Indian Exports- An Analysis, Business Practices of Successful
Indian Exporters
The Bank disseminates on export opportunities and highlights
developments that have a bearing on Indian exports, through its
quarterly bulletin, Eximius: export advantage. Its Eximius: Export
advantage publication also carries a regular feature, Country Scan,
which gives updates on the trade/investment climate in various
countries. The Bank supports three quarterly publications viz. The
52
Bank also brings out a bi-monthly publication titled Agri-Export
Advantage in English, Hindi and 10 regional languages. The bank
supports three quarterly publications viz. Indo-Africa Business, Indo
– Latin America Business, and Indo- CIS business. Support with
these magazines demonstrates Exim Bank’s commitment to
promoting and supporting the trade with Africa, Latin America and
CIS regions.
9.2 Award for Business Excellence
Exim Bank, in association with the Confederation of Indian
Industry (CII), presents as Annual Award for Business excellence for
the best TQM practices adopted by an Indian company. The high
performance standards set down in order to qualify for the Award
serve to foster strong commitments to the TQM in the company’s
journey towards Business Excellence.
EXIM BANK INTERNATIONAL ECONOMIC
DEVELOPMENT RESEARCH ANNUAL (IEDRA) AWARD,
2008
In commemoration of Jawaharlal Nehru Birth Centenary (1889-
1989)
9.3 The award
Export-Import Bank of India has instituted an Annual Award
for research in International Economics, Trade & Development and
Related Financing. The objective is to promote research in
International Economics, Trade & Development and Related
Financing by Indian nationals at universities and academic
53
institutions in India and abroad. The Award will consist of a sum of
Indian Rupees One Hundred Thousand and a Citation.
The Award was initiated in commemoration of Jawaharlal
Nehru Birth Centenary (1889-1989).
9.4 The entry
Research work by Indian nationals in International Economics,
Trade & Development and Related Financing (either awarded a
Doctorate or accepted for award of Doctorate) from a university or
equivalent academic institution in India or abroad is a prerequisite
for eligibility of Award. The Award will be made to a person eligible
to receive an award in Indian Rupees. Exim Bank will accept, as
entry, thesis by which doctorate has been obtained/ accepted for
award of Doctorate between January 1, 2004 and September 30,
2008. Thesis can be submitted either in English or Hindi, and in the
latter case must be accompanied by a version in English.
Support to Indian Consultants for undertaking services
abroad
Under an agreement with the International Finance
Corporation (IFC), Washington, Exim Bank is a participant in the
trust funds set up by the IFC in different parts of the world. As a
result of this arrangement, Indian consultants can avail of its support
for undertaking specific assignment in select countries. including
Africa, Eastern Europe, CIS countries, China, South Asia, and the
Mekong Delta region.
54
9.5 ADFIAP DEVELOPMENT AWARD
The Association of Development Financing Institutions in Asia and
the Pacific (ADFIAP) Development Award recognizes and honours
ADFIAP member institutions, which have assisted projects that
have created a development impact in their respective countries.
The Bank has been conferred the 2006 'Trade Development
Award'. The Award is in recognition of the Bank's initiative for
supporting village and rural industries to explore markets overseas,
leveraging effectively upon the Bank's extensive institutional and
trade promotion linkages, and its support and financing
programmes.
55
CHAPTER 10
RUPEE RESOURCES OF EXIM BANK
10.1 Term Deposits:
Issued for tenors 1 to 5 years. Minimum size of each deposit is Rs.
10,000/-. Applicable rates
On the deposits for different tenors is published from time to time. An
incentive in the form of a higher rate is available to senior citizens. The
deposits are non-transferable.
56
10.2: Term Money:
Bank can borrow term money for 3-6 months from scheduled
commercial banks and cooperative Banks at mutually agreed rates.
10.3: Certificates of Deposit (CD)
Issued for tenors 1-3 years at mutually agreed rates in multiples of Rs 1
lakh with minimum amount of a CD from a single subscriber at Rs. 1
lakh. Eligible investors include individuals (other than minors),
corporations, companies, trusts, funds, associations etc. and non-resident
Indians (NRIs)
10.4: Commercial Papers (CPs)
Issued at a discount to the face-value at mutually agreed rates, for
maturities of 15 days - one year in denomination of Rs. 5 lakh (face-
value) or multiples there of Eligible investors Include individuals,
banking companies, other corporate bodies registered or incorporated in
India And unincorporated bodies, Non- Resident Indians (NRIs) and
Foreign Institutional Investors (FIIs) (investment By FIIs would be within
the limit set for their investments by the Securities and Exchange Board
of India (SEBI)).
57
10.5: Bonds
Issued for a minimum maturity of 3 years. In respect of bonds having
call / put or both options, the same would not be exercisable before the
expiry of one year from the date of issue of bonds. The coupon on the
bond may be fixed or floating (linked to a mutually acceptable 'reference
rate').
All the above instruments currently enjoy the highest safety rating from
CRISIL, ICRA and Fitch.
Distributors with proven track record can empanel with the Bank for
arrangement of term deposits
58
RECENT NEWS:
EXIM Bank of India extended a US$ 60 million line of credit to
Myanmar for financing of railway projects.
These projects will be executed by the India’s state-owned RITES
Ltd. This was announced by Mr. U Soe Tha, Minister for National
Planning & Economic development of Myanmar, after the signing
of a Memorandum of Understanding (MoU) by Mr. T C A
Ranganathan, Chairman & Managing Director, EXIM Bank and
Mr. Nyi Phyu Hla, Managing Director, Myanmar Foreign Trade
Bank at Federation House .
EXIM Bank has so far extended several lines of credit to Myanmar
aggregating US$ 250 million for a variety of projects such as railways,
telecom, refinery, truck assembly plant and electricity transmission lines
in Myanmar.
The Myanmar Government was encouraging the involvement of
the private sector in a big way. For instance, the government was
supporting the setting up of private banks and had begum
privatization of petrol filling stations.
Minister Tha said that about 400 foreign enterprises from 31
countries were doing business from and with Myanmar, accounting
for an investment of US$ 23 billion. In contrast only 5 Indian
59
companies were present in the country with an investment of US$
200,000.
The new areas for cooperation were identified as construction,
development of hydropower and manufacturing in Myanmar.
Exim bank signs LOC with Cambodia- prabhakar dalal, ED,
Export import bank of india signing a line of credit agreement for
US $ 15 mn with HE dr. Aun porn Moniroth, secretary of state,
Ministry of economy and finance of the government of Cambodia,
at Royal palace in phnom penh, in the presence of the president of
india, H.E. Pratibha devising patil, and the prime minister of
cambolia, H.E. Hun sen.
60
SUMMARY
The Exim Bank Letter of Credit policy can reduce a bank’s risks
on confirmations and negotiations of irrevocable letters of credit issued
by overseas financial institutions for the financing of U.S. exports.
This policy affords commercial and political coverage against the
failure of an overseas financial institution (issuing bank), whether
sovereign or private, to make payment or reimbursement to the insured
bank on an irrevocable letter of credit. Coverage is also provided for the
insured bank's refinancing of payments under a sight irrevocable letter of
credit of the issuing bank.
The policy applies to irrevocable letters of credit which conform
with the Uniform Customs and Practice for Documentary Credits (UCP),
1993 revision, publication number 500 of the International Chamber of
Commerce where the insured has a relationship with the foreign issuing
bank. The policy is not applicable to revocable, back-to-back, red clause
or conditional letters of credit.
Coverage applies to irrevocable letter of credit sales for goods
produced in and shipped from the United States during the policy period,
and for services
Performed by U.S. personnel either in the U.S. or in a host country.
Receivables for products, which are less than 50% U.S. content,
61
excluding mark-up, and certain defense products, are not eligible for
cover.
Terms up to 180 days from the date of first presentation of
documents may be extended for consumer goods, spare parts and raw
materials. On a case-by-case basis, agricultural commodities, fertilizer
and capital equipment may be insured on terms up to 360 days.
Principal amounts are covered up to the maximum insured
percentages stated below or as specified in the policy declarations.
Documented interest is covered up to 180 days after the date of the
issuing bank's default (or fewer days when the claim is settled earlier). On
letters of credit that are payable in U.S. dollars, the insured interest rate is
generally prime rate minus 0.5% or the rate stated in the credit agreement,
whichever is less. Exim Bank uses the prime rate published in the Wall
Street Journal, under the table "Money Rates."
The policy specifically excludes coverage for those transactions in
which there is an unresolved documentary dispute between the insured
and the issuing bank. Additionally, coverage is specifically excluded in
situations in which the issuing bank refuses documents at the time of
presentation and seeks a refund from the insured bank to which a
reimbursement has already been made.
62
CONCLUSION
The journey, along with many hurdles along the way, but
at every step was a higher learning & a better understanding of why
the Export Import Bank of India is well established in the minds of
many, today. While working on this project I came to realize that
the essence of Exim Bank lies with its ability to recognize the
changing global scenario and move ahead with the world, by
extending financial assistance to different countries in the form of
loans, advances, consultancy, rediscounting facilities, working
capital finance, project finance and not to mention its Lines of
Credits facility. Because of its range of differentiated and tailor-
made products and services, the Bank has been able to achieve
international recognition & today it can be truly called a catalyst
for India’s international trade. With the advent of globalization, the
barriers to trade are getting dismantled & the dividing lines between
national & global markets are slowly disappearing.
Towards facilitating inclusive globalization is the banks new
initiative, which has been seen through its involvement in creating export
capability in small & medium enterprises, grassroots business enterprises
& agro industries. Exim Bank recognizes that the these sectors have great
potential & with the right assistance, support, investment & expertise, the
purchasing power at the bottom of the pyramid can increase thus leading
to a gradual effect in all other sectors and thus the overall development of
63
the economy which was ultimately the aim of the Bank at the time of its
incorporation and still is.
Throughout the entire project we have referred to all the various
functions and duties that Exim bank has undertaken in all these years.
This project has mainly put light on Exim bank of India.Exim bank of
India has grown exceptionally well in all those years and catered to the
needs of all those thousands and millions of people in their export and
import regulations. It is the backbone of Indians foreign trade and today
that India’s foreign trade is touching heights, Exim bank has played the
major role in fulfilling that expectation.
It is now India’s one of the largest financial institution and is
acclaimed worldwide for all the functions it carries out. It has been
graded A+ + + by CRISIL.it has taken various functions apart from
export and import duties. Lastly we can say that it is not just a bank, but
an enormous financial institution, which is leaving no stone unturned in
making its mark globally.
64
BIBILIOGRAPHY
Websites
www.moneycontrol.com.
www.google.com.
en.wikipedia.org/wiki/Wealth management
www.eximbankindia.com
www.eximbankagro.com
www.rbi.org.com
www.eximcomm.com
Books
Banking Theory and Practice by Sundaram and Varshney.
Practice and law of Banking by B.S. Khubchandani.
Export Import Financing by Gerhard.W.Scheider
International banking and finance by Dipak Abhyankar.
65
Publications:
Export-Import Act of India 1981
News letters- Eximius, June 2008, March 2008.
Annual Report 2007-2008 – Exim Bank.
Brochure- Exim Bank Of India
Newspapers
Economic Times
Hindu Business Line
DNA
66
Recommended