DECELARATION

I MISS. SHIVANI VINOD PATEL, student of KHAR EDUCATION

SOCIETYS COLLEGE OF COMMERCE AND ECONOMICS, B.B.I.
(BANKING & INSURANCE) [Semester V] hereby declare that I have
completed the project title ROLE OF EXPORT AND IMPORT BANK
IN INDIA in the academic year 2016-2017.
The information submitted here in is true and original to the best of my
knowledge.

DATE:
MISS. SHIVANI PATEL

ACKNOWLEDGEMENT
Many people have played a part in making I making this project
study a success by give their valuable inputs and useful
suggestions.

Firstly I would express my gratitude to the University of

Mumbai for providing me the opportunity to study the practical
aspects o banking and insurance.

I am thankful to the principal DR.NANDINI DESHMUKH for

giving me and opportunity to work on this project.

I am also thankful to our coordinator MS.HARSHADA

KALBHOR for immeasurable encouragement and support.

I am also particularly grateful to my project guide MS.

ANAMIKA SONAWANE for extending her support and time.

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Introduction of EXIM Bank

History of EXIM Bank
Objectives of EXIM Bank
Organization of EXIM Bank
Function of EXIM Bank
Primary EX-IM Programmes EXIM Bank Act
EXIM Bank Act
Role of EXIM Bank of India in a Foreign investment overview of
EXIM Bank
Financial Assistance Provided by EXIM Bank to Overseas
Companies
Role of DGFT in EXIM Bank
Policies of EXIM Bank
Export Credit Guarantee Corporation of India
Line of Credit
Management of EXIM Bank
Resources of EXIM Bank
Export Development Fund
EXIM Bank LOCS Recent Development
Major Programmes of EXIM Bank
Research Methodology
Literature Review
CONCLUSION
BIBLIOGRAPHY

ABSTRACT

The Export-Import Bank of India (Exim Bank of India) is Indias

national Export Finance Institution, fully owned by the Government of India.
The Bank is engaged in financing, facilitating, and promoting Indias twoway international trade and investment, and seeks to enhance the
international competitiveness of Indian enterprises. Recognizing the
dynamics of international trade, Exim Bank of Indias vision has evolved
beyond providing export credit to a conscious, systematic effort at creating
international competitiveness capabilities by arranging competitive finance
and services at all stages of the business cycle even during currency turmoil.

Key words: Exim Bank, Export finance, policies, credit, Pre-Shipment,

Post-Shipment.

EXPORT IMPORT BANK

The Export-Import Bank of India, also known as Exim Bank of India, is the
leading export finance institution in the country. The bank was set up in the
year 1982 under the Export-Import Bank of India Act 1981. The
Government of India launched the Export-Import Bank Of India with an
aim to augment exports from India and also to combine the country's
foreign trade and investment with the overall economic growth. The bank
began its operations as a supplier of export credit, but has over the period
evolved into an institution that plays a major role in partnering Indian
Industries including small and medium enterprises.
Export-Import Bank of India has been one of the prime institutions that
encourages project exports from India. The bank offers wide-ranging
services for enhancing the prospect of Indian project exports. Exim Bank's
Overseas Investment Finance program gives a variety of facilities for Indian
reserves and acquirements overseas. The facilities consist of direct equity
participation by the bank in the overseas venture and non-funded activities
by the overseas venture and loan to the Indian companies for equity
participation in the venture abroad. As part of Exim Bank's marketing
Finance Program, the bank offers support to small and medium enterprises
in their export marketing efforts consisting of financing the soft expenditure
linking to completion of tactical and systematic export market development
plans.
The primary objective of the Export-Import Bank of India is to provide
financial assistance to importers and exporters and function as the top
5

financial institution. Some of the services of the bank include: overseas

investment finance, film finance, export credit, finance for export oriented
units and agricultural & SME finance. In the period of 2005- 2006 the total
amount of loan given out by the bank amounted to 150,389 million, while
this figure shot up to ` 220,760 million in the flowing year.
Export-Import Bank of India plays the role of source of finance, promoter,
coordinator and consultation to India's Foreign Trade. The bank is the
coordinator of the Working Group Mechanism for the clearance of projects,
service exports and deferred payment exports. This group comprises of
Exim Bank and Government of India representatives from the Ministries of
Finance, Commerce and external Affairs, Export Credit Guarantee
Corporation of India Ltd, commercial banks that are certified foreign
exchange dealers and the Reserve Bank of India. This working group gives
clearance to contracts sponsored by Exim Bank or commercial banks and
operates as a single window mechanism for clearance of export proposal
terms.

HISTORY OF EXIM BANK

YEAR EVENTS 1982 - Export-Import Bank of India was established on
January 1st, 1982. The Bank fills an institutional gap in the area of
financing India's international trade. With its setting up, a long felt need for
an apex bank that can function as the principal financial institution for
interfacing with institutions engaged in financing export and import trade
was fulfilled.
1983 - The Bank introduced a new facility under the name "Exim Syndicate
Facility" to attract greater participation in export credit from commercial
banks in India, who were authorised dealers in foreign exchange.
1984 - The Bank also introduced two new lending programmes, one
relating to financing of deemed exports and the other to financing of 100%
6

export units and units in free trade zones. Bank entered into an arrangement
with Templeton Worldwide Inc. U.S.A. to help medium sized Indian
Companies access capital.
- The Bank entered the Japanese commercial Yen market and signed a loan
agreement for raising Yen 1 billion.
1987 - A new programme to finance computer software exports was
introduced under two channels:
(i)
for those seeking finance and clearance under Exim tract, where, the
bank undertook 350% of the export obligation and
(ii)
for those who seek only financial assistance (necessarily Rupee term
finance).
- The Bank introduced EME scheme where in the Bank undertook upto
50% of the total cost incurred on export marketing activities.
- Rs 22 crores capital subscribed for by Government.
1988 - Rs 26 crores capital subscribed for by Government.
1989 - The Bank instituted an Annual Award for research in "International
Trade and Related Financing".
- Rs 13.30 crores capital subscribed for by Government.
1990 - Rs 23 crores capital subscribed for by Government.
1991 - Rs 3935, 18,115 capital subscribed for by Government.
1992 - A new programme viz., Export Vendor Development Finance was
introduced, which seeks to provide integrated financing packages to
manufactures - exporters and export trading houses to implement strategic
vendor developing plans.
- Rs 3942, 53,214capitals subscribed for by Government.
1993 - The Bank promotes Indian exports through a variety and a range of
lending programmes. The Bank offers export bills rediscounting facility,
refinance of supplier's credit, refinance of term loans to export oriented
units and bulk import finance to commercial banks in India.

- The Bank also participates in guarantees issued by commercial banks on

behalf of Indian project exporters.
- During the year, two consultancy assignments were awarded to Indian
consultants for providing management information system and cost
accounting system for a food processing company and an automotive parts
manufacturing company, both in Poland.
- During the year, the Bank brought out five occasional papers, covering
subjects such as Exports to Japan, Foreign Investment in Pharmaceutical
Industry, Exports to Eastern Europe and the former USSR, Software Sector
and Effective Exchange Rate of the Rupee.
- The Bank introduced Export Vendor Development Finance during the year
to support vendor development activities of exporters.
- The Bank introduced for the first time in India, forfeiting as an alternative
instrument of export financing.
- During the year, the Bank arranged two lines of credit for financing import
of plant and machinery by export oriented units in India.
- A line of credit of 20 million (Rs.420 million) was signed with Credit
Suisse, Zurich, for financing import of plant and machinery from
Switzerland.
- The Bank issued `Export Advantage', a quarterly publication, in Hindi.
- The Bank participated in Hindi Day celebrations jointly organised under
the auspices of the Town Official Language Implementation Committee of
Public Sector Banks of Mumbai.
- Rs 2184,06,552 capital subscribed for by Government.
1994 - Another new programme for providing underwriting facilities was
launched in January. Under this programme, the bank would offer
underwriting as well as bridge

Loan facility to eligible Indian exporting companies to raise funds from

public by way of equity or debentures.

- The bank opened two offices in Europe and at Budapest and Rome to act
as two way trade and investment service centres between India and Europe,
to obtain information on buyers, investors, specific product sectors for
privatisation and sales.
- The Centre equipped with the State-of-the-art hardware was to offer
training facilities to small and medium sized companies India.
- Rs 8290,80, 000 capital subscribed for by Government.
1995 - The Uruguay Round agreement was followed by the creation of the
World Trade Organisation (WTO) in January.
- During the year, the Bank arranged a line of credit of US $ 15 mn. From
Citibank guaranteed by US Exim Bank.
- During the year Exim Bank offered strategic market entry support to 16
companies for Rs 8.6 mn. To encourage exporters to make responsive bids
under international competitive bidding procedure.

- During the year, the Bank signed a framework co-operation agreement

with the European Bank for Reconstruction and Development (EBRD)
headquartered in London for acquiring advance information on projects
funded by EBRD in order to enter into co-financing proposals with the
EBRD in Eastern Europe and CIS.
- During the year, the Bank organised two seminars in Mumbai and Calcutta
on "Growth Opportunities for Globalising India."
- The Bank introduced the `Clusters of Excellence' programme for
upgradation of quality standards and obtaining ISO 9000 certification.
- The Bank opened an Eximius Centre at Bangalore. The Centre is equipped
with state-of-the-art hardware and will offer training facilities particularly
to small and medium sized companies in India & in a variety of subjects.
- During the year, the Bank concluded a Co-operation Agreement with
African Management Services Company Amsterdam (AMSCO) for
sponsoring Indian consultants to undertake assignments for private sector
companies in Sub-Saharan Africa to rehabilitate and expand their
businesses.

- Exim Bank participated in the Indian Engineering Trade Fair in New

Delhi in February. Italy was the partner country.
- Exim Bank signed an agreement with SVEX srl, Italy, an organisation for
promotion of international business of small and medium units of EmiliaRoinagna region of Northern Italy.
- Rs 5966, 61,000capitals subscribed for by Government.
-1996 - Bank entered into three interest rate swap agreements as part of
liability management.
- During April-December 1995, the total value of issues launched was Rs
141.5 billion.
- The concept of a back-to-back inland letter of credit has been introduced
to enable an advance licence holder to source his inputs from domestic
suppliers.
- The international consultancy firm, McKinsey & Co., Inc., were
commissioned by the Bank for developing a medium term strategy for the
Bank.
- Bank has also signed a MOU with Exim Bank of Thailand for extending a
Line of Credit of US $ 10 mn.
- During the year, Bank introduced a new programme for commercial banks
to ensure regular flow of financing to exporters.
- Seventy five companies have obtained ISO certification with Exim Bank's
help, outside the clusters programme.
- During the year, Bank introduced an export facilitation programme aimed
at financing of minor ports.
- Bank has entered into an arrangement with Templeton Worldwide Inc.,
USA under which Templeton is to raise an offshore fund for US $ 60 mn.
- Exim Bank has introduced a financing programme to enable Indian
companies to adopt and implement new quality standards laid down by
developed countries.
10

- The Bank has launched The Exim us Club of exporters who are active in
the global market.
- During the year, the Bank joined yet another initiative of IFC viz. Africa
Enterprise Fund.

1997 - The Bank introduced maturity linked interest rates for supplier's
credits in rupees and foreign currency as well as lines of Credit/Buyer's
Credits extended to overseas institutions/government for financing exports
from India.
- Mr Y B Desai has been appointed managing director of Export-Import
Bank of India vide a government notification on August 22. He was the
executive director of Exim Bank prior to this appointment.
- The Exim Bank has signed a memorandum of understanding with
Spanish-based Compania Espanola de Financiacion DEL Desarrollo
(COFIDES).
- Y B Desai, managing director signed the MoU on behalf of Exim Bank
while JJ Zaballa, chairman and CEO signed the MoU on behalf of
COFIDES.
- The MoU was signed on the occasion of Expotecnia-97, an industrial
exhibition where Spanish Industry is showcasing their technology and
machinery to promote bilateral business relation between India and Spain.
1998 - During the year 1997-98, 145 export bids valued at Rs 121.74 bn. for
supply, construction and turnkey projects and consultancy services were
approved by Exim Bank/Working Group.
- During 1997-98, Reserve Bank of India issued 11.40 per cent Government
of India Compensation (Project Exports to Iraq) Bonds, 2003 for an
aggregate amount of Rs 2.16 bn. in favour of exporters, banks and Exim
Bank against project receivables from Iraq.
- During the year, Bank introduced working capital term loan facility for
export-oriented units. Bank offers comprehensive financing package
11

covering term loans for investment, working capital finance and foreign
trade related guarantees.
- During the year, Bank expanded the scope of the programme to cover
additional international, regional and country specific quality standards.
- Exim Bank in association with Confederation of Indian Industry (CII) has
instituted an Annual Award for Business Excellence for best TQM practices
adopted by an Indian company.
- During the year, Bank became an honorary member of Association of
African Development Finance Institutions (AADFI).
- During the year, Bank completed Phase II of the assignment to set up
institutional infrastructure in the export sector, commissioned by the
Reserve Bank of Zimbabwe.
- During the year, Bank entered into a currency-cum-interest rate swap of
floating rate US$ funds for JPY 296.0 mm. as part of liability management.
- The Export-Import Bank of India today signed a memorandum of
understanding with the Sharjah Chamber of Commerce and Industry for
joint promotion and facilitating of trade and investment.
- The Export-Import Bank of India and the National Association of
Software and Service Companies has entered into a memorandum of
understanding in New Delhi for promoting software and services exports.
- EXIM Bank of India is privately placing a 10 year 13.5 paper for an
amount of Rs. 200 crore.
- The Export-Import Bank of India (Exim Bank) and the African
Development Bank (AFDB) signed a memorandum of understanding
(MoU) to co-finance development projects in Africa.
- The Exim Bank has now emerged as an important institution in export
financing by introducing a series of innovative measures including a
comprehensive financing package covering term loans for investment,
working capital finance and foreign trade-related guarantees to cater to the
growing business needs, he observed.

12

- The Export-Import Bank of India (Exim Bank) is issuing bonds to raise an

aggregate Rs 700 crore ($161.29m), including a green shoe option of Rs
350 crore, money market brokers.
- Exim Bank entered the domestic debt market on November 25 to raise Rs
700 crore of funds through a bond issue, offering investors to choose
between tenor ranging from one year to five years.
1999 - Bank introduced a number of financing programmes with a view to
expanding coverage of Bank's finance for exporters, importers and for
investment overseas.
- During the year, Bank introduced the long term working capital finance
programme for export-oriented units for augmenting their long term
working capital.
- Bank also provided information and advisory services to members of the
Exim us Club set up by the Bank to meet the international business needs of
member companies.
- Bank entered into co-operation agreements and memoranda of
understanding with business promotion agencies in Vietnam, Italy, China,
UAE, and Uzbekistan.
- During the year, Bank organised, in collaboration with IFC, Washington
D.C., eight workshops on opportunities for Indian consultants in overseas
projects, at various centres in India.
- Bank participated in IFC's Donor's Round Table Meet in Austria, for
development impact study of technical assistance programmes.
- Bank was a co-sponsor of the Afro-Indian meet in trade and investments
organised by Engineering Export Promotion Council (EEPC) in New Delhi
with a view to promoting economic relations between India and Africa.
- Bank's Office in Rome entered into co-operative arrangements with
chambers of commerce in Veneto and Lombardi regions in Italy to set up
India Desks for providing information on trade and investment
opportunities in India to their member companies.
- Bank was a principal co-sponsor of "Advantage Africa" seminar organised
by CII as part of the above Fair.
13

- Bank joined a CII Industrial Mission to Qatar and Kuwait in March.

- Bank organised seminars on "Business Opportunities under Asian
Development Bank (As DB) Funded Projects" at four centres in India, in
June, 1998.
- Exim Bank participated in Indiatech '98 exposition jointly organised by
EEPC and Electronic & Software Export Promotion Council at Nairobi in
Kenya in September 1998.
- Bank's bonds received highest rating viz. `AAA' from the rating agencies,
CRISIL and ICRA.
2000 - Export-Import Bank of India and Exim Bank of Thailand signed an
agreement in Bangkok for a line of credit of $ 10 million from Exim India
to Exim Thailand.
- International Finance Corporation, West LB Bank and Export Import
Bank of India will be forming a joint venture company for structured
finance activities.
- The Indian exim bank enjoys the highest profitability in Asia and has the
highest per employee profitability with just 160 employees managing a Rs
6,000-crore business.
- The Export Import Bank of India (Exim Bank) is slated to sign a
memorandum of understanding (MoU) with Bank of Maharashtra (BoM) on
February 28 for providing advisory services on export finance.
- The Bank has signed memoranda of understanding with Bank Hapoalim,
Bank Leumi and Israel Discount Bank for setting up lines of credit to
finance trade flows.
- The Bank and Tata Projects Ltd., an engineering, procurement and
construction company, recently signed a memorandum of co-operation.
- The Bank has joined hands with German Bank West deutsche Landes
bank Girozentrale (West LB) for floating a new company in the country.

14

- Exim Bank of India and SBI Capital Markets Ltd. have signed a
memorandum of understanding to move closer links and leverage
complementary strengths for mutual advantage.
- The Bank and the East African Development Bank signed an agreement
for a $5-million line of credit from Exim Bank to EADB.
- Export-Import Bank of India is big-ticket entry into venture capital
funding.
- The Bank has become member of the Society for Worldwide Interbank
Financial Telecommunications which will allow the bank to offer treasuryrelated products without requiring to route the transactions through
commercial banks.
- Export Import Bank of India has signed a rupee loan guarantee facility
agreement with the US Exim Bank.
- The Bank has launched a programme in association with the European
Bank for Reconstruction and Development, London, to support Indian
exports to 26 countries including Russia, CIS and East European countries.
- Export - Import Bank of India has signed an agreement with
Vnesheconom bank, the Russian bank specialising in international trade, for
extending a $10 m line of credit.
- The Export-Import Bank of India (Exim Bank) and Banque International
Arabe de Tunisie (BIAT - International Arab Bank of Tunisia) had signed an
agreement in Tunis on Oct. 21 for a line of Credit (LoC) of $5 million, from
Exim Bank to BIAT.
- The Exim Bank has signed an agreement with International Finance
Corporation Budapest.
2001 - T C Venkat Subramanian, executive director of Exim Bank, will take
charge as managing director of the bank for a period of five years from 1st
May.

15

- Export Import Bank of India and Banco de Comercio Exterior de

Colombia S.A. (Bancoldex), Colombia, signed an agreement in New Delhi
for establishing reciprocal lines of credit for US $10 million.
- The export-Import Bank of India is all set to form a joint venture with the
Washington-based International Finance Corporation and German Bank
West to provide factoring and forfeiting service in the country.
- Export-Import Bank of India and Banco Centromericano de Interaction
Economic have entered into a Memorandum of Understanding for
facilitating information exchanges and co-operation in business
opportunities.
- T C Venkat Subramanian took charge as the managing director of Exim
Bank from Y B Desai effect from 2nd May.
- The Export-Import Bank (Exim Bank), West deutsche Landes bank (West
LB) and International Finance Corporation (IFC) have joined hands to
launch Global Trade Finance Pvt Ltd (GTF) on September 20 for
undertaking export factoring.
- Mr R.M.V. Raman has been appointed as the Executive Director of Exim
Bank.
2002- Export-Import Bank of India (Exim Bank) signs pact with Banco
Bradesco for a line of credit of $10 million with Banco Bradesco SA, Brazil
to promote India's exports to Brazil.
2004-Exim Bank mops up $75mn through syndicated loans
-The Export-Import (Exim) Bank of India has signed an agreement with
Uniao De Bancos Brasileiros (Unibanco) to provide a line of credit of $10
million to finance India's export of equipment, goods and services to Brazil
-The Export-Import Bank of India (Exim Bank) has concluded an
agreement with the Government of Angola to provide a line of credit (LoC),
up to an aggregate sum of $50 lakh
-Export-Import Bank of India has instituted an award for research in
international economics, trade and development
-Exim Bank agreement with Hungarian Bank
16

-Central Food Technological Research Institute (CFTRI) signs an MoU

with Exim Bank
-Exim Bank offers $150 million loan to Sri Lanka
-Exim Bank set alliance with Vietnam govt. to provide line of credit (LoC)
aggregating $27 million.
2005
-Exim Bank signs MoU with CFTRI to promote units in Africa
-Exim Bank signs agreement with DHAN Foundation
-GPCL enters into full-fledged services area in Iran
-Exim Bank signed a memorandum of cooperation with United Bank of
India
-The Export-Import Bank of India has signed MoU with the Instituto de
Credito Oficial of Spain to promote trade between the two countries
-Exim Bank signs pact with World Bank branch
-Uravu inks MoC with Exim Bank for bamboo craft exports
-Exim Bank join hands with BoB for SME financing.
-Exim Bank, Basix tie up to strengthen rural exports
2006-Exim bank enters into co-operation pacts with NGOs
-Exim Bank signed a memorandum of cooperation (MoC) with SEWA
Trade Facilitation Centre
2007- Exim Bank of India has inked a pact with International Finance
Corporation (IFC), Washington, a member of the World Bank group, under
the Global Trade Finance Programme (GTFP) of IFC.
(a) Planning, promoting and developing exports and imports.

17

(b) Providing technical, administrative and managerial assistance for

promotion, management and expansion of exports.
(c) Undertaking market and investment surveys and techno-economic
studies related to development of exports of goods and services.

The Exim Bank has a 17-member Board of Directors, with Chairman and
Managing Director as the chief executive and full-time director. The Board
of Directors consists of the representative of the Government of India, RBI,
IDBI, ECGC, commercial banks and the exporting community.

The authorised capital of Exim Bank is Rs. 200 crores, of which Rs. 75
crores is paid up. The banks have secured a long-term loan of Rs. 20 crores
from the Government of India. It can also borrow from the RBI. It is
empowered to raise resources in domestic and international markets.

The Bank began its lending operations from March, 1982. Till June, 1982, it
has extended assistance up to Rs. 133 crores to the export sector in various
ways.
The establishment of Exim Bank may be regarded as a right step in the
export promotion policy and programme of the Government.

During 1984, the Exim Bank sanctioned various programmes of funded

assistance of Rs. 430 crores. It also launched a new programme to provide
term finance for export-

oriented units, under which assistance was provided through a consortium

for establishing a 100 per cent export unit in the ceramics industry.

The Exim Bank also extended its financial assistance to Indian exports
through letters of credit, re-lending facility, export bills rediscounting,
overseas investment finance, facilities for deemed exports and assistance to
hundred per cent export units and units in free trade zone.
18

At the end of December 1984, the Exim Banks outstanding underfunded

and non-funded assistance amounted to Rs. 415 crores and Rs. 510 crores,
respectively.
In 1984, the Exim Bank signed a loan agreement to borrow one billion yen
from the Japanese commercial yen market.

In June 1986, the Exim Bank introduced a new programme called the
Export Marketing Fund (EMF), under which finance is made available to
Indian companies for

undertaking export marketing activities. The programme also covers

activities like desk research, minor product adaptation, overseas operations
and travel to India by buyers overseas. During 1986, Rs. 78 lakhs were
sanctioned, while Rs. 3.4 lakhs have been utilised under the EMF.

On whole, the Exim Bank concluded an agency credit line of US $ 15

million with the International Finance Corporation (IFC).

During 1994-95, Exim Bank sanctioned Rs. 2,466 crore and disbursed Rs.
2,130 crore of financial assistance under various lending project.

Objectives of the study

1. To study various modes of financing offered to exporters.
2. To study the credit facilities provided to exporters by bank.

3. To study the banking facilities provided to exporters by bank.

4. To ensure and integrated and co-ordinated approach in solving the allied
problems encountered by exporters in india

19

5. To pay specific attention to the exports of capital goods

6. To facilitate and encourage joint ventures and export of technical services and
international and merchant banking
7. To tap domestic and foreign markets for resources for undertaking
development and financial activities in the export sector

ORGANIZATION
Exim Bank is managed by a Board of Directors, which has representatives
from the Government, Reserve Bank of India, Export Credit Guarantee Corporation
of India, a financial institution, public sector banks, and the business
a financial institution, public sector banks, and the business

20

The Bank's functions are segmented into several operating groups

including:

21

Corporate Banking Group which handles a variety of financing

programmes for Export Oriented Units (EOUs), Importers, and
overseas investment by Indian companies.

Project Finance / Trade Finance Group handles the entire range of

export credit services such as supplier's credit, pre-shipment
Agriculture Business Group, to spearhead the initiative to promote
and support Agricultural exports. The Group handles projects and
export transactions in the agricultural sector for financing.

Small and Medium Enterprise: The group handles credit proposals

from SMEs under various lending programmes of the Bank.

Export Services Group offers variety of advisory and value-added

information services aimed at investment promotion.

Export Marketing Services Bank offers assistance to Indian

companies, to enable them establish their products in overseas
markets. The idea behind this service is to promote Indian export.
Export Marketing Services covers wide range of exports oriented
companies and organizations. EMS group also covers Project
exports and Export of Services.

Besides these, the Support Services groups, which include: Research

& Planning, Treasury and Accounts, Loan Administration, Internal
Audit, Management Information Services, Information Technology,
Legal, Human Resources Management and Corporate
Communications?

22

FUNCTION OF EXIM BANK

The Export-Import (EXIM) Bank of India is the principal financial

institution in India for coordinating the working of institutions engaged in
financing export and import trade. It is a statutory corporation wholly
owned by the Government of India. It was established on January 1, 1982
for the purpose of financing, facilitating and promoting foreign trade of
India

(a) Planning, promoting and developing exports and imports;

(b) Providing technical, administrative and managerial assistance for
promotion, management and expansion of exports; and
(c) Undertaking market and investment surveys and techno-economic
studies related to development of exports of goods and services.
The Exim Bank has a 17-member Board of Directors, with Chairman and
Managing Director as the chief executive and full-time director. The Board
of Directors consists of the representative of the Government of India, RBI,
IDBI, ECGC, commercial banks and the exporting community.
The authorised capital of Exim Bank is Rs. 200 crores, of which Rs. 75
crores is paid up. The banks have secured a long-term loan of Rs. 20 crores
from the Government of India. It can also borrow from the RBI. It is
empowered to raise resources in domestic and international markets.
The Bank began its lending operations from March, 1982. Till June, 1982, it
has extended assistance up to Rs. 133 crores to the export sector in various
ways.
The establishment of Exim Bank may be regarded as a right step in the
export promotion policy and programme of the Government.
During 1984, the Exim Bank sanctioned various programmes of funded
assistance of Rs. 430 crores. It also launched a new programme to provide
term finance for export-oriented units, under which assistance was provided
through a consortium for establishing a 100 per cent export unit in the
ceramics industry.

23

The Exim Bank also extended its financial assistance to Indian exports
through letters of credit, re-lending facility, export bills rediscounting,
overseas investment finance, facilities for deemed exports and assistance to
hundred per cent export units and units in free trade zone.
At the end of December 1984, the Exim Banks outstanding underfunded
and non-funded assistance amounted to Rs. 415 crores and Rs. 510 crores,
respectively.
In 1984, the Exim Bank signed a loan agreement to borrow one billion yen
from the Japanese commercial yen market.
In June 1986, the Exim Bank introduced a new programme called the
Export Marketing Fund (EMF), under which finance is made available to
Indian companies for
Undertaking export marketing activities. The programme also covers
activities like desk research, minor product adaptation, overseas operations
and travel to India by buyers overseas. During 1986, Rs. 78 lakhs were
sanctioned, while Rs. 3.4 lakhs have been utilised under the EMF.
On whole, the Exim Bank concluded an agency credit line of US $ 15
million with the International Finance Corporation (IFC).
During 1994-95, Exim Bank sanctioned Rs. 2,466 crore and disbursed Rs.
2,130 crore of financial assistance under various lending project.

What are the functions of Export-Import Bank of India?

The main functions of the EXIM Bank are as follows:
(i)

Financing of exports and imports of goods and services, not only of

India but also of the third world countries;

(ii)

Financing of exports and imports of machinery and equipment on

lease basis;

(iii)

Financing of joint ventures in foreign countries;

(iv)

Providing loans to Indian parties to enable them to contribute to the

share capital of joint ventures in foreign countries;

24

(v)

To undertake limited merchant banking functions such as

underwriting of stocks, shares, bonds or debentures of Indian
companies engaged in export or import; and

(vi)

To provide technical, administrative and financial assistance to

parties in connection with export and import.

The important functions of the EXIM Bank

1. Financing of export and import of goods and services both of India and
of outside India.
2. Providing finance for joint ventures in foreign countries.
3. Undertaking merchant banking functions of companies engaged in
foreign trade.
4. Providing technical and administrative assistance to the parties engaged
in export andimport business.
5. Offering buyers credit and lines of credit to the foreign governments
and banks.
6. Providing advance information and business advisory services to Indian
exports in respect of multilaterally funded projects overseas.
During the year 1994-95, the EXIM Bank introduced the Clusters of
Excellence programme for up-gradation of quality standards and obtaining
ISO 9000 certification in various parts of the country. The Bank also
entered into framework cooperation agreement with European Bankfor
Reconstruction and Development (EBRD) for acquiring advance
information on EBRD funded projects in order to enter into co-financing
proposals with EBRD in Eastern Europe and CIS.
With a view to promote exports, EXIM Bank has introduced the following
three Schemes:
1. Production Equipment Finance Programme
2. Export Marketing Finance
3. Export Vendor Development Finance
Over the period, expansion /diversification programme has claimed the
maximum Share (54.3%) of EXIM Banks sanctions, followed by new
projects, (33.2%) and Modernisation /acquisition of equipment (12.5%).
25

PRIMARY EX-IM PROGRAM EXIM BANK ACT

The primary way in which the Ex-Im Bank aids small-and medium-sized
U.S. exporters is through one or more of its financing programs. These are
summarized as follows:

Working Capital Guarantee Program (WCGP)

The Working Capital Guarantee Program, which is operated in conjunction
with the SBA's Export Working Capital Program, assists small business
exporters in obtaining the capital they need to purchase inventory or raw
materials, market exports, or engage in manufacturing activities. The
program guarantees 90 percent of the principal and interest on working
capital loans extended by commercial lenders to eligible exporters,
provided the loan is fully collateralized (through inventory, accounts
receivable, or other means). The loan amount may be used for a variety of
business purposes, including purchase of raw materials, purchase of
inventory, or manufacturing expenses (including cost of labour,
engineering, and other services).

Export Credit Insurance Program.

The Export-Import Bank makes available credit insurance to qualified small
businesses. This insurance, which may be obtained directly or via an
insurance broker, consists of a wide variety of policies designed to protect

26

businesses against losses incurred in developing countries, where

commercial and political developments can trigger defaults. In FY 2004,
small businesses received $1.6 billion in credit insurance authorizations.
Specifically, this program

1) protects the exporter against the failure of foreign buyers to make

payment because of national political and/or economic developments;

2) encourages exporters to offer international buyers competitive terms of

payment;
3) gives exporters and their lending institutions greater financial flexibility
in handling overseas accounts receivable (policies are assignable from the
insured exporter to financial institutions).

Small Business Insurance Policy Program.

The Export-Import Bank provides short-term (no more than 180 days)
policies designed to address the unique credit requirements of smaller,
newer exporters. Under the policy, Ex-Im Bank assumes 95 percent of the
commercial and 100 percent of the political risk involved in extending
credit to the exporter's overseas customers. "This policy frees the exporter
from 'first loss' commercial risk deductible provisions that are usually found
in regular insurance policies," stated the Ex-Im Bank. "It is a multi-buyer
type policy which requires the exporter to insure all export credit sales. It
offers a special 'hold-harmless' assignment of proceeds which makes the
financing of insured receivables more attractive to banks."

Short-Term Single Buyer Program.

This option is available to exporters who do not wish to insure all their
short-term credit sales under a multi-buyer policy when they are in fact
making single or multiple sales to the same buyer. The policy offers 90
percent to 100 percent coverage for both political and commercial risks of
27

default, depending on buyer, term of sale, and type of product. It has no

deductible, and small businesses are eligible for special reduced premiums.

Other notable programs offered by the Ex-Im Bank include:

1) Umbrella Policyallows state agencies, export trading

and management companies,

insurance brokers, and other agencies to
intermediaries between the Bank and their clients.

act

as

2) Medium-Term Insurancecomprehensive (100 percent) coverage

available to
exporters of capital goods or services in amounts of $10 million or less and
terms up to five years.

3) Guarantees to Foreign Buyersvarious loans and guarantees of

commercial
Financing that can be extended to foreign purchasers of U.S. capital goods
and
Related services.

4) Guarantees of repayment protection for private sector loans to buyers of

U.S. Capital goods and related services.

5) Programs Supporting Export of Environmental Goods and Services

This Ex-Im Bank Offering supports export of environmental goods and
services by providing

short-term environmental insurance policies that feature no deductible and

Comprehensive coverage in the event of default.

6) Seminars and Briefing ProgramsAvailable to members of the small

business

28

Community, these discussions and seminars cover a variety of exporting

topics. For
More information on these and other Ex-Im offerings, contact the bank's
central
Headquarters in Washington, D.C., or one of its six regional offices
across United States. For more information on these canters, or on any of
the institution's other programs and services, call 1-800-565-EXIM or
access their Web site at In addition, the United States maintains 14 U.S.
Export Assistance Centres (USEACs) which server as one-stop centers for
export-related services of the Ex-Im Bank and other agencies, including the
Small Business Administration and the Department of Commerce.

29

EXIM BANK ACT

1. The Export-Import Bank of India Act, 1981 was enacted 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 institutions engaged in financing export and import of goods
and services with a view to promoting the country's international trade.
The aforesaid Act was amended in the years 1985, 1988, 1998, 1999,
2005 and 2006.
2. The Export and Import Bank (EXIM Bank) was established under the
Export-import Bank Act, 1981 with an authorised capital of five
hundred crores of rupees. Subsequently, in the year 1999, the authorised
capital of the EXIM Bank was increased to one thousand crores of
rupees with a provision that the Central Government may, by
notification, increase the authorised capital up to two thousand crores of
rupees in the year 2007. The issued capital of the EXIM Bank is wholly
subscribed by the Central Government.
3. It has become necessary to provide for an adequate capital base to the
EXIM Bank to meet the requirement of capital arising from the
significant business growth recorded by the EXIM Bank in the recent
years and the growth momentum is expected to be sustained in future.
Accordingly, it is proposed to increase the authorised capital of the
EXIM Bank from two thousand crores of rupees to ten thousand crores
of rupees with a provision that the Central Government may increase
the authorised capital up to an amount that it may deem necessary from
time to time.
4. The proposed amendments would enable the EXIM Bank to make fresh
borrowings, borrow to fund commitments under export Line of Credits,
strengthen the capital base, enable the Bank to enhance single or group
borrowers exposure limits and comply with regulatory requirements.
5. The Export-Import Bank of India (Amendment) Bill, 2011 provides for
the following, namely:
(a) to increase the authorised capital of the EXIM Bank from two
thousand crores of rupees to ten thousand crores of rupees with a
provision that the Central Government may, by notification, increase
the authorised capital up to an amount that it may deem necessary
from time to time; and
(b) to make provision for appointment of two whole-time directors in
the EXIM Bank by the Central Government.
6. The Bill seeks to achieve the above objects.

30

EXIM BANK ACT 1945

The Export-Import Bank Act of 1945 (P.L. 79-173, 59 Stat. 526) made the
Export-Import Bank of Washington an independent government agency
operating under a renewable charter. President Franklin D. Roosevelt
initially established the bank by an executive order in 1934 and funded it
with $1 billion from the U.S. Treasury. President Roosevelt originally
intended to fund U.S. trade with the Soviet Union, but within the decade,
the mission of the bank expanded to include the provision of loans and
grants to U.S. companies seeking to export their products. By executive
order, jurisdiction over the bank was transferred between government
agencies four times between 1939 and 1943 before Congress established it
as an independent agency with the enactment of the Export-Import Bank
Act of 1945.
A 1968 amendment to the Export-Import Bank Act of 1945 renamed the
bank the Export-Import Bank of the United States, and this continues to be
its name today. Before 1980, the main avenue of export promotion through
the bank was by way of direct loans to producers seeking to sell goods
abroad. This program provided fixed interest rate loans and were most often
given to producers to fund high capital (plant and equipment) expenditures
in industries such as aircraft manufacture and nuclear power. Perhaps the
most well-known case of such government funding is that provided to
aircraft manufacturer Boeing. The government has supported Boeing
though the Export-Import Bank for decades as a response to the European
Union's subsidy of Boeing's major European competitor, Airbus. In 1980,
when Congress limited the amount of direct lending, the bank decreased its
direct lending and increased its use of loan guarantees and insurance
coverage as a means of facilitating the export of American goods.
The global environment in which the Export-Import Bank of the United
States must operate today is very different from that of 1945 when the
Export-Import Bank Act made it an independent government agency. At
that time, the bank was a mechanism for economic growth, as well as a
means to promote the involvement of U.S. companies in the post-war
reconstruction of Europe and Asia. At the time Congress intended these
government subsidies to promote U.S exports abroad, thus increasing
industrial production and lowering unemployment in the U.S. Today, the
role of government subsidization to achieve economic growth is a source of
debate among politicians and economistssome continuing to support the
mechanism, while others argue that it undermines growth and productivity.

31

ROLE OF EXIM BANK OF INDIA IN FOREIGN

INVESTMENT OVERVIEW OF EXIM BANK
The main objective of Export-Import Bank (EXIM Bank) is to provide
financial assistance to promote the export production in India. The financial
assistance provided by the EXIM Bank widely includes the following:
Direct financial assistance
Foreign investment finance
Term loaning options for export production and export development
Pre-shipping credit
Buyer's credit
Lines of credit
Re loaning facility
Export bills rediscounting
Refinance to commercial banks
The Export-Import Bank also provides non-funded facility in the form of
guarantees to the Indian exporters.

Various Stages of Exports Covered by EXIM Bank

Development of export makers

Expansion of export production capacity
Production for exports
Financing post-shipment activities
Export of manufactured goods
Export of projects
Export of technology and softwares

Forms of Financial Assistance Provided by

EXIM Bank to Indian Companies

Delayed Payment ExportsTerm loans are provided to those exporters who deal with
exporting of goods and services and this enables them to
offer delayed credit to the foreign buyers. This system of
deferred credit covers Indian consultancies, technology,
and other services. Commercial banks take part in this
program either directly or under risk syndication
arrangements.
32

Pre-shipment creditIndian companies which are highly involved in the

execution of export activities beyond the cycle time of six
months are funded by EXIM Bank. The construction or
turnkey project exporters enjoy the provision of rupee
mobilization.

Term loans for export productionEXIM Bank offers term loans to the 100 percent export
oriented units, units involved in free trade zones, and
exporters of various softwares in India. EXIM bank also
works in association with International Finance Corporation,
Washington, to provide financial assistance to the small
scale and medium industrial units in terms of ameliorating
the export production capacity of these units in India. EXIM
Bank also provides funded and non- funded facilities to
deemed exports from India.

Foreign Investment FinanceEXIM bank provides financial assistance for equity

contribution to the Indian companies who form Joint
Venture with the foreign companies.

Financing export marketingIt helps the exporters carry out their export market
development plan in Indian market.

33

FINANCIAL ASSISTANCE PROVIDED BY EXIM BANK TO

OVERSEAS COMPANIES

Foreign Buyer's Creditthe foreign players are entitled to a sum of financial assistance in order to
import goods and services on deferred payments.
Lines of CreditEXIM bank also offers financial assistance to the overseas financial
institutions and various government agencies for import of goods and
services from India.
Re loaning Options to Foreign Banks-

34

The foreign banks are entrusted with funding from EXIM bank in order to
provide the same to their clients across the globe for importing of goods
from India.

The major services extended by the ECIM Bank for promoting exports
include:
1. Information and support services to Indian companies to help improve
their prospects for securing business in multilateral-agencies funded
projects including the following:
a) Dissemination of business opportunities in funded projects Providing
detailed information on projects of interest Information on procurement
guidelines, policies, practices of multilateral agencies Assistance for
registration with multilateral agencies advising Indian companies on the
preparation of expression of interested intervention.
b) In order to promote Indian consultancy the bank has tied up with a
number of international organizations, such as International Finance
Corporation, Eastern and Southern African Trade and Development
Bank, etc.
c) The bank also serves as a consultant to various developing countries in
promoting exports and exports finance.
d) The bank helps in knowledge building by way of conducting seminars,
workshops, and carrying out research studies on projects, sectors,
countries, and macroeconomic issues relevant to international trade and
investment. The bank has conducted sector-specific studies for
identifying market potential for computer software, electric
components, chemicals, floriculture, machine tools, pharmaceuticals,
medicinal plants, sports goods, financial services, etc.
e) The
bank
gathers
and
disseminates
information
on
exporters/importers/industry/market reports, trade regulations and laws,
country reports, international quality standards, etc. to assist exporters.

35

ROLE OF DGFT

DGFT India - Director General of Foreign Trade provides a set of

guidelines and framework for importers and exporters wanting to trade in
India. DGFT IEC stands for Importer Exporter Code issued by DGFT. Any
bonafide person/ company starting a venture for International trade requires
DGFT IEC. The guidelines are set by DGFT India -Director General of
Foreign Trade. DGFT India Foreign Trade enables companies to acquire
benefits on their imports, exports, customs, exports promotion council etc.
DGFT India is laying stress on the development of foreign trade in the
country in the recent years. This is because foreign trade is gaining
immense importance in the country by the day. DGFT views this as a
national priority in terms of gaining economic as well as overall growth.

36

DGFT is responsible for implementing the Foreign Trade Policy or Exim

Policy with the main objective of promoting Indian exports.

DGFT or Directorate General of Foreign Trade is a government

organization

in

India

responsible

for

the

formulation

of exim

guidelines and principles for indian importers and Indian exporters of

the country. Before 1991, DGFT was known as the Chief Controller of
Imports & Exports (CCI&E).

To implement the Exim Policy or Foreign Trade Policy of India by

introducing various schemes and guidelines through its network of dgft
regional offices thought-out the country. DGFT perform its functions in
coordination with state governments and all the other departments of
Ministry of Commerce and Industry, Government of India.

To Grant Exporter Importer Code Number to Indian Exporter and

Importers. IEC Number is a unique 10 digit code required by the traders or
manufacturers for the purpose of import and export in India. DGFT IEC
Codes are mandatory for carrying out import export trade operations and
enable companies to acquire benefits on their imports/exports, indian
customs, export promotion councils council etc in India.

DGFT permits or regulate Transit of Goods from India or to countries

adjacent to India in accordance with the bilateral treaties between India and
other countries.

To promote trade with neighboring countries.

To grant the permission of free export in Export Policy Schedule 2.

DGFT also play an important role in controlling DEPB Rates.

Setting standard input-output norms is also controlled by the DGFT.

37

Any changes or formulation or addition of new codes in ITC-HS Codes are

also carried out by DGFT (Directorate General of Foreign Trade).

Apart from the above, DGFT also acts as a trade facilitator. It also deals
with the quality complaints of the foreign buyers. Officials DGFT works in
close coordination with other related economic offices like Customs
Commission rates, Central Excise authorities, DRI authorities

and

Enforcement Directorate in the year 2004, DGFT has also introduced the
digital signature.

38

POLICIES OF EXIM BANK

Indian exim policy contains various policy related decisions taken by the
government in the sphere of Foreign Trade, i.e., with respect to imports and
exports from the country and more especially export promotion measures,
policies and procedures related thereto. Trade Policy is prepared and announced

by the Central Government (Ministry of Commerce). India's Export Import

Policy also known as Foreign Trade Policy, in general, aims at developing
export potential, improving export performance, encouraging foreign trade
and creating favourable balance of payments position.
EXIM POLICY or Foreign Trade Policy is a set of guidelines and
instructions established by the DGFT in matters related to the import and
export of goods in India.
The Foreign Trade Policy of India is guided by the Export Import in known
as in short EXIM Policy of the Indian Government and is regulated by
the Foreign Trade DevelopmentandRegulationAct,1992.
DGFT (Directorate General of Foreign Trade) is the main governing body
in matters related to Exim Policy. The main objective of the Foreign Trade
(Development and Regulation) Act is to provide the development and
regulation of foreign trade by facilitating imports into, and augmenting
exports from India. Foreign Trade Act has replaced the earlier law known as
the
Imports and Exports (Control) Act 1947.

39

L
LOAN TO

INDIAN COMPANIES DEFERRED PAYMENT EXPORTS:

Term finance is provided to Indian exporters of eligible goods and service
which enable Them to offer deferred credit to overseas buyers. Deferred
credit can also cover Indian Consultancy, technology and other services.
Commercial banks participate in this Programme directly or under risk
syndication arrangements.

PRESHIPMENT CREDIT:
Finance is available from Exim Bank for companies executing
contracts involving cycle time exceeding six months. The facility
also enables provision of rupee mobilization expenses for
construction/turnkey project exporters.

TERM LOANS FOR EXPORT PRODCUTION:

Exim Bank provides term loans/deferred payment guarantees to
100%export. Oriented units, units in free trade zones and computer
software exporters. In collaboration with International Finance
Corporation. Exim Bank provides loans to enable small and medium
enterprises upgrade export production capability. Facilities for
deeded exports; Deemed export are eligible for funded and nonfunded facilities from Exim Bank

OVERSEAS INVESTMENT FINANCE:

Indian companies establishing joint ventures overseas are provided
finance towards their equity contribution in the joint venture.

FINANCE FOR EXPORT MARKETING:

This programme, which is a component of a World Bank loan, helps
exporters implement their export market development plans.

40

LOANS TO FOREIGN GOVERMENTS, COMPANIES

AND FINANCIAL INSTITUTIONS OVERSEAS BUYER'S
CREDIT:
Credit s directly offered to foreign entities for import of eligible goods and
related services, on deferred payment.
LINES OF CREDIT:
Besides foreign governments, finance is available to foreign financial
institutions and government agencies to on-lend in the respective country
for import of goods and services from India.
RELENDING FACILITY TO BANKS OVERSEAS:
Relending facility is extended to banks overseas to enable them to provide
term finance to their clients world-wide for imports from India.

LOANS TO COMMERCIAL BANKS IN INDIA EXPORT

BILLS REDISCOUNTING:
Commercial Banks in India who are authorized to deal in foreign exchange
can rediscount their short term export bills with Exim Banks, unexpired
usance period of not more than 90 days.
REFINANCE OF EXPORT CREDIT:
Authorized dealers in foreign exchange can obtain from Exim Bank 100
refinance of de3ferred payment loans extended for export of eligible Indian
goods.
GUARANTEEING OF OBLIGATIONS:
Exim Bank participates with commercial banks in India in the issue
guarantees required by Indian companies for the export contracts and
execution of overseas construction and turnkey projects.

History of Exim Policy of India

In the year 1962, the Government of India appointed a special Exim
Policy Committee to review the government previous export import
policies. The committee was later on approved by the Government of India.
Mr V. P. Singh, the then Commerce Minister and announced the Exim
Policy on the 12th of April, 1985. Initially the EXIM Policy was

41

Introduced for the period of three years with main objective to boost
the export business in India
Exim Policy Documents an exporter or importer finds out that Exim
Policy is important for his export business then the exporter must also
check out the same paragraph in the Hand book of Procedures Volume for
further details. The Handbook of Procedures Volume-II provides very
crucial information in matters related to the Standard Input-Output Norms
(SION). Such Input output norms are applicable for the products such
as electronics, engineering chemical, food products including fish and
marine products, handicraft, plastic and leather products etc. Based on
SION, exporters are provided the facility to make duty-free import of inputs
required for manufacture of export products under the Duty Exemption
Scheme or Duty Remission scheme.
The Export Import Policy regarding import or export of a specific item is
given in the ITC- HS Codes or better known as Indian Trade Clarification
Code based on Harmonized System of Coding was adopted in India for
import-export operations. Indian Custom uses an eight digit ITC-HS Codes
to suit the national trade requirements. ITC-HS codes are divided into two
schedules. Schedule I describe the rules and Exim guidelines related to
import policies whereas Export Policy Schedule II describes the
Rules and regulation related to export policies. Schedule I of the ITC-HS
code is divided into 21 sections and each section is further divided into
chapters. The total number of chapters in the schedule I is 98. The chapters
are further divided into sub-heading under which different HS codes are
mentioned. ITC (Hs) Schedule II of the code contains giving all the details
about the Export Import Guidelines related to the export policies.

Objectives of the Exim Policy

Government control import of non-essential items through the
EXIM Policy. At the same time, all-out efforts are made to promote exports.
Thus, there are two aspects of Exim Policy; the import policy which is
concerned with regulation and management of imports and the export
policy which is concerned with exports not only promotion but also
regulation. The main objective of the Government's EXIM Policy is to
promote exports to the maximum extent. Exports should be promoted in
such a manner that the economy of the country is not affected by
unregulated exportable items specially needed within the country. Export
control is, therefore, exercised in respect of a limited number of items
whose supply position demands that their exports should be regulated in the
larger interests of the country. In other words, the main objective of the
Exim Policy is:
To accelerate the economy from low level of economic activities to high
level of economic activities by making it a globally oriented vibrant
42

economy and to derive maximum benefits from expanding global market

opportunities.
To stimulate sustained economic growth by providing access to essential
raw materials, intermediates, components,' consumables and capital goods
required for augmenting production.
To enhance the techno local strength and efficiency of Indian agriculture,
industry and services, thereby, improving their competitiveness.
To generate new employment.
Opportunities and encourage the attainment of internationally accepted
standards of quality. To provide quality consumer products at reasonable
prices.

Governing Body of Exim Policy

The Government of India notifies the Exim Policy for a period of five years
(1997- 2002) under Section 5 of the Foreign Trade (Development and
Regulation Act), 1992. The current Export Import Policy covers the period
2002-2007. The Exim Policy is updated every year on the 31st of March and
the modifications, improvements and new schemes became effective from
1st April of every year. All types of changes or modifications related to the
EXIM Policy normally announced by the Union Minister of Commerce and
Industry who co-ordinates with the Ministry of Finance, the Directorate
General of Foreign Trade and network of Dgft Regional Offices.

Exim Policy of 1992-1997

In order to liberalize imports and boost exports, the Government of India for
the first time introduced the Indian Exim Policy on April I, 1992. In order to
bring stability and continuity, the Export Import Policy was made for the
duration of 5 years. However, the Central Government reserves the right in
public interest to make any amendments to the trade Policy in exercise of the
powers conferred by Section-5 of the Act. Such amendment shall be made by
means of a Notification published in the Gazette of India. Export Import
Policy is believed to be an important step towards the economic reforms of
India.

Exim Policy 1997 -2002

New Export Import Policy was need for the smooth
functioning of the Indian export import trade. Hence, the
Government of India introduced a new Exim Policy for the
year 1997-2002. This policy has further simplified the
procedures and educed the interface between exporters and
the Director General of Foreign Trade (DGFT) by reducing
43

the number of documents required for export by half. Import

has been further liberalized and better efforts have been
made to promote Indian exports in international trade.

Highlights of the Exim Policy 1997-2002

Period of the Exim Policy: This policy is valid for five years instead of
three years as in the case of earlier policies. It is effective from 1st April
1997 to 31st March 2002.

Liberalization:
A very important feature of the policy is liberalization. It has
substantially eliminated licensing, quantitative restrictions and other
regulatory and discretionary controls. All goods, except those
coming under negative list, may be freely imported or exported.

Imports Liberalization:
542 items from the restricted list 150 items have been transferred to
Special Import Licence (SIL) list and remaining 392 items have
been transferred to Open General Licence (OGL) List.

Export Promotion Capital Goods (EPCG) Scheme:

EPCG Scheme has been reduced from 15% to 10%. Under the zero
duty EPCG Scheme, the threshold limit has been reduced from Rs.
20 crore to Rs. 5 crore for agricultural and allied Sectors

Advance Licence Scheme:

Under Advance License Scheme, the period for export obligation
has been
extended from 12 months to 18 months. A further
extension for six months can be given on payment of 1 % of the
value of unfulfilled exports.

Duty Entitlement Pass Book (DEPB) Scheme:

Under the DEPB Scheme an exporter may apply for credit, as a
specified percentage of FOB value of exports, made in freely
convertible currency. Such credit can be can be utilized for import
of raw materials, intermediates, components, parts, packaging
materials, etc. for export purpos

44

EXPORT CREDIT GAURANTEE CORPORATION

OF INDIA (ECGC)
The ECGC Limited (ECGC) was established on 30 July 1957 with an objective
to provide insurance cover in respect of risks in export trade. These risk may
include loss of money on account of foreign buyer becoming bankrupt or
sudden import or exchange restrictions resulting in stopping of payments etc.
The Export Credit Guarantee Corporation of India Limited is a company
wholly owned by the Government of India based in Mumbai, Maharashtra. It
provides export credit insurance support to Indian exporters and is controlled
by the Ministry of Commerce. Government of India had initially set up Export
Risks Insurance Corporation (ERIC) in July 1957. It was transformed into
Export Credit and Guarantee Corporation Limited (ECGC) in 1964 and to
Export Credit Guarantee Corporation of India in 1983. In 2014 August, the
Company was again renamed as ECGC Limited.

HISTORY
ECGC Ltd , was established in July, 1957 to strengthen the export promotion
by covering the risk of exporting on credit. It functions under the
administrative control of the Ministry of Commerce & Industry, Department of
Commerce, and Government of India. It is managed by a Board of Directors
comprising representatives of the Government, Reserve Bank of India,
banking, and insurance and exporting community.
ECGC is the fifth largest credit insurer of the world in terms of coverage of
national exports. The present paid-up capital of the company is Rs.1200 crores
and authorized capital Rs.5000 crores

What is ECGC?
Export Credit Guarantee Corporation of India Ltd. (ECGC) is a Government of
India Enterprise which provides export credit insurance facilities to exporters
and banks in India. It functions under the administrative control of Ministry of
Commerce &Industry, and is managed by a Board of Directors comprising
representatives of the Government, Reserve Bank of India, banking , insurance
and exporting community. Over the years, it has evolved various export credit
risk insurance products to suit the requirements of Indian exporters and
commercial banks. ECGC Is the seventh largest credit insurer of the world in
terms of coverage of national exports. The present paid up capital of the
Company is Rs. 1200 Crores and the authorized capital is Rs. 5000 Crores.
ECGC is essentially an export promotion organization, seeking to improve the
competitive capacity of Indian exporters by giving them credit insurance
covers comparable to those available to their competitors from most other
countries. It keeps it's premium rates at the lowest level possible.

What does ECGC do?

Offers insurance protection to exporters against payment risks
Provides guidance in export-related activities
Makes available information on different countries with its own credit
ratings
Makes it easy to obtain export finance from banks/financial institutions
Assists exporters in recovering bad debts
Provides information on credit-worthiness of overseas buyers
Provides names and addresses of prospective buyers in the overseas
market

HOW DOES ECGC HELP EXPORTERS?

Offers insurance protection to exporters against payment risks Provides guidance in
export-related activities Makes available information on different countries with its own
credit ratings Makes it easy to obtain export finance from banks/financial institutions
Assists exporters in recovering bad debts Provides information on credit-worthiness of
overseas buyers.

NEED FOR EXPORT CREDIT INSURANCE

Payments for exports are open to risks even at the best of times. The risks have assumed
large proportions today due to the far-reaching political and economic changes that are
sweeping the world. An outbreak of war or civil war may block or delay payment for
goods exported. A coup or an insurrection may also bring about the same result.
Economic difficulties or balance of payment problems may lead a country to impose
restrictions on either import of certain goods or on transfer of payments for goods
imported. In addition, the exporters have to face commercial risks of insolvency or
protracted default of buyers. The commercial risks of a foreign buyer going bankrupt or
losing his capacity to pay are aggravated due to the political and economic uncertainties.
Export credit insurance is designed to protect exporters from the consequences of the
payment risks, both political and commercial, and to enable them to expand their
overseas business without fear of loss.
Cooperation agreement with MIGA (Multilateral Investment Guarantee Agency) an arm
of World Bank. MIGA provides:
Political insurance for foreign investment in developing countries.
Technical assistance to improve investment climate.
Dispute mediation service.
Under this agreement protection is available against political and economic risks such as
transfer restriction, expropriation, war, terrorism and civil disturbances etc..

ROLE OF ECGC
Export Credit Guarantee Corporation (ECGC) of India Limited, set up by the Govt of
India in 1957, strengthens the export promotion drive by covering the risk of exporting
on credit. Being essentially an export promotion organization, it functions under the
administrative control of the Ministry of Commerce & Industry, Department of
Commerce, and Government of India. It is managed by a Board of Directors comprising
representatives of the Government, Reserve Bank of India, banking, and insurance and
exporting community. ECGC is the fifth largest credit insurer of the world in terms of
coverage of national exports. The present paid-up capital of the company is Rs.800
crores and authorized capital Rs.1000 crores.

The types of insurance protection provided by ECGC include:

a range of credit risk insurance covers to exporters against loss in
Export of goods and services
guarantees to banks and financial institutions to enable exporters
to obtain better facilities from them
Overseas Investment Insurance to Indian companies investing in
Joint ventures abroad in the form of equity or loan.

LETTER OF CREDIT L/C

Letter of Credit also known as Documentary Credit is a written undertaking by the
importers bank known as the issuing bank on behalf of its customer, the importer
(applicant), promising to effect payment in favour of the exporter (beneficiary) up to a
stated sum of money, within a prescribed time limit and against stipulated documents. It
is published by the International Chamber of Commerce under the provision of Uniform
Custom and Practices (UCP) brochure number 500.

Various types of L/Cs are:

Revocable & Irrevocable Letter of Credit (L/c)

A Revocable Letter of Credit can be cancelled without the consent of the
exporter. An Irrevocable Letter of Credit cannot be cancelled or amended
without the consent of all parties including the exporter.

Sight & Time Letter of Credit

If payment is to be made at the time of presenting the document then it is
referred as the Sight Letter of Credit. In this case banks are allowed to take the
necessary time required to check the documents. If payment is to be made after
the lapse of a particular time period as stated in the draft then it is referred as the
Term Letter of Credit.

Confirmed Letter of Credit (L/c)

Under a Confirmed Letter of Credit, a bank, called the Confirming Bank, adds
its commitment to that of the issuing bank. By adding its commitment, the
Confirming Bank takes the responsibility of claim under the letter of credit,
assuming all terms and conditions of the letter of credit are met.

PARTIES TO LETTER OF CREDIT

Applicant
Applicant is the buyer of the goods or services supplied by the seller. Letter of credit is
opened by the issuing bank as per applicant's request. However, applicant does not
belong one of the parties to a letter of credit transaction. This is because of the fact that
letters of credit are separate transactions from the sale or other contract on which they
may be based. Applicant is one of the main parties involved in a Letter of Credit. Who
is an applicant under Letter of credit?
Applicant is the party who opens Letter of Credit. Normally, buyer of goods is the
Applicant who opens letter of credit. Letter of credit is opened as per his instruction and
necessary payment is arranged to open Letter of credit with his bank. The applicant
arranges to open letter of credit with his bank as per the terms and conditions of
Purchase order and business contract between buyer and seller. So Applicant is one of
the major parties involved in a Letter of credit.

Beneficiary
Beneficiary is the seller of the goods or the provider of the services in a standard
commercial letter of credit transaction. Letter of credit is opened by the issuing bank in
favour of the beneficiary.
Beneficiary is one of the main parties under letter of credit. Beneficiary of Letter of
credit gets the benefit under Letter of credit. Beneficiary is the party under letter of
credit who receives amount under letter of credit. The LC is opened on Beneficiary
partys favour. Beneficiary party under letter of credit submits all required documents
with is bank in accordance with the terms and conditions under LC. Issuing
bank Issuing Bank is the bank that issues a letter of credit at the request of an applicant

or its own behalf. Issuing bank undertakes to honour a complying presentation of the
beneficiary without recourse. Issuing Bank is one of the other main parties involved in
an LC. Who is an Issuing Bank under Letter of credit? Issuing Bank is the bank who
opens letter of credit. Letter of credit is created by issuing bank who takes responsibility
to pay amount on receipt of documents from supplier of goods (beneficiary under LC).

Negotiating bank
Negotiating bank is one of the main parties involved under Letter of Credit. Negotiating
Bank, who negotiates documents delivered to bank by beneficiary of LC. Negotiating
bank is the bank who verifies documents and confirms the terms and conditions under
LC on behalf of beneficiary to avoid discrepancies

Advising bank
Advising bank is the bank that advises the credit at the request of the issuing bank. An
advising bank that is not a confirming bank advises the credit and any amendment
without any obligation to honour. Advising bank is another party involved under LC.
Advising bank, as a part of letter of credit takes responsibility to communicate with
necessary parties under letter of credit and other required authorities. The advising bank
is the party who sends documents under Letter of Credit to opening bank.

Confirming Bank
Confirming bank is the bank that adds its confirmation to a credit upon the issuing
bank's authorization or request. Confirming bank may or may not add its confirmation
to a letter of credit. This decision is up to confirming bank only. However, once it adds
its confirmation to the credit confirming is irrevocably bound to honour or negotiate as
of the time it adds its confirmation to the credit. Even if the issuing bank fails to honour,
confirming bank must pay to the beneficiary.

Reimbursing Bank
Reimbursing Bank shall mean the bank instructed and/or authorized to provide
reimbursement pursuant to a reimbursement authorization issued by the issuing bank.

Documentary Letter of Credit

What Is a Documentary Letter of Credit?
A Documentary Letter of Credit is a banks international payment instrument by means
of which a certain amount of money is made available to a Beneficiary (Seller) by an
Applicant (Buyer) through a Bank that becomes payable after certain terms have been
met.
Documentary Letter of Credit:

1.
2.
3.
4.

Applicant (Buyer) goods/services at disposal as set out in the Letter of Credit

Beneficiary (Seller) payment of the Letter of Credit amount after evidence has been
presented by it to the Bank confirming that it has met its obligations under the Letter of
Credit
Who Are the Parties Involved in a Documentary Letter of Credit?
Applicant
Buyer of goods/services at whose request a Letter of Credit is opened
Beneficiary
Seller of goods/services to whose benefit a Letter of Credit is opened
Issuing
Bank that opens a Letter of Credit at the request of the Applicant (Buyer)
Advising
Bank that is authorised to pay the Letter of Credit amount in favour of the Beneficiary
(Seller) in accordance with the order of the Issuing Bank

\
How Does a Documentary Letter of Credit Function in Practice?

MANAGEMENT OF EXIM BANK

MANAGEMENT:
(1) The general superintendence, direction and management of the affairs and business

of the Exim Bank shall vest in the Board, which may exercise all powers and do
all acts and things which may be exercised or done by the Exim Bank.
(2) Save as otherwise provided in the regulations made under this Act, (a) the chairman, if he is a whole-time director or if he is holding offices both
as the chairman and the managing director, or
(b) the managing director, if the chairman is not a whole-time director, or, if the
chairman being a whole-time director, is absent,
shall also have powers of general superintendence, direction and management of
the affairs and business of the Exim Bank and may also exercise all powers and do
all acts and things which may be exercised or done by the Exim Bank.
(3) Subject to the provisions of this Act, the Board in discharging its functions shall
act on business principles with due regard to public interest.
(4) In the discharge of its functions under this Act, the Exim Bank shall be guided by
such directions in matters of policy involving public interest as the Central
Government may give to it in writing.

CONSTITUTION OF BOARD :
(1) The Board of Directors of the Exim Bank shall consist of the following, namely:(a) a chairman and a managing director appointed by the Central Government:
Provided that the same person may be appointed to function both as chairman and as
managing director;
(a) two whole-time directors appointed by the Central Government;
(b) one director nominated by the Reserve Bank;
(c) one director nominated by the Development Bank;
(d) one director nominated by the Export Credit and Guarantee Corporation
Limited, being a Government Company within the meaning of section 617
of the Companies Act, 1956;
(e) not more than twelve directors nominated by the Central Government of
whom (i) five directors shall be officials of the Central Government;
(ii) not more than three directors shall be from the scheduled banks;
(iii) not more than four directors shall be persons who have special knowledge of,or
professional experience in, export or import or financing thereof.
(2) The chairman and the managing director or the whole-time director shall hold office
for such term, not exceeding five years, as the Central Government may specify in this
behalf and any person so appointed shall be eligible for reappointment.
(3) Not withstanding anything contained in sub-section
(a), the Central Government shall have the right to terminate the term of office of the
chairman or, the managing director, or the whole-time director, as the case may be, at
any time before the expiry of the term specified under sub-section.
(b), by giving him notice of not less than three months in writing or three months salary
and allowances in lieu thereof, and the chairman or the managing director, or the wholetime director, as the case may be, shall also have the right to relinquish his office at any
time before the expiry of the term specified under sub-section
(4) by giving to the Central Government notice of not less than three months in writing
or three months salary and allowances in lieu thereof.
The chairman and the managing director or the whole-time director shall receive such
salary and allowances as may be determined by the Central Government.
(5) The Central Government may, at any time, remove the chairman or the managing
director, or the whole-time director, as the case may be, from office: Provided that no
person shall be removed from his office under this sub-section unless he has been given
an opportunity of showing cause against his removal. Subject to the provisions
contained in sub-section
(6), any director nominate dunder clause (b) or clause (c) or clause (d) or clause (e) of

sub-section (1) and not being an official of Government or not being a whole-time
director or official of the Reserve Bank or the Development Bank or the said Export
Credit and Guarantee Corporation Limited or a scheduled bank, shall hold office for
such term, not exceeding three years, as the Central Government or, as the case may be,
the authority nominating him, may specify in this behalf and shall be eligible for
re-nomination: Provided that no such director shall hold office continuously for a period
exceeding six years.
(7) Any director nominated under this section shall hold office during the pleasure of
the authority nominating him.
(8) The Board shall meet at such times and places and shall observe such rules of
procedure in regard to the transaction of business at its meetings as may be prescribed.
(9) The chairman or, if for any reason he is unable to attend a meeting of the Board, the
managing director or, in the event of both the chairman and the managing director being
unable to attend a meeting, any other director nominated by the chairman in this behalf
and in the absence of such nomination any director elected by the directors present from
among themselves, shall preside at the meeting.
(10) All questions which come up before any meeting of the Board shall be decided by a
majority of votes of the directors present and voting, and in the event of an equality of
votes, the chairman, or in his absence, the managing director, or in the absence of both
the chairman and the managing director, the person presiding, shall have and exercise a
second or casting vote.
(11) Save as otherwise provided in sub-section (10), every director of the Board shall
have one vote.

COMMITTIES :
(1) The Board may constitute such Committees whether consisting wholly of
directors or wholly of other persons or partly of directors and partly of other
persons for such purpose or purposes as it may think fit.
(2) Any Committee constituted under sub-section (1) shall meet at such times and
places and shall observe such rules of procedure in regard to the transaction of business
at its meetings as may be prescribed Fees and allowances of 8. The directors and the
members of a Committee shall be paid such fees and allowances directors and members
as may be prescribed for attending the Meetings of the Board or of any Committee of
Committees. constituted in pursuance of this Act and for attending to any other work of
the Exim Bank:
Provided that no fees shall be payable to the chairman, if he is appointed as a whole
time chairman, or to the managing director or the whole-time director or to any other
director or member who is an official of the Government, the Reserve Bank or the

FEES AND ALLOWANCES OF DIRECTORS AND MEMBER OF

THE COMMITTIES :
The directors and the members of a Committee shall be paid such fees and allowances
directors and members as may be prescribed for attending the Meetings of the Board or
of any Committee of Committees. constituted in pursuance of this Act and for attending
to any other work of the Exim Bank:
Provided that no fees shall be payable to the chairman, if he is appointed as a whole
time chairman, or to the managing director or the whole-time director or to any other
director or member who is an official of the Government, the Reserve Bank or the
Development Bank

DISQUALIFICATIONS :
No person shall be a director of the Board constituted under this Act, who
(a)is, or at any time has been, adjudged insolvent, or
(b) is of unsound mind and has been so declared by a competent court, or
(c) is, or has been, convicted of an offence which, in the opinion of the Central
Government, involves moral turpitude, or
(d) has, in the opinion of the Central Government, so abused his position as a director,
as to render his continuance on the Board detrimental to the interests of the general
public, or
(e) has been, for any reason, removed from the Board.

Chairman and Managing Director

MR. YADUVENDRA MATHUR

Mr. Yaduvendra Mathur has been appointed by the Government of India as Chairman
and Managing Director of Export-Import Bank of India (Exim Bank). Prior to this
appointment, Mr. Mathur was Chairman and Managing Director, Rajasthan Financial
Corporation, since 2011.
Mr .Mathur is an Indian Administrative Service Officer of the 1986 batch. A First Class
Graduate in Economics and an MBA in Finance, Mr. Mathur has worked with Golden
Tobacco and Associated Cement Companies in Mumbai between 1982 1984 before
joining the Indian Revenue Services (Income Tax) in 1984 and then the IAS in 1986,
topping his batch.
He has had long stints in various positions in the Finance Department including
Principal Secretary Finance, Government of Rajasthan. During his postings under the
Department of Economic Affairs (2001-2003) at Cote d'Ivoire and Tunisia, Mr. Mathur
worked as Assistant to the Executive Director (representing India, Norway, Denmark,
Sweden, Finland and Switzerland) of African Development Bank. He was then actively
engaged with the Export-Import Bank of India in enhancing and promoting business
opportunities for Indian companies in the African continent through Technical
Cooperation Agreements. As Energy Secretary of Rajasthan for over three years, Mr.
Mathur contributed in the setting up of three green field power plants in the state. He
was also Planning Secretary, PHED Secretary and Director General Revenue
Intelligence in Government of Rajasthan. He also has experience as Managing Director
of a Textile Mill at Bhilwara and as Chairman of Indira Gandhi Canal Board. Mr.
Mathur was Collector & District Magistrate of Bhilwara and Bharatpur and has also
served for over three years as Senior Deputy Director at the Lal Bahadur Shastri
National Academy of Administration, Mussoorie. Mr. Mathur has interests in
entrepreneurship development, infrastructure financing, regulatory issues and in
behavioural sciences

DEPUTY MANAGING DIRECTORS.

MR. DAVID RASQUINHA

Mr. David Rasquinha has been appointed by the Government of India as
Deputy Managing Director of Export-Import Bank of India (Exim Bank). Prior
to this appointment, he was Executive Director of Exim Bank.
A first class graduate in Economics and a post graduate in Business
Management, Mr. Rasquinha joined Exim Bank in 1985 and since then has had
a wide ranging exposure to the broad field of export credit, having worked in
the areas of Treasury, Multilateral Agency Funded Projects, Planning &
Research, Risk Management, Trade Finance, Project Finance and Project
Exports. He was a member of an Exim Bank team that conducted a feasibility
study for setting up an export credit agency for the Gulf Co-operation Council
countries. He served as a member on the Working Group set up by Reserve
Bank of India for working capital finance to software units. From 1999 2004,
he served as Resident Representative at the Banks Washington DC
Representative Office

MR. DEBASISH MALLICK

Mr. Debasish Mallick has been appointed by the Government of India as
Deputy Managing Director of Export-Import Bank of India. Prior to this
appointment, Mr. Mallick was the Managing Director and CEO of IDBI Asset
Management Company Ltd.
A post graduate in Economics and a Certified Associate of Indian Institute of
Bankers, Mr. Mallick has nearly three decades of experience in the Banking
industry immediately prior to joining the IDBI Asset Management Company
Ltd., he was head of Personal Banking Business for IDBI Bank Ltd. (West
Zone) which included distribution of Mutual Fund products. Mr. Mallick has
long experience in the areas of Corporate Banking, International Banking,
Resource Mobilization and Treasury among others.

EXECUTIVE DIRECTOR:

MR. N. SHANKAR
Mr. N. Shankar is the Executive Director of Export-Import Bank of India
(Exim Bank) since August 2006. Mr Shankar was the Chairman-cumManaging Director of ECGC Ltd. (formerly Export Credit Guarantee
Corporation of India Ltd.), on deputation, for 3 years from October 2011 to
October 2014. Mr. Shankar has put in over 38 years of varied experience in
financial sector comprising 6 years in Indian Public sector banks and 29 years
in Exim Bank of India and 3 years in ECGC Ltd. He has been with Exim Bank
since the inception of the institution. Mr. Shankar has top level experience in
both international trade financing and export credit insurance. Mr. Shankars
specialization and experience encompass export credit insurance, corporate
credit, SME credit, raising funds in domestic/international markets, integrated
treasury, risk management, MIS, IT and corporate accounts regulatory
compliances.
Mr. Shankar, a Mathematics Rank holder in graduation from Madras University
is a Certified Associate of Indian Institute of Bankers (CAIIB) and a Chartered
Financial Analyst (CFA) from ICFAI.
Mr. Shankar has been involved in institution building in challenging times. His
proven expertise includes negotiation skills in fund management, framing
policies and procedures, implementation of robust systems and controls,
shaping and implementing new initiatives especially in Brand Building, Human
Resources Management, Information Technology and expanding Network of
Offices in India and abroad.

RESOURCES OF THE EXIM BANK

Loans by Central Government

The Central Government may, after due appropriation made by Parliament by
law in this behalf advance to the Exim Bank.
(a) a loan of twenty crores of rupees at a rate of interest of five and a quarter
per cent, per annum repayable in fifteen equal annual instalments,
commencing on the expiry of a period of fifteen years from the date of
receipt of the loan.
(b) such further sums of money by way of loan on such terms and conditions as
may be agreed upon:
(c)Provided that the Central Government may on a request being made to it by
the Exim Bank, increase the number of instalments or alter the amount of
any instalment or vary the date on which any instalment is payable under
clause

Borrowings and acceptance of deposits by Exim Bank

(1) The Exim Bank may, for the purposes of carrying out its functions under
this Act,
(a)Issue and sell bonds and debentures with or without the guarantee of the
Central
Government;
(b) Borrow money from the Reserve Bank
(i) repayable on demand or on the expiry of fixed periods not exceeding ninety
days from the date on which the money is so borrowed against the security of
stocks, funds and securities (other than immovable property) in which a trustee
is authorized to invest trust money by any law for the time being in force in
India
(ii) Against bills of exchange or promissory notes arising out of bona fide
commercial or trade transactions and bearing two or more good signatures and
maturing within five years from the date of the borrowing
(iii) Out of the National Industrial Credit (Long Term Operations) Fund
established under section 46C of the Reserve Bank of India Act, 1934 (2 of
1934) for any of the purposes specified in that section
(c) Borrow money from such other authority, organization or institution in
India as may generally or specially be approved by the Central Government

(d) Accept deposits repayable after the expiry of a period which shall not be
less than twelve months from the date of the making of the deposit on such
terms as may generally or specially be approved by the Reserve Bank.
(2) The Central Government may, on a request being made to it by the Exim
Bank, guarantee the bonds and debentures issued by that Bank as to the
repayment of principal and the payment of interest at such rate as may be fixed
by that Government.
Loans in foreign currency
Notwithstanding anything contained in the Foreign Exchange Regulation Act,
1973 (46 of 1973) or in any other law for the time being in force relating to
foreign exchange, the Exim Bank may, for the purpose of granting loans and
advances under this Act, borrow, with the previous consent of the Central
Government, foreign currency from any foreign State or from any bank or
financial institution in any foreign country or otherwise.

Grants, donations, etc., to Exim Bank.

The Exim Bank may receive gifts, grants, donations or benefactions from
Government or any other source in or outside India

EXPORT DEVELOPMENT FUND

Export Development Fund.With effect from such date 1 as the Central
Government may, by notification, appoint, the Exim Bank shall establish a
special fund to be called the Export Development Fund.
Credits to Export Development Fund.To the Export Development Fund
shall be credited all amounts received for the purposes of that Fund by way of loans,
gifts,
grants, donations or benefactions from Government or any other source
in or outside India;
repayments or recoveries in respect of loans, advances or other facilities
granted from the Fund;
income or profits from investments made from the Fund.
income accruing or arising to the Fund by way of interest or otherwise,
on account of the application of the Fund in accordance with the
provisions of section.
Utilisation of Export Development Fund.
(1) Where the Exim Bank considers it necessary or desirable so to do, it may,
subject to the provisions of sub-sections
(2) and (3), disburse or spend from the Export Development Fund any amount
an account or in consequence of the grant of any loan or advance, or on
account or in consequence of entering into any arrangement under sub-section
(1) or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause
(s) or clause (w) or clause (x) of sub-section (2) of section 10:
Provided that before granting any such loan or advance or entering into any
such arrangement, the Exim Bank shall obtain the prior approval of the Central
Government.
(2) Before seeking the approval of the Central Government under sub-section
(1), the Exim Bank shall satisfy itself that banking or other financial
institutions or other agencies are not likely to grant such loan or advance, or to
enter into any such arrangement in the ordinary course of business.
(3) The Central Government shall, before giving its approval, satisfy itself that
such loan, advance or arrangement is necessary as a matter of priority in the
interests of the international trade of the country.
(4) For the removal of doubts, it is hereby declared that nothing contained in
this section shall be deemed to preclude the Exim Bank from granting any loan
or advance or from entering into any arrangement under sub-section (1) or
clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause (s) or
clause (w) or clause (x) of sub-section (2) of section 10 without the approval of

the Central Government, if no amount in respect thereof is to be disbursed or

spent from the Export Development Fund.

Debits to Export Development Fund.

(1) To the Export Development Fund shall be debited
(a)such amounts as may from time to time be disbursed or spent under subsection (1) of section 17
(b) such amounts as may be required for discharging the liabilities in respect of
loans received for the purposes of that Fund
(c) any loss arising on account of investment made out of that Fund; and
(d) such expenditure arising out of, or in connection with, the administration
and application of the Fund as may be determined by the Board.
(2) No amount shall be debited to the Export Development Fund except as
provided for in sub-section (1).

Accounts and audit of Export Development Fund

(1) The balance-sheet and accounts of the Export Development Fund shall be
prepared in such form and manner as may be prescribed.
(2) The Board shall cause the books and accounts of the Export Development
Fund to be closed and balanced as on the 31st day of December
(3) The Export Development Fund shall be audited by one or more auditors
appointed by the Central Government under section 24 who shall make a
separate report thereon.
(4) The provisions of sub-sections (2), (3), (4) and (6) of section 24 shall, so
far as maybe, apply in relation to the audit of the Export Development
Fund.
(5) The Exim Bank shall furnish to the Central Government, within four
months from the date on which the accounts of the Export Development
Fund are closed and balanced, a copy of the balance-sheet and accounts
together with a copy of the auditors' report and a report on the operation of
the Fund during the relevant year and the Central Government shall, as
soon as may be after they are received by it, cause the same to be laid
before each House of Parliament.

EXIM BANK LOCS RECENT DEVELOPMENT

Lines of Credit (LOCs) are currently one of the three Government of India
instruments for disbursing development assistance. They are Government of
India-backed and Export-Import Bank of India (Exim) run credit line
agreements signed between the head of the Exim Bank and the respective
government.

Exim Bank LOCs - a recent development:

The Government of Indias use of these Lines of Credit as part of Indias larger
program of development partnerships is a relatively recent phenomena. In his
March 2003 budget speech, the then Finance Minister Jaswant Singh
announced the India Development Initiative (IDI) to promote India as both a
production centre and an investment destination and to leverage Indias
strategic and economic investments abroad. Through this speech the
Government of India also announced the end of government to government
loans, known as advances, as well as credit lines. Though the IDI initiative
was dismantled by the new government after the 2004 elections, Government
of India-backed and Ministry of Finance-managed advances and lines of credit
were phased out starting in 2003 and in its place the government in 2004
launched a new instrument of Indian development cooperation: Lines of Credit
by the Exim Bank of India.
The phasing out of advances and government to government lines of credit in
2003/04 represented a move towards articulating a new and larger development
assistance framework and one that articulated Indian development assistance as
part of Indias foreign policy. It also represented a shift in the development
assistance method used by the Government of India from one that focused on
technical assistance, grants, and loans to other governments to one that also
extends larger credit lines through Indias Exim Bank to other developing
countries.
New LOCs allow harnessing of greater resources for Development
Partnerships: Indian development assistance until the turn of the century had
been limited in amount. It was distributed through training programs and grants
managed by the Ministry of External Affairs and advances and concessional
LOCs managed by the Ministry of Finance. This limited the extent of
development resources India could provide to other countries due to the limits
placed by the government budget, known as the Consolidated Fund of India.
In a rethinking of Indias emerging role as a regional and global power and in
order to raise the amount of development funding at its disposal, the

Government of India launched the new Indian Development and Economic

Assistance Scheme (IDEAS) in 2004/05.Through this scheme Government of
India-supported Exim Bank LOCs are provided to other developing countries
in order to support developmental projects as suggested by the Ministry of
External Affairs. The key difference between these new LOCs provided
through Indias Exim Bank versus those provided earlier through the Ministry
of Finance is that these new LOCs are not limited by the Indian budget.
Instead, the Exim Bank raises funds for LOCs from the international debt
market. This new instrument of development assistance thus enables the Indian
government to harness the significantly greater resources available through
Exim Bank in the form of LOCs. These LOCs are made available to developing
countries for support of developmental and other projects of mutual interest as
recommended by Ministry of External Affairs (MEA).

The Process of getting a Line of Credit

Originates in requesting country: In keeping with the Indian approach to
development cooperation that is demand-driven, or initiated by the recipient
country, the request for a Line of Credit is generally made by the developing
country to the Indian embassy in the country requesting the LOC. The Indian
embassy then passes the request on to the Ministry of External Affairs.

Figure 1: The LOC decision-making process in India

Source: Govt of India, Dept of Economic Affairs, Ministry of Finance, Terms

and Conditions and Procedure to be adopted in respect of Government of India
(GOI) Supported EXIM Bank Lines of Credit LOC's accessed January 27,
2013
MEA decides on the political framework: The Ministry of External Affairs
decides on the size of the LOC and what degree of concession should be
attached to the LOC and then passes the request on to the Department of
Economic Affairs within the Ministry of Finance.
MOF decides on the financial framework: The Ministry of Finance in turn
decides on the terms of the LOC and when turning the LOC over to the Exim

Bank provides a sovereign guarantee on the LOC to the recipient nation, as

well as interest equalization support from its budgetary resources. (Interest
equalisation support is the difference between Exim Banks rate of interest and
the concessional rate of interest on which the LOC is extended.) Since this
budgetary support is technically the only financing that is provided by the
Government of India to the recipient country in the form of the LOC, only this
interest rate equalization amount of the LOC is reported by the Government of
India as development assistance provided.
EXIM Bank signs & manages LOC: The head of the Exim Bank signs the LOC
agreement with the respective country, raises the resources for the LOC, and
funds the administration of the LOC, including inviting tenders for LOCapproved projects

Exim Bank LOC Procedural Flow Chart

Financing of Concessional LOCs

Lines of Credit as Trade Instruments

Lines of Credits are widely perceived as trade instrument to enable buyers in
developing nations to import goods and services from India on deferred credit
terms. LOCs are a financing mechanism that provides a safe mode of nonrecourse financing option to Indian exporters, especially to SMEs, and serve as
an effective market entry tool and market diversification.[5] According to the
detailed guidelines framed by the Finance Ministry in consultation with MEA,
Department of Financial Services (DFS) and Exim Bank, these LOCs are tied.
As a rule, a minimum of 75 percent of goods and services procured under the
LOC (with a suitable relaxation of up to 10 percent) must be sourced from
Indian companies.[6]
India views LOCs as Development Partnership Instruments
Whether Lines of Credit should be categorized as development assistance has
been questioned within and outside of India. However, the Government of
India officially considers LOCs as one of the its three instruments for providing
development assistance and reports the interest rate equalization support as
development assistance. Moreover, although India is neither a member of
OECD nor considers development partnerships to be Official Development
Assistance (ODA), under OECD guidelines soft loans such as the concessional
Government of India-backed and Exim-bank distributed LOCs are considered
development assistance. In addition, the Ministry of Finance in its guidelines
for LOCs uses the OECD formula to calculate the grant component of its LOCs
(see table 1). Finally, borrowing nations must submit proposals indicating the
projects, goods and services they plan on importing from India, and the Indian
government gives funding priority to economic and infrastructural projects that
are of mutual benefit thus underscoring that these LOCs are to be seen as
development partnerships between two developing countries.

MAJOR PROGRAMMES OF EXIM BANK

E X P O R T C R E D IT
PR O JECTS

F IN A N C E F O R E X P O R T IN G C O S

V A L U E -A D D E D S E R V IC E S

TERM LOANS

E X P O R T M A R K E T IN G
S E R V IC E S

W O R K IN G C A P IT A L

M U L T IL A T E R A L F U N D E D
PRO JEC TS

EXPORT M ARKET/
EXPORT PRODUCT DEVELO PM ENT

J O IN T V E N T U R E
F A C IL IT A T IO N

PRODUCTS

EXPORT
F A C IL IT A T IO N

CONSULTANCY SUPPO RT

L in e s o f C re d it

O V E R S E A S IN V E S T M E N T
F IN A N C E

W O R K S H O P S & S E M IN A R S

D IR E C T E Q U IT Y P A R T IC IP A T IO N
IN IN D IA N E X P O R T IN G C O s

IN F O R M A T IO N S E R V IC E S

S u p p lie r 's & B u y e r 's C r e d it

P r e -S h ip m e n t C r e d it
G u a ra n te e s & L /C s

P r e -S h ip m e n t C r e d it
P o s t-S h ip m e n t C r e d it

S E R V IC E S

S u p p lie r's C r e d it
B u y e r 's C r e d it

D IR E C T E Q U IT Y P A R T IC IP A T IO N
IN IN D IA N O V E R S E A S V E N T U R E S
IM P O R T F IN A N C E
C A P IT A L G O O D S , R A W M A T E R IA L S

Research Methodology
Research Type:
It is a project type

Sources of Data:
In this report all necessary information to prepare are collected from both sources of
data. These are:
Primary Data:
Consist of information collected for the specific purpose at hand.
Secondary Data:
This source of data contains all the information & data that already existing
somewhere.
Data Collection Procedure:
Secondary Data:
The secondary data comes from:

Different types of brochures of EXIM Bank

www.google.com
www.EXIBBAnkbd.com

Primary Data:
The primary data collection process includes:

Direct Observation
Conversation with Officials/ Clients

Literature Review

CONCLUSION

After a detail study on Exim banks financial assistance and

policies. It can be concluded that over a period of decade Exim bank has
showcased an extraordinary, exemplary performance in providing assistance
to exports and export oriented projects in India and in abroad. Developing
nations like India on edge of growth has concentrated more on enhancing the
value and volume of the export turnover in order to attain better economic
stability and development, which enables country to generate better
employment opportunities leading to optimum utilization of available
resources and it has also extended its support to finance all sorts of exports,
even though comprising of high risk. According to present scenario Exim
bank has played a significant role in improving and promoting export
turnover to larger spectrum both nationally and internationally.

WEBLOGRAPHY

www.eximbank.gov

www.eximbankbd.com

apjor.com

www.your articlelibrary.com

www.eximbankindia.in

www.kersays.com

www.infodriveindia.com

www.dgft.org

www.eximguru.com

www.exim-polcy.com

www.eximbankago.com

www.business.mapsofindia.com

www.wikipedia.org

www.ecgcindia .in

www.hbor.hr /sec583

idcr.cprindia.org/blog/lines-credit

www.eximbankindia.com /loc-es.asp

www.indiacode.nic.in

www.shodhgangotri.com

BIBLOGRAPHY
References book

Indian economy (MANAN PRAKASHAN)

Indias Foreign Trade by Mahesh Prasad edition 2012

Ex-Im Policy in India Dr.P.B. Rathod-2009

International Banking & Finance Deepak Abhyankar-6th Revised

Edition

JOURNAL
1. Parvata Raj Prabhu A Study on Role of Exim Bank in Export trade. Asia Pacific
journal of Research Vol no 1, Issue no 7, pp 122 123.
2. International Journal of Finance and Banking Study/ Management Study
3.