EXIM Bank Project (PDF)

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   Serial No.                  Topic           No.
       1        INTRODUCTION                    1
       2        OBJECTIVES OF EXIM BANK         2
       3        EXIM BANK ACT                   3
       4         OFFICES                        4
       5        GENERAL GUIDELINES ON EXIM      6

                LINES OF CREDIT (LOCS)
        7       FINANCE                         13
        8       SMALL AND MEDIUM ENTERPRISES    16

       9        PERFORMANCE                     20
      10        BIBLIOGRAPHY                    28

1.   The Export-Import Bank of India (Exim Bank) is a public sector financial

institution created by an Act of Parliament, the Export-import Bank of India Act,


2.   The business of Exim Bank is to finance Indian exports that lead to

continuity of foreign exchange for India.

3.   The Bank's primary objective is to develop commercially viable

relationships with a target set of externally oriented companies by offering them

a comprehensive range of products and services, aimed at enhancing their

internationalization efforts.

4.   There are apex institutions in the country, which deal with major economic

activities, viz. industry, agriculture and foreign trade.

5.   The Industrial Development Bank of India extends term industrial loans; the

National Bank for Agricultural loans; and the Exim Bank extends term loans for

foreign trade.

6.   All these institutions are wholesale banks. They, therefore work closely

with commercial banks and other state level financial institutions that operate the

retail banking system in the country.

The Export-Import Bank of India was established “for providing financial

assistance to exporters and importers for functioning as the principle 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 Export-Import Bank of India Act, 1981
                            EXIM BANK ACT
     •    Completed 23 years of operations in March 2005

     •    Set up by an Act of Parliament in September 1981

     •    Commenced operations in March 1982

     •    Wholly owned by the Government of India

•         Export-Import Bank of India was set up for the purpose of financing,

    facilitating and promoting foreign trade in India

•         Exim is the principal financial institution in the country for co-ordinating

    working of institutions engaged in financing exports and imports

•    Head office -Mumbai

•    Domestic Offices:

Ahmedabad, Bangalore, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai,

New Delhi, Pune.
Overseas Offices:

 Budapest, Johannesburg, London, Singapore, Washington DC.

                     LINES OF CREDIT (LOCS)


     Exim Bank extends Lines of Credit (LOCs) to overseas financial institutions,

     regional development banks, sovereign governments and other entities

     overseas, to enable buyers in those countries, to import goods and services from

     India on deferred credit terms. The Indian exporters can obtain payment of

     eligible value from Exim Bank, without recourse to them, against negotiation of

     shipping documents. LOC is a financing mechanism that provides a safe mode

     of non-recourse financing option to Indian exporters, especially to SMEs, and

     serves as an effective market entry tool.

      How does it work?

1.         Exim Bank signs LOC Agreement with overseas Borrower Institutions

     (Borrower) and announces the availability of LOC for utilization, when the

     Agreement becomes effective.

2.         Exporter checks with Exim Bank, available amount under the LOC and

     quantum of service fee payable to Exim Bank and negotiates contract with


      3.   Importer approaches the Borrower for approval of the contract.
4.         Borrower appraises the proposal. If satisfied, approves the contract and

     refers to Exim Bank for concurrence for inclusion of contract for being financed

     under the LOC.

5.         Exim Bank accords approval to the contract, if in conformity with the

     terms of LOC. Exim Bank conveys contract approval to the exporter and the


6.         The Importer arranges remittance of advance payment to the Exporter and

     also opening of a Letter of Credit, which states that the contract is covered under

     Exim Bank's LOC to the Borrower and reimbursement will be by Exim Bank for

     the Eligible Value of Credit.

      7.   Exporter executes the contract/ships the goods/provides services.

8.         Commercial bank in India, designated as the Negotiating Bank, negotiates

     shipping documents and pays the exporter.

9.         Exim Bank reimburses the Negotiating Bank, on receipt of valid claim and

     service fee, by debit to the LOC account of the Borrower.

      10. Borrower repays Exim Bank on due dates.
Eligible Goods

Capital goods, plant and machinery, industrial manufactures, consumer

durables and any other items eligible for being exported under the 'Exim Policy'

of the Government of India.


•    Exporters are advised to check with Exim Bank before finalizing the

contracts with the buyers, details of service fee and other charges, if any,

payable by the exporters on the contracts to be covered under the relative LOC.

General Verification:

Exporters are advised to check with Exim Bank before finalizing the contracts

with the buyers, details of service fee and other charges, if any, payable by the

exporters on the contracts to be covered under the relative LOC.

(i)   Lending Programme For Export Oriented Units :

      Motto of this programme is to Create and enhance export capabilities of

      Indian companies.

(ii) Production Equipment Finance Programme (PEFP) :

      Under this program Exim Bank seeks to finance non-project related

      capital expenditure of export oriented units. PEFP is structured as an

      umbrella arrangement under which various equipment, imported and

      indigenous, can be financed, thus obviating the need to arrange finance for

      every such procurement. It is not necessary to identify specific equipment

      sought to be financed at the time of application; this could be done at the

      time of disbursement.

(iii) Overseas Investment Finance (OIF) :

      Under this program finance equity loan to Indian companies for setting up

      of overseas joint ventures/ wholly owned subsidiaries.

(iv) Equity Investment In Indian Ventures Abroad :

      This program develops overseas investment by Indian companies to

      enhance visibility of Indian overseas ventures.

(v) Asian Countries Investment Partners Programme (ACIP) :
    This program promotes joint ventures in India between Indian companies

    & companies from Asian countries through four facilities that address

    different stages of the project cycle. ACIP seeks to catalyse investment

    flows into India by creating of Joint Ventures in India between Indian

    companies and companies from East Asian countries. ACIP is proposed to

    be a funding instrument providing finance at various stages of a Joint

    Venture project cycle viz. sector study, project identification, feasibility

    study, prototype development, setting up project and technical, managerial


(vi) Export Marketing Finance Programme (EMFP) :

    This program create and enhance export capabilities and international

    competitiveness of Indian companies. Under the lending programme for

    Export Marketing Finance, the Bank addresses the term finance

    requirements for a structural and strategic export marketing and

    development effort of Indian companies.

(vii) Export Product Development Programme (EPDP) :

    This program is to support systematic export product development plans

    with focus on industrialized markets and Eligible Companies.

(viii) Programme For Financing Export Vendor Development (EVD) :

    This program there is to finance export strategic vendor development

    plans for export companies with a view to enhancing exports through

    creation, strengthening of backward linkages with vendors.

(ix) Programme For Export Facilitation (PEF) :
    Under this Exim Bank offers term finance and non-funded facilities to

    Indian corporates to create infrastructure facilities to facilitate India's

    international trade & thereby enhance their export capability

(a) Financing Port Development :

    This programme is there to finance development of minor ports with

    related infrastructural activities which would facilitate India's international


(b) Lending Programme for Software Training Institutes :

    The programme seeks to address the perceived constraint in availability of

    trained high-end software professionals to support the fast growing

    software exports. The programme aims at financing the establishment /

    expansion of software training institutes.

(x) Foreign Currency Pre-Shipment Credit (FCPC) :

    Under this programme, short-term foreign currency finance is available to

    eligible exporters for financing inputs for export production such as raw

    materials, components and consumables. The finance is repayable in

    foreign currency from proceeds of the relative exports.

    FCPC programme represents another funding source to the exporter for

    expanding export volumes, particularly of manufactured and value added

    goods. It eliminates two-way exchange conversion costs and exchange

    risk, thus enhancing export competitiveness. FCPC can be a cost effective

    funding source as compared to rupee export credit as well as overseas

    supplier's credit depending on market conditions for loans under FCPC.
       As far as commercial banks are concerned, loans availed of from Exim

       Bank are exempt from Cash Reserve Ratio, Statutory Liquidity Ratio and

       Incremental Credit-Deposit Ratio requirements.

 (xi) Working Capital Term Loan Programme For Export Oriented Units

       (WCTL) :

       WCTL programme seeks to create, enhance export capabilities of Indian


 (xii) Bulk Import Finance Programme (BIF) :

       To provide short term working capital finance to manufacturing

       companies to excess consumable inputs

 (xiii) Programme For Financing Research & Development :

       To provide integrated financing for Research & Development activities by

       export oriented companies

 (xiv) Long Term Working Capital Programme For Export Oriented Units :

       To provide finance for long term working capital

(xv)    Import Finance :

       •     To provide finance for import of capital goods/plant and machinery,


       •     Exim Bank's finance available to Indian manufacturing companies

       •     Term loans in Indian rupees / foreign currency


    Guidelines on Project & Services Exports :

    •    Issued by RBI under Sec. 47 of Foreign Exchange Management Act, 1999

    •    Types of Exports covered :

•        Export of Goods on Deferred Payment Terms (e.g. Export of machinery,

    equipment, manufactured products)

    •    Turnkey Projects (e.g. Setting up of Sugar Plant, Cement Plant)

    •    Construction Projects (e.g. Construction of Roads, Dams, Bridges)

•        Consultancy & Technical Services (e.g. Operation & Maintenance

    Contracts) collectively referred to as 'PROJECT & SERVICES EXPORTS'

         On Deferred Payment Terms :
         For any amount : Working Group

    In-principle commitment at Bid Stage :
           While dispensing with the requirement of pre-bid clearance of project

     export proposals vide it's A.D (M.A. Series) Circular No. 9 dated May 5, 2000,

     RBI has advised exporters to ensure, in their own interest, that conditions as

     laid down in Memorandum PEM for submission of bids are compiled with.

           Project exporters, at the time of submission of bids/offers for execution of

     project/export contracts overseas, seek in-principle commitment from Exim

     Bank and other banks for post-award facilities at to ensure proper tie-up of


           Exim Bank issues guarantees required for execution of project export

     contracts trough overseas banks or directly favoring overseas clients.

•          Exporter submits application in prescribed from along with copies of

    contract through his commercial bank for Post Award Clearance.

•          Exporter can directly approach Exim Bank for proposals of value limits

    upto Rs.200 crores.

•          On receipt of application and contract copies from the commercial bank,

    EXIM Bank approves the proposal if the same falls within its delegated powers

    or convenes Working Group meeting.

•          In approved cases, Exim Bank/Working Group accords clearance to the

    final terms and conditions of the contract including various fund based and non-

    fund based facilities and requisite exchange control approvals.

•          On the basis of package post award clearance granted by Exim

    Bank/Working Group, final approvals for fund based and non-fund based
facilities and requisite exchange control approvals are issued by the concerned

institutions and export's bank(s).
Small and Medium Enterprises Finance

                           Handmade Paper Bags

     The importance of SME sector is well-recognized world over owing to its

significant contribution in achieving various socio-economic objectives, such as

employment generation, contribution to national output and exports, fostering

new entrepreneurship and to provide depth to the industrial base of the

economy. India has a vibrant SME sector that plays an important role in

sustaining economic growth, increasing trade, generating employment and

creating new entrepreneurship in India.

                                Dried Flowers

     Indian SMEs require business advisory services to enhance their

international competitiveness in a highly competitive globalising world. The

SMEs find the services of reputed national and international consultants as not

cost effective and often, not adequately focused. Recognizing this knowledge

gap, Exim Bank of India has been endeavoring to provide a suite of services to

its SME clients. These include providing business leads, handholding during the

process of winning an export contract and thus assisting the generation of
export business on success fee basis, countries/ sector information

dissemination etc. and financial advisory services such as loan syndication, etc.

EXIM Bank’s Services:

                  Gift Articles made with Handmade Paper

•    The SME sector can avail of a comprehensive range of products and

services that Exim Bank offers. Broadly, these can be classified into three


Export Credit:

     Exim Bank provides pre shipment and post shipment credit in Indian

rupees and foreign currency. Finance is extended for short term i.e. upto 6

months as also for medium/long term i.e. beyond 6 months for eligible products

and projects. Certain RBI guidelines apply for such medium/long term export


              Hammocks made out of cork and cotton ropes

Finance for Export Oriented Companies

     Exim Bank offers loans for financing Export Oriented Companies

which may be categorized as under:

•    Project Finance
 •     Finance for new projects, expansion, modernization projects.

 •     Finance for purchase of equipment both imported as well as indigenous.

 •     Working Capital both short term as well as medium term.

 •     Overseas Investment Finance

 Export Marketing Finance (Finance for developing strategic forward

 linkages) :

       Term loans are extended to important strategic marketing plan covering

inter-alia, overseas market research, participating in international trade fairs,

promotion of product, brand positioning, international quality certification, mirror

product adaptation, pre-operative expenses for overseas offices, prospective buyers

visits to India, etc.

Export Product Development:

       Term Loan for product adaptation, pilot plants, product/process

development, etc.

Finance for Research & Development:

       Exim Bank also provides lending for Research & Development activities

for facilitating exports.

Advisory Services:

       Exim Bank offers advisory services to Indian exporters for facilitating

 forward linkage for agri exports. Exim Bank's international network comprising
overseas office, co-operation partners, correspondent banks and financial

institutions is leveraged to provide export information on:

•    Overseas markets/market segments.

•    Direct marketing of product.

•    Overseas business opportunities.

•    Information on export/import regulations, finance, etc.

Business Performance

       •   Export Contracts supported by Exim Bank amounted to Rs. 7945

       crores, highest ever in value terms.

       •   Loan Sanction : Rs. 15853 crores, an increase of 71%.

       •   Disbursements : Rs. 11435 crores, an increase of 64%.

       •   Loans Assets : Rs. 13410 crores, an increase of 24%.

       •   Total Assets of the Bank exceed Rs. 18000 crores.

       •   Guarantee Sanctions : Rs. 1589 crores.

       •   Guarantees Issued : Rs. 1660 crores.

       •   Lines of Credit amount to US$ 423 million .

Financial Performance

       •   Net profit at Rs. 258 crores, an increase of 13%.

       •   Net worth of the Bank increased to Rs. 2512 crores from Rs. 2143


       •   Dividend to Government of Rs. 65.44 crores as compared to Rs. 47

       crores in the previous year.

       •   Capital to Risk Assets Ratio (CRAR) STOOD AT 21.58%.
         •     Net NPAs to net loan assets decreased to 0.85% as on March 31,

         2005 from 1.26% as on March 31, 2004.

3.   New initiatives

 Financing of Service Sector

     •       Services sectors financed during the year included entertainment,

             health care, hospitality and shipping.

     •       During the year, loans were extended to there companies in the

             entertainment industry, engaged in film production . Of the seven films

             financed by the bank during the year.

Exim Bank Rural initiatives

With the advent of globalisation, the barriers to trade are getting dismantled and

the dividing line between national and global markets is slowly disappearing.

While this phenomenon has resulted in expansion of market opportunities for

products and services, it has also made certain sections in developing countries

more vulnerable to market vagaries. Thus, the objectives of Exim Bank's rural

initiatives are two fold:

1. Poverty reduction through export linkages.

2. Benefit of globalization to grassroots’ rural enterprises.
With the above objectives in mind, Exim Bank has now made its rural initiatives

programme as the core to its operations, as depicted in this diagram. While the

other financing programmes will give Exim Bank the volume and the return

(topline and bottomline), the rural initiatives will enable the Bank to break new

ground in the operations of export credit agencies and leverage its expertise in

international market to the benefit of rural poor through creation of export

capability in rural enterprises. It is also recognised that these initiatives would

require disproportionate amount of resources in terms of time and manpower. But,

if these initiatives prove successful and give desired results, it has the potential to

enhance the purchasing power of the 'bottom of the pyramid' and will have

beneficial spin off effects in all sectors of the economy.

 Small and Medium Enterprise Group

     •    The Bank has been focusing on Small and Medium Enterprise (SME)

          exporters as a significant target group of clients.

     •    During the year, Bank sanctioned credit facilities amounting to Rs.

          133.50 crores to export oriented SMEs under the new initiative.

 Equity and other Structured Finance Products

     •    Finance for international operations of a consumer durables company.

     •    Finance for exploration, drilling and production of oil and gas.
         •     Finance against securitization of receivables for import and supply of

               telecom equipment.

         •     Performance guarantee on behalf of a company in the steel sector, to

               enable it to access international finance.

     Overseas Investment Finance Programme

•              During the year, eleven corporates were sanctioned funded and non-

    funded assistance aggregating Rs. 548 crores for part financing their overseas

    investment in seven countries.

•              Exim bank has provided finance to 122 ventures set up by over 100

    companies in 43 countries so far.

•              Aggregate assistance extended for overseas investment amounts to Rs.

    1888 crores.

•              Overseas investments financed by Exim Bank during the year include:

    o          acquisition of a stainless steel plant in Indonesia.

    o          acquisition of a BPO services company in USA.

    o          acquisition of a pharmaceutical company in Denmark.

    o          Finance for setting up a consumer dealer network in UK.

    o          acquisition of an auto ancillaries unit in the USA, with both and equity

Agri Business Group

   •    Exim bank has identified agri-exports as a focus area and has

        established an “Agri Business Group” which aims to facilities, promote

        and finance agri business having export potential.

   •    Sanctions and disbursements of the Agri Business Group during the year

        2004-05 aggregated Rs.582 crores and Rs.495 crores respectively.

   •    Bank’s finance to the agri sector during the year included term finance

        for food producing, floriculture, fruits and vegetables and contract

        farming sectors.

   •    Export finance for a wide range of agro-based products including

        basmati rice, wheat, sugar, coffee, maize, cattle feed, groundnut kernels,

        herbal extracts, cashew, sesame seeds, mushrooms.

   •    Export markets for above mentioned products included USA, Japan,

        Korea, Singapore, South Africa and UAE.

   •    Exim bank has strengthen its linkages with relevant organisation in the

        sector such as NABARD, APEDA, Agriculture Finance Corporation

        Ltd., Central Food Technological Research Institute, National

        Horticultural Board and Small Farmer’s Agri Business Consortium

        which help to leverage their respective strengths with a view to future

        augmenting exports of agricultural products from India.

     •   The bank has been conferred with the 2005 ‘trade development award’.

         The award is in the recognition of the banks export marketing services

         programme that proactively creates the enabling environment for Indian

         firms to explore newer geographies leveraging upon banks extensive

         institutional and trade linkages, its reach, access and credibility to serve

         as the marketing arm of select Indian companies effectively utilizing the

         banks overseas offices. The bank had been conferred with this award in

         the years 2002 and 2004 also.

     •   The ADFIAP Awards Board this year has also bestowed upon the

         Chairman and Managing Director of Exim bank, a special “Plaque of

         Merit” in recognition of his leadership role in moulding the bank into a

         dynamic and innovative organisation, contributing to india’s trade with

         the world.

5.   Business for the year

Contracts secured

     •   During the year,570 export contracts aggregating Rs7945 crores’

         covering 64 countries were secured by 198 Indian exporters with Exim

         banks support as against 164 contracts valued at Rs7543 crores covering

         48 countries secured by 96 Indian Exporters during the previous year.
    •    Export contracts secured during the year consisted of 11construction

         contracts valued at Rs1490 crores, 11service contracts valued at Rs

         263crores,526 supply contracts valued at Rs 3852crores and 22 turnkey

         contracts valued at Rs 2340crores.

    •    Construction contracts included water transmission system in Oman,

         rehabilitation of roads in Afghanistan; laying of sewerage line in Saudi

         Arabia; construction of coffer dams in Qatar; contract for gas

         transmission pipeline project in Bangladesh and construction of

         fabricated LNG vessels in Equatorial Guinea.

    •    During the year, the Bank extended sixteen LOCs, aggregating US$ 423

         million to support export of projects, goods and services from India.

    •    Forty four LOCs covering sixty eight countries, with credit

         commitments aggregating US$ 953 million are currently available for


Funded / Non-funded facilities

    •    Loan sanctions aggregated Rs. 15853 crores under various ;landing


    •    Disbursement aggregated Rs. 11435 crores during the year 2004-05.

    •    Loans Assets increased 24% moving upwards to Rs. 13410 crores as on

         March 31, 2005.

    •    Bank sanctioned and issue guarantees aggregating Rs. 1589 crores and

         Rs. 1660 crores respectively.

    •      Profit before Tax stood at Rs. 314 crores as compared to Rs. 304 crores

           during the previous year.

    •      The profit after Tax amounted to Rs. 258 crores as compared to Rs. 229

           crores during previous year.

    •      Bank has made a provision of Rs. 56 crores towards income tax.

    •      Net wroth of the Bank increased to Rs. 2512 crores from Rs. 2143



    •      Rs. 65.44 crores will be paid to the Central Government as dividend for

           2004-05, as compared to Rs.47 crores for 2003-04.








Name: - Shraddha k. Khandhadia

Roll no: - 4

Sub: - Management of Banks and Financial


(Management of Banks)

Project on: - EXIM BANK

Class: - IIIrd Year

Specialization: - Finance (MFM)

College: - Vasantdada patil pratishthan’s institute

of management studies