CHAPTER 1

INTRODUCTION

INTRODUCTION

Export-Import Bank of India is the premier export finance

institution of the country, set up in 1982 under the Export-Import

Bank of India Act 1981. Government of India launched the

institution with a mandate, not just to enhance exports from India,

but to integrate the country’s foreign trade and investment with the

overall economic growth. Since its inception, Exim Bank of India

has been both a catalyst and a key player in the promotion of cross

border trade and investment. Commencing operations as a

purveyor of export credit, like other Export Credit Agencies in the

world, Exim Bank of India has, over the period, evolved into an

institution that plays a major role in partnering Indian industries,

particularly the Small and Medium Enterprises, in their

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globalization efforts, through a wide range of products and services

offered at all stages of the business cycle, starting from import of

technology and export product development to export production,

export marketing, pre-shipment and post-shipment and overseas

investment.

a. The foreign trade policy for the year 2009-2014 was announced

on 27th august 2009 at a time when the world was emerging from

the shadow of challenging economic period, the worst India has

seen in the last 7 decades.

b. The key objective for the foreign trade policy was to arrest the

declining exports and reserve the trend.

c. Labour intensive sectors are being given special attention and the

policy parameters have been crafted to enhance the

competitiveness of the exports by supporting up graduation in

technologies.

1.1 ORIGIN

The Export-Import Bank Act, 1981

An act to establish a corporation to be known as the Export-Import

Bank of India for providing financial assistance to exporters and

importers, and for functioning as the principal financial institution for co-

ordinating the working of financial institutions engaged in financing the

export and import of goods and services with a view to promoting the

country’s international trade and for matters connected therewith and

incidental to.

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1.2HISTOTY

This Act extends to the whole of India. With effect from the date

i.e. September 1981, as the Central Government by notification,

appointed, a corporation Known as the Export Import Bank of India was

established for the purposes of this Act.

The Export Import Bank of India, commonly known as the EXIM

Bank, commenced operations in March 1982. It was set up so as to take

over the operations relating to export finance which the IDBI (Industrial

Development Bank of India) had been handling since the year 1970.

Exim Bank acts as the apex financial institution relating to financing for

foreign trade. It provides financial assistance by way of direct loans and

advances for the purpose of export or import, rediscounting of usance

export bills for banks and finance for international trade activities.

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1.3 THE INSTITUTION

Policy announcements which are made this year, will help

achieving export target of US$ 200 billion in the fiscal year 2010-11 and

over the remaining 3 years of policy, India should be able to come back

on the high export growth trajectory of 25% per annum, and by 2014

there is expectations of India’s exports of goods and services getting

doubled.

1.4 MISSION

Exim Banks mission is to facilitate globalization of Indian

Business.

Exim Banks mission statement: “To develop commercially

viable relationships with externally oriented companies by

supporting their internationalization efforts, through a diverse

range of products and services.”

1.5 OBJECTIVE

The objective of the bank is-

“… for providing financial assistance to exporters and importers, and

for functioning as the principal financial institution for coordinating

the working of institutions engaged in financing export and import of

goods and services with a view to promoting the country’s international

trade…”

“… shall act on business principles with due regard to public interest”

as Stated In the Export-Import Bank Act,1981.

The primary objective of EXIM bank is to develop commercially

viable relationships with a largest set of externally oriented

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companies by offering them a comprehensive range of products

and services, aimed at enhancing their internationalization efforts.

EXIM bank was set up for providing financial assistance to

exporters and importers, and for functioning as the principal

financial institution for coordinating the working of institutions

engaged in financing exports and imports of goods and services

with a view to promoting country’s international trade.

Exim bank plays four prolonged pole with regard to India’s foreign

trade: those of coordinator, a source of finance, consultant and

promoter.

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1.6 EXIM BANK ACT

Completed 23 years of operations in march 2005

Set up by an act of parliament in September 1981

Commenced operations in march 1982

Wholly owned by government of India

Export import bank of India was set up for the purpose of financing,

facilitating and promoting foreign trade in India.

Exim is the principal financial institution in the country for

coordinating working for institution engaged in financial exports and

imports.

1.7 OFFICES

Head office: Mumbai

Domestic offices:

Ahemdabad, banglore, chennai, guwahati, hyderabad, kolkota, mumbai,

new Delhi, pune

Overseas offices:

Budapest, Johannesburg, London, Singapure, Woshington DC

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1.8 CORPORATE PHILOSOPHY

Exim banks corporate philosophy is built on two pillars:

People orientation and customer focus.

The Banks believes that its people are its key resource. Therefore, the

Banks seeks to develop its human resource by motivating them through

challenging assignments, upgrading their skills through training

programmes, and recognizing professional excellence.

Customer-responsiveness is germane to the Banks philosophy. The Bank

constantly seeks to innovate and improve its products, processes and

delivery mechanisms, and thereby minimize response time and maximize

customer equity. Our interactive mode of analysis and decision-making,

through multi disciplinary cross-functional groups ensures that the best

possible business solution is offered to the customer.

1.9 THE INITIATIVES

Exim Bank of India has been the prime mover in encouraging project

exports from India. The Bank provides Indian project exporters with a

comprehensive range of services to enhance the prospect of their

securing export contracts, particularly those funded by Multilateral

Funding Agencies like the World Bank, Asian Development Bank,

African Development Bank and European Bank for Reconstruction

and Development.

The Bank extends lines of credit to overseas financial institutions,

foreign governments and their agencies, enabling them to finance

imports of goods and services from India on deferred credit terms. The

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Bank’s Overseas Investment Finance programmers offers a variety of

facilities for Indian investments and acquisitions overseas.

The facilities include loan to Indian companies for equity participation

in overseas ventures, direct equity participation by Exim Bank in the

overseas venture and non-funded facilities such as letters of credit and

guarantees to facilitate local borrowings by the overseas venture.

The Bank provides financial assistance by way of term loans in Indian

rupees/foreign currencies for setting up new production facility,

expansion/modernization/up gradation of existing facilities and for

acquisition of production equipment/technology.

The Bank has launched the Rural Initiatives Programme with the

objective of linking Indian rural industry to the global market. The

programme is intended to benefit rural poor through creation of export

capability in rural enterprises.

In order to assist the Small and Medium Enterprises, the Bank has put

in place the Export Marketing Services (EMS) Programme. The

service is provided on success fee basis.

Exim Bank supplements its financing programmes with a wide range

of value-added information, advisory and support services, which

enable exporters to evaluate international risks, exploit export

opportunities and improve competitiveness, thereby helping them in

their globalization efforts.

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1.10 RESOURCES/TREASURY

Bank raised borrowings of varying maturities aggregating to Rs. 7886

crore comprising Rupee resources of Rs. 4384 crore and foreign

currency resources of US$ 785 mn equivalent.

Market borrowings as on March 31, 2006 constituted 80% of the total

resources.

During the year, Bank received share capital of Rs. 100 crore from the

Government of India. Bank's paid-up capital increased to Rs. 950

crore as on March 31, 2006.

The Bank's domestic debt instruments continued to enjoy the highest

rating viz. 'AAA' from the rating agencies, CRISIL and ICRA. As on

March 31, 2006, outstanding Rupee borrowings including bonds and

commercial paper amounted to Rs. 11825 crore.

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CHAPTER 2

THE ORGANISATION

.Exim bank is the coordinator of the working group mechanism for

clearance of project and services exports and deferred payment

exports(for amounts above a certain value currently US$100 million).

The working group comprises exim bank, government of India

representatives(ministries of finance, commerce, external affairs), reserve

bank of India, export credit guarantee corporation of India ltd. And

commercial banks that are authorized foreign exchange dealers. Now we

will see how Exim bank work as an organization:-

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2.1 ORGANISATIONAL SET-UP

Exim bank is managed by a Board of Directors, which has high

level representatives from the Government, Reserve Bank of India,

Export Credit Guarantee Corporation of India, public sector Banks,

academia and business community. With its headquarters in

Mumbai, the bank has nine regional offices overseas.

The banks functions are segmented into several operating

groups including;

Corporate banking group which handles a variety of financing

programmes for, Export Oriented Units (EOUs), importers, and

investment by Indian companies.

Project finance/trade finance group which handles the entire range

of export credit services such as suppliers credit, pre-shipment

credit, buyers credit, finance for export of projects and consultancy

services, guarantees, forfeiting.

Lines of credit group- lines of credit (LOC) is a financing

mechanism that provides a safe mode of non –recourse financing

option to Indian exporters, especially to SMEs, and serves and an

effective market entry tool.

Agri business group, which has been put in place to spearhead the

initiative to promote and support Agri –exports

Small and medium enterprises group has been established to cater

to the specific financing requirements of export oriented SMEs.The

group handles credit proposals from SMEs under various leading

programmes of the bank. Export services group offers a variety of

advisory and value- added information services aimed at trade an

investment promotion.

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2.2:EXIM LINES OF CREDIT

INTRODUCTION Exim bank extends lines of credit (LOCs) to overseas financial institutions, regional development banks, sovereign government and other entities overseas, to enable buyers in those countries, to import goods and services from India on defferd credit terms. The Indian exporters can obtain payment of eligible value of exim bank, without recourse to them, against negotiation of shipping document. LOC is the financing mechanism that provides a safe mode of non recourse financing option to Indian exporters , especially to SMEs, and serves as an effective market entry tool.

How does it work?

1. Exim bank signs LOC agreement with overseas borrower institutions (borrower) and announces the availability of LOC for utilization, when the agreement becomes effective.

2. Exporter checks with exim bank, available amount under LOC and quantum of service fee payable to exim bank and negotiates contract with exporter.

3. Importer approaches the borrower for approval of the contract.4. The borrower appraises the proposal, if satisfied approves the

contract and refers to exim bank for concurrence for inclusion of contract for being financed under the LOC.

5. Exim bank accords approval to the contract, if in conformity with the terms of LOC. Exim bank conveys contract approval to the exporter and borrower.

6. The importer arranges remittance of advance payment to the exporter and also opening of a letter of credit, which states that the contract is covered under exim banks loc to the borrower and reimbursement will be exim bank for the eligible value of credit.

7. Exporter executes the contract/ ships the goods/ provider services.8. Commercial bank in India, designed as the negotiating bank,

negotiates shipping documents and pays the exporter.9. Exim bank reimburses the negotiating bank, on receipt of valid

claim and service fees, by debit to the LOC account of the borrower.

Borrower pays exim bank on due dates.

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2.3 EVOLVING VISION

FUNCTIONS:

1) Financing of exports and imports of goods and services, not

only of India but also of third world countries.

2) Financing of exports and imports of machinery and equipment

on lease basis.

3) Financing of joint ventures in foreign countries.

4) Providing loans to Indian parties to enable them to contribute

to the share capital of joint ventures in foreign countries.

5) Undertake limited merchant banking functions such as

underwriting of stocks, shares, bonds or debentures of companies

engaged in export or import; and

6) Provide technical administrative and financial assistance to parties

in connection with export and import.

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2.4 THE MAIN FOCUS OF THE EXIM BANK IS ON

Market diversification

Technological up gradation

Support to status holders

Agriculture

Handlooms

Handicraft

Germs and jewelry

Lather, marine

Electronics and IT hardware electronics machinery manufacturing

industries

Green product

Export of products from north East

Sports goods and toys sector

1. Higher support to market and product diversification -

Additional benefits of 2% bonus over and above the existing

benefits of 5%/2% under focus product scheme, allowed for

around 135 existing products which have suffered due to

recession in exports. 256 new products added under FPS (at 8

digit level), which shall be entitled for benefits @ 2% of FOB

value of exports to all markets.

Nearly three digit products (at 8 digit level) from the readymade

garment sector incentivized under MLFPS for further 6 months

from October 2010 to march 2011 for exports to 27 EU

countries.

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2. Support to technological up gradation-

Zero duty EPCG scheme, introduced in August 2009 and valid for

only two years up to 31.3.2011, has been extended by one more

year till 31.3.2012.The benefit of the scheme has been expanded to

cover paper & paperboard and articles thereof, ceramic products,

refractory’s, glass & glassware, rubber & articles thereof, Plywood

and allied products, marine products, sports goods and toys and

additional engineering products.

3. Benefit and flexibility to Status Holders-

Status Holders contribute to a substantial part of our exports. To

support them to upgrade their technology, 1% Status Holder

Incentive Scheme (SHIS) introduced in August 2009 and valid for

only two years upto 31.3.2011, has been extended by one more

year for 2011-12 exports.

4. Stability/Continuity of the Foreign Trade Policy-

The popular and exporter friendly Duty Entitlement Passbook

(DEPB) scheme has been extended beyond 31.12.2010 till

30.06.2011.

Advance Authorization for Annual Requirement shall also be

exempted from payment of anti-dumping & Safeguard duty in line

with the underlying principle that goods and services should be

exported and not the taxes and levies.

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5. Procedural Simplification and Reduction of Transaction

Cost

Exporters shall now have the flexibility to get a high value EPCG

authorisation by filing their EPCG application on Annual basis,

without the need to file the application for individual capital goods

from time to time. It will reduce transaction time and cost.

Chartered Engineer Certificate for Advance Authorisation on self

declared basis has been dispensed with. This will reduce

documentation and the transaction cost.

6. Agriculture and plantation

Instant Tea and CSNL Cardinol included for benefits under

VKGUY @ 5% of FOB value of exports.

Oil Meals (Cotton, rape seed, and groundnut), Castor Oil

derivatives, Packed Coconut Water and Coconut Shell worked

items shall be entitled for benefits @ 2% of FOB value of exports

to all markets under FPS

7. Handlooms

Duty free import of specified trimmings, embellishments etc. shall

be available on Handloom made-ups exports @ 5% of FOB value

of exports.

Additional 2% bonus benefits over and above the existing benefits

under Focus Product Scheme would significantly benefit the

Handloom Sector.

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8. Leather sector

Leather sector shall be allowed re-export of unsold imported raw

hides and skins and semi-finished leather from Public bonded

warehouses, without payment of any export duty. This will

facilitate the logistics for establishment of such warehouses and

easy access to raw material for the leather sector.

9. Textiles sector

Duty free import of specified trimmings, embellishment etc shall

be available @ 3% on exports of polyester made-ups in line with

the facility available to sectors like Textiles & Leather. It will

promote export of products such as micro cloth, which has become

popular in home textiles.

Readymade Garment sector granted enhanced support under

MLFPS for a period of further 6 months from October, 2010 to

March, 2011 for exports to 27 EU countries.

10. Gems & Jewellery sector

The list of items allowed for duty free import by Gems &Jewellery

sector has been expanded by Inclusion of additional items such as

Tags and labels, Security censor on card, Staple wire, Poly bag.

This will reduce the cost of the product to some extent.

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11. Handicraft sector

The facility of duty free import of tools under Duty Free Import

scrips for Handicraft sector shall be made operational.

Additional 2% bonus benefits over and above the existing benefits

under Focus Product Scheme will significantly benefit the

Handicrafts and Silk Carpets sectors.

12. Service sector

Scrips issued under Served from India Scheme (SFIS) can now be

used for payment of duty on import of Vehicles, which are in the

nature of professional equipment.

13. Engineering and Electronics:-

A number of engineering items namely, Machine Tools,

Compressors, Iron & Steel Structures including Transmission

Towers and Scaffolding, LPG Cylinders, Ductile Tubes & Pipes

shall now be entitled for benefits @ 2% of FOB value of exports to

all markets under FPS instead of their exports to specific markets

under MLFPS earlier.

Telecom Equipments, Color TVs, Audio Systems, Optical Media,

Semi-conductors, Capacitors, Resistors, PCBs, LEDs, Conductors,

Desktops and Notebooks shall now be entitled for benefits @ 2%

of FOB value of exports to all markets under FPS instead of their

exports to limited market under MLFPS earlier.

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14. Toys and Sports goods

Additional 2% bonus benefits over and above the existing benefits

under Focus Product Scheme will significantly benefit the Toys

and Sports Goods Sector.

Benefits under Zero duty EPCG and SHIS schemes will

significantly promote technological up gradation of Toys and

Sports Goods sectors.

2.5 EXIM BANK FACILITIES

Pre shipment credit exim banks pre shipment credit facility, in

Indian rupees and foreign currency.

For project exporters Indian project exporters incur expenditure

while executing overseas project export contracts.

For exporters of consultancy and technological services exim bank

offers a special credit facility to indian exporters of consultancy

and technology services.

Guarantee facilities Indian companies can evil of these to furnish

requisite guarantees to facilitate, execution of export contracts and

import transactions.

For commercial banks exim bank offers rediscounting facility to

commercial banks, enabling them to rediscount export bills of their

SSI customers, with usance not exceeding 90 days.

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Finance for export oriented units exim bank provides term loan for

project finance, equipment finance, for import of technology etc.

Lines of credit exim bank extends lines of credit(LOC’s) to overseas

financial institutions, regional development banks, sovereign

governments and other entities overseas, to enable buyers in those

countries, to import goods and services from Indian deferred credit

terms. The Indian exporters can obtain payment of eligible value

from exim bank, without recourse to them, against negotiation of

shipping company

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CHAPTER 3

FINANCING PROGRAMMES

3.1

EXPORT CREDIT FINANCE

Exim bank offers the following export credit facilities, which

can be availed of by Indian companies, commercial banks and

international entities.

PRESHIPMENT CREDIT.

Exim banks pre-shipment credit facility, in Indian rupees and

foreign currencies, provides access to finance at a manufacturing stage,

enabling exporters to purchase raw materials and other inputs.

SUPPLIERS CREDIT

This facility enables Indian exporters to extend term credit to

importers (overseas) of the eligible goods at the post shipment stage.

FOR PROJECTS EXPORTERS

Indian project exporters incur Rupee expenditure while executing

overseas project export contracts i.e. costs of mobilization/acquisition of

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materials, personnel and equipment etc. Exim Bank's facility helps them

meet these expenses.

FOR EXPORTERS OF CONSULTANCY AND TECHNOLOGICAL

SERVICES.

Exim Bank offers a special credit facility to Indian exporters of

consultancy and technology services, so that they can, in turn, extend

term credit to overseas importers.

GUARANTEE FACILITIES

Indian companies can avail of these to furnish requisite guarantees to

facilitate execution and export contracts and import transactions.

FORFEITING.

Forfeiting is a financing mechanism that enables a company to

convert credit sale to cash sale, on “without recourse” basis. Exim bank

acts as facilitator for the Indian exporter, enabling him to access the

services of an overseas forfeiting agency.

3.2 FINANCE FOR EXPORT ORIENTED UNITS

TERM FINANCE FOR EXPORTING COMPANIES

Project Finance

Equipment Finance

Import of Technology & Related Services

Domestic Acquisitions of businesses/ companies/ brands

Export Product Development/ Research & Development

General corporate finance.

WORKING CAPITAL FINANCE FOR EXPORTING COMPANIES

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Funded

o Working Capital Term Loans [< 2 years]

o Long Term Working Capital [up to 5 years]

o Export Bills Discounting

o Export Packing Credit

o Cash Flow financing.

Non-funded

o Letter of credit limits

o Guarantee limit

3.3 EXPORT CREDIT

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FOR COMMERCIAL BANKS

Exim bank offers Rediscounting facility to commercial banks,

enabling them to rediscount export bills of their SSI customers, with

usance not exceeding 90 days.

We also offer Refinance of Suppliers Credit, enabling

commercial banks to offer credit to Indian exporters of eligible

goods, who in turn extend them credit over 180 days to importers

overseas.

OTHER FACILITIES FOR INDIAN COMPANIES

Indian companies executing contracts within India, but which

are financed by multilater al finance agencies, can avail of credit

under our finance for deemed exports facility, aimed at helping them

meet cash flow deficits.

FOR OVERSEAS ENTITIES

Overseas buyers can avail of Buyers Credit from Exim bank,

for import of eligible goods from India on deferred payment terms.

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3.4 Overseas Investment Finance

Finance for Indian Company's equity participation in the overseas

Joint Venture (JV)/ Wholly Owned Subsidiary (WOS)

Direct Finance (Term & Working Capital) to the overseas JV / WOS

Finance (for equity/debt component) for acquisition of overseas

businesses / companies including leveraged buy-outs including

structured financing options.Direct Equity by Exim Bank in the

overseas JV/ WOS of an Indian Company.

3.5 AGRI FINANCE

The globalization and post-WTO scenario offers considerable scope for

exports of Indian agricultural products. Exim Bank has a dedicated Agri

Business Group to cater to the financing needs of export-oriented

companies dealing in agricultural products.

Financial assistance is provided by way of term loans, pre-shipment/post-

shipment credit, overseas buyers' credit, bulk import finance, guarantees

25

etc. Term loans with varying maturities are provided for setting up

processing facilities, expansion, modernization, purchase of equipment,

import of equipment/technology, financing overseas joint ventures and

acquisitions etc.

The Bank has strong linkages with other stakeholders in Agri sector such

as Ministry of Food Processing Industries, GoI, NABARD, APEDA,

Small Farmers' Agri-Business Consortium (SFAC), and National

Horticultural Board etc.

The Bank also publishes a number of Occasional Papers,

Working Papers on export potential of various sub-sectors in

agriculture and a bi-monthly publication in different languages on

global scenario in agri-business and opportunities therein.

Exim Bank has signed a Memorandum of Cooperation with

DHAN Foundation, Madurai (a leading NGO covering 3 lakh

families in 4 states) for advisory and financial support for

export related activities for their grass root enterprises

Set up units to produce value-added products from organic

tamarind grown in the area

Steps are on to set up an export oriented coco-peat projects

To market products made out of palm leaves and handmade

papers in Europe through our overseas offices.

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3.6 FILM FINANCE

The bank has till date-sanctioned loans more than Rs 33.15

crores for film production .the first three films financed by Exim bank has

been commercially successful across India and overseas market.

FILMS FINANCED BY EXIM BANK

Honeymoon Travels Pvt. Ltd.

Kabul Express

Dhoom -2

Don - The Chase Begins Again

Fanaa

Bunty Aur Babli

Salaam Namaste

Veer Zaara

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3.7 PROJECT FINANCE

For setting up of EOUs

Exim bank offers term loans for setting up of new projects, and

acquisition of assets for modernization/upgradation/exansion of

existing units. The bank also extends 100% refinance to commercial

banks, for term loan sanctioned by the lending bank to an EOU.

For textile and jute industries

The bank also extends finance to eligible units in textile and

jute industries under The Technology Up gradation Fund Scheme, to

enable them to upgrade their manufacturing facilities.

For software industry

The bank offers a comprehensive financing /services package

for the software industry.

To address the perceived constraint in the availability of trained

software professionals, Exim Bank extends term loans to software

exporters for establishment/expansion of software training institutes.

28

Further, the bank also facilitates setting up of software technology

parks (STPs).

For Indian companies involved in port development and

related activities

Exim Bank extends term loans to Indian companies involved

in construction of ports/jetties, and for acquisition of fixed assets for

stevedoring, cargo handling, storage and related activities like dry

docks and ship breaking.

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Chapter 4

Export Import Bank of India - Small & Medium Enterprises

& Agricultural finance

4.1 Definition of SMEs in India and World

In India the small and medium enterprises are not well defined. The

internal group set up by the Reserve Bank of India has recently

recommended that the units with investment in plant and machinery in

excess of SSI limit and up to Rs. 10 crores may be treated as medium

enterprises. The definitions of ‘small’ and ‘medium’ sized enterprises

differ from one country to another. SMEs have been defined against

various criteria such as the number of workers employed, volume of

output or sales, value of assets employed, and the use of energy.

Organization for Economic Cooperation and Development (OECD)

defines establishments with up to 19 employees as ‘very small’, between

30

20 and 99 employees as ‘small, from 100 to 499 employees as medium

and over 500 employees as large enterprises. However, many

establishments in some developing countries with 100 to 499 employees

are regarded as relatively ‘large’ firms. Multilateral Investment Guarantee

Agency (MIGA) has recently developed a guarantee programme, called

the Small Investment Programme (SIP) that is specifically designed for

SMEs. MIGA defines SMEs, for coverage under this programme, as

firms with not more than 300 employees, value of assets not exceeding

US $ 15 million and annual sales not exceeding US $ 15 million. The

European Union defines SMEs that have employees of less than 250, with

a turnover not exceeding Euro 50 million. Thus the definition of SME

varies from country to country and from region to region. The

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

significant contribution in achieving various socio-economic

objectives, such as employment generation, contribution to national

output and exports, fostering new entrepreneurship and to provide

depth to the industrial base of the economy. India has a vibrant SME

sector that plays an important role in sustaining economic growth,

increasing trade, generating employment and creating new

entrepreneurship in India.

4.2 Importance of the SME sector

The SSI sector in India employs around 26 million people and is

involved with the production of over 7500 industrial items with the

product range varying from very simple items produced with traditional

technology to high tech products. At present, the SSI sector accounts for

over 90% of industrial units in the country, 40% of value addition in the

31

manufacturing output and approximately 35% of India’s exports. SSI

sector in India has been exhibiting a striking export performance. Barring

few years, exports have grown double digit in the last 10 years. Major

sectors contributing to SSI exports include readymade garments (27%),

engineering goods (14.5%), chemicals & pharmaceuticals, electronics &

computers, and processed foods (11% each).

4.3 Exim Bank and SMEs

Indian SMEs require business advisory services to enhance their

international competitiveness in a highly competitive globalising

world. The SMEs find the services of reputed national and

international consultants as not cost effective and often, not

adequately focused. Recognizing this knowledge gap, Exim Bank of

India has been endeavouring to provide a suite of services to its SME

clients. These include providing business leads, handholding during

the process of winning an export contract and thus assisting the

generation of export business on success fee basis, countries/ sector

32

information dissemination, capacity building in niche areas such as

quality, safety, export marketing, etc. and financial advisory services

such as loan syndication, etc.

In the past, Exim Bank has implemented a number of innovative

programmes focusing primarily on SMEs. The Bank, in the past, has

operated an Agency Line of Credit for IFC and an Export Marketing

Programme for the World Bank, which are targeted towards SME sector.

The Bank proactively assists SME units in establishing their products in

international markets. Exim Bank’s Lines of Credit help SMEs to offer

competitive credit term to the buyers and to explore newer geographical

markets. Recently, the Bank has signed a Memorandum of Cooperation

with the International Trade Centre (ITC), Geneva, to implement the

Enterprise Management Development Services (EMDS) programme, for

supporting SMEs in their globalisation efforts. This initiative is being

launched by ITC for the first time in any country.

33

CHAPTER 5

RECENT DEVELOPMENTS

5.1 EXIM’s focus on SMEs

Special Line of Credit from ADB: The Bank is negotiating

a long term Line of Credit of US$ 250 mn. From the Asian

Development Bank, without Central Government guarantee, for

extending loans to SMEs . The Bank will have an option to draw the

funds in different currencies, as per the needs of its customers.

5.2 Innovative Programme for SMEs

The Bank has entered into a cooperation arrangement

with International Trade Centre (ITC), Geneva, for implementing a

unique Enterprise Management Development Services (EMDS)

program, which is an IT based solution provider to enable small

enterprises to prepare business plans with international market in

focus. This is a pioneering initiative for supporting SMEs and for

providing term loans and export finance facilities to the identified

units to help them in their globalisation efforts. The Bank has

partnered ITC in implementing this project. The Bank thus supports

small enterprises through capacity building and assistance in

formulation of viable proposals. It is envisaged that the learning

from this programme would be transferred to other developing

34

countries, and thus assist in capacity creation and institution building

in the global arena.

The Bank has partnered the Commonwealth Secretariat in the

Commonwealth – India Small Business Competitiveness

Development Programme. The objective of the programme is to

undertake capacity development initiative that promotes economic

development (increased employment, investment, trade and

economic activity) in Commonwealth member states by providing

competitive strategies and policies on SME development to

practitioners and policy makers, and to build and develop

institutional capacity.

5.3 ADFIAP Development Award

The Association of Development Financing Institutions

in Asia and the Pacific (ADFIAP) Development Award recognises

and honours ADFIAP member institutions, which have assisted

projects that have created a development impact in their respective

countries. Awardsare given to member institutions, which have

implemented or enhanced outstanding and innovative development

projects during the year. The Bank has been conferred the 2008

“SME Development Award”.

The Award is in recognition of the Bank’s “Enterprises

Management Development Services (EMDS)” programme, an IT

35

based solution provider to enable small enterprises to prepare

business plans with international market in focus

5.4 Debt restructuring scheme for small and medium

enterprises

Publications

Export Performance of Small and Medium Enterprises in India in

research brief.

Occasional Paper: Institutional Support to SMEs A Study of Trade

and Investment Potential

Occasional Paper: Institutional Support Systems for SMEs in India

and International Experiences

36

CHAPTER 6:

LINE OF CREDIT

Introduction

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

institutions, regional development banks, sovereign governments and

other entities overseas, to enable buyers in those countries, to import

goods and services from India on deferred credit terms. The Indian

exporters can obtain payment of eligible value from Exim Bank, without

recourse to them, against negotiation of shipping documents. LOC is a

financing mechanism that provides a safe mode of non-recourse financing

option to Indian exporters, especially to SMEs, and serves as an effective

market entry tool. Exim Bank extends LOCs, on its own, as well as, at the

behest of Government of India.

37

6.1:- How does it work?

1. Exim Bank signs LOC Agreement with overseas Borrower Institution

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

the Agreement becomes effective.

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

quantum of service fee payable to Exim Bank, if any, and negotiates

contract with Importer.

3. Importer approaches the Borrower for approval of the contract.

4. Borrower appraises the proposal. If satisfied, approves the contract and

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

financed under the LOC.

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

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

the Borrower.

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

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

covered under Exim Bank's LOC to the Borrower and reimbursement will

be by Exim Bank for the Eligible Value of Credit, upon compliance with

stipulated conditions therein.

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

38

8. Exim Bank/commercial bank in India, designated as the Negotiating

Bank negotiates shipping documents and pays the exporter.

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

and service fee, as applicable, by debit to the LOC account of the

Borrower.

10. Borrower repays Exim Bank on due dates.

6.2:- Procedural flow chart

39

Procedural flow chart:

1. Exim Bank signs agreement with Borrower and announces when effective.

2. Exporter checks procedures and Service fee with Exim Bank and negotiates contract with

Importer.

3. Importer consults borrower and signs contract with exporter.

4. Borrower approves contract.

5. Exim Bank approves contract and advises borrower and also exporter and commercial bank.

6. Exporter ships goods.

7. Commercial bank negotiates shipping documents and pays exporter.

8. Exim Bank reimburses Commercial bank on receipt of claim by debit to borrower.

9. Borrower repays Exim Bank on due date.

6.3:- Benefits to the Indian Exporter:

Under Exim Bank's LOCs, the Indian exporters can obtain payment

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

against negotiation of shipping documents. The Indian exporter

does not carry any credit risk either on the importer or the

importer's country, whilst the overseas importer enjoys deferred

40

credit facility. Thus, LOC is a safe mode of non-recourse financing

option to the Indian exporter and serves as a market entry tool for

India's exports. The Indian exporter can also increase his export

volumes by offering deferred credit, where required.

6.4;- Benefits to Overseas Importer of goods and services:

Exim Bank has been using the LOC mechanism for promoting India's

exports to the traditional as well as new markets in developing countries,

which need deferred credit for buying Indian machinery, goods and

services. As the LOC is extended by Exim Bank on internationally

competitive terms, the overseas importer of Indian goods is allowed

access to the credit facility at competitive interest rates. The overseas

importer and the Indian exporter do not have to negotiate credit terms

separately as the credit arrangement between Exim Bank and the overseas

borrower financial institution is already in place.

6.5:- Credit period allowed under the LOC Eligible Goods:

Capital goods, plant and machinery, industrial manufactures, consumer

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

Policy' of the Government of India.

6.6:- Interest rate the overseas importer of Indian goods has

to pay

The overseas importer of Indian goods has to approach the overseas

borrower financial institution/recipient of Exim Bank's LOC, for approval

of his proposal for import of Indian goods on deferred credit terms. The

interest rate that the importer will need to pay to the recipient of Exim

41

Bank's LOC, will depend on various factors such as the cost of fund, the

currency of credit, tenor of credit, security offered by the importer, the

risk perception of the importer and the interest rate structure prevalent in

the country. It may however be mentioned that Exim Bank's interest rates

on LOCs being competitive, the importer would normally have to pay

interest rate lower than what he would otherwise pay to his Bank on

similar credits.

6.7:- Charges payable by the Indian exporter to Exim Bank

In respect of certain LOCs, the Indian exporter has to pay a service fee to

Exim Bank. The exporter should check in advance with Exim Bank the

quantum/percentage of service fee payable. In respect of LOCs extended

by Exim Bank, at the behest of Government of India, no service fee is

normally payable by the exporter to Exim Bank.

6.8:- Minimum value of contract for being eligible for

coverage under the LOC

Most of the LOCs stipulate a minimum contract value as US$ 50000.

However, under certain LOCs, the minimum value of contract could be

different. Exporters would be well advised to check the particulars of the

individual LOC with Exim Bank.

Generally, export of capital goods and plant and machinery is allowed on

credit terms of upto 5 years, whereas the export of industrial

manufactures, consumer durables, raw materials and commodities is

42

allowed on credit terms of upto 2 years. However, the credit period

allowed under each LOC could be different. There are certain short-term

LOCs which provide for credit period of 1 year, and there are certain

LOCs which permit credit period beyond 5 years. Exporters are advised

to check the details with Exim Bank, in advance. In respect of LOCs

extended by Exim Bank, at the behest of Government of India, credit

period ranges from 8 years to 20 years depending on the caegories of

countries, based on their levels of incomes and external debt.

6.9:- The stage at which the Indian exporter should contact

Exim Bank

The Indian exporter should contact Exim Bank before finalizing the price

negotiation with his prospective importer, if the transaction is intended to

be covered under Exim Bank's LOC. The exporter should ascertain

details such as the service fee payable to Exim Bank, the credit period

permissible under the LOC, the payment procedure involved and the

contact person/department in the overseas borrower institution/recipient

of LOC. In respect of certain LOCs especially those extended by Exim

Bank, at the behest of Government of India, sectors/projects could be pre-

identified.

6.10:-ECGC cover

As the LOC is a non-recourse financing option to the Indian exporter, he

does not have to obtain any ECGC cover.

43

CHAPTER 7

OTHER FACILITIES

7.1 Finance for R & D and Export Product Development

Exim bank offers term loans to EOUs, for development of new

technology to satisfy domestic and international environment and

standards, and to help them develop and/or commercialize new

product/process applications.

7.2 Finance for service sector

Services sectors financed by Exim Bank include

entertainment, health care, hospitality and shipping. Exim Bank has

entered into the business of film financing on a very selective basis

to cover, inter alia, film production and finance for distribution in

overseas markets.

7.3 Natural resources

Exim bank selectively provides term loans to Indian

companies in their endeavor to acquire overseas natural resources in

terms of acquiring mining/exploration rights in overseas locations.

Exim; finance will be available to Indian companies for acquisitions

of such rights either on its own or in joint venture with an overseas

partner, subject to a reasonable proportion of the resources being

destined for India.

44

7.4 Underwriting

Exim bank extends underwriting commitment to Indian

exporters, to help them raise finance from capital markets through

public/rights issues of equity shares /debentures.

7.5 Export Marketing Finance

Exim bank offers term loans to Indian companies, to aid them

in their efforts to penetrate and retain their presence in overseas

markets, particularly in developed countries.

7.6 Import loans

Exim bank finances bulk imports of consumable inputs and

canalized items undertaken by manufacturing companies.

7.7 Guarantee facility

Exim bank issues different kinds of guarantees for

EOUs.These include: a) export obligation guarantees; b) deferred

payment guarantees; c) guarantees in favor of commercial

banks/lending institutions abroad on behalf of Indian exporters.

45

7.8 Finance for venture overseas.

The bank has a comprehensive programme in terms of equity

finance, loans, guarantees and advisory services to support Indian

outward investment.

Exim bank offers term loans to Indian companies, both for

equity investment in their ventures overseas as well as for on lending

purposes.

Besides, Exim Bank also undertakes Direct Equity Stake in

Indian Ventures Abroad, to enable Indian companies to supplement

their equity with Exim Banks equity contribution.

46

CHAPTER 8

OTHER SERVICES

8.1 EXPORT SERVICES

Exim bank offers a diverse range of information, advisory,

and support services, which enable exporters to evaluate

international risks, exploit export opportunities and improve

competitiveness.

8.2 For Multilateral Agencies Funded Projects Overseas

(MFPO)

Exim bank offers value added information and support

services to Indian companies seeking business in business funded by

multilateral agencies such as World Bank, Asian Development Bank,

African Development Bank, European Bank for Reconstruction and

Development, and other official Development Agencies like the

Japan Bank for International Cooperation.

8.3 Services offered include

Identification of business opportunities in funded projects.

Details on specific project of interest.

Information on procurement guidelines, policies and practices of

multilateral agencies.

Advice on preparation of Expression of Interest, Capability, Profile

etc.

47

Advice on bids, with regard to bid evaluation, review of bid

documents, etc.

Apart from these we also offer support services, such as

liaising with Indian missions, monitoring bid performance,

assistance in prequalification etc.

8.4 Commercial services

Exim bank undertakes customized research on behalf of

interested companies, in areas such as establishing market potentials,

defining marketing arrangements, and specifying distribution

channels. We also assist companies in developing export market

entry plans, obtaining quality certifications and display of their

products in our overseas offices.

8.5 Country profiles

Exim bank also undertakes country profiles, which assess the

economic, political, currency and credit risks involved, along with

the export opportunities in the country concerned.

8.6 Financial counseling

Exim bank offer advice on how to access foreign currency

finance from multilateral institutions and import lines of credit, trade

finance alternatives, collection/payment systems, as well on the

credit worthiness of business entities and banks.

48

8.7 Internationalization support

Exim bank helps in identifying technology suppliers, partners,

and in consummation of domestic and overseas joint ventures,

through its network of alliances and its overseas offices. It also

advice companies on regulatory clearances, and facilitate tying-up

finance for equity and working capital.

8.8 Information access

Exim bank issues business opportunities alerts, which

communicate business leads, acquisition opportunities, industry

trends as well as collaboration opportunities.

8.9 Building export capability

Our Eximius Learning Centers in Banglore, Ahmedabad and

Pune organize training programmes, workshop and seminars for

exporters. These programmes, often on sector-specific issues, are

conducted buy international experts from trade promotion

organizations and multinational companies.

The bank also carries out research on issues related to

international trade, economics and sector/product/country studies,

which it publishes in the form of Occasional Papers and Working

Papers.

The bank disseminates information on export opportunities

and highlights development that has a bearing on Indian exports,

through its quarterly bulletin, Eximius: Export Advantage.

49

Besides, this publication also carries a regular feature, country

scan, which gives update on the trade/investment climate in various

countries.

The bank also brings out a bi-monthly publication titled “Agri

Export Advantage” in English, Hindi and 10 regional languages.

The bank supports three quarterly publications viz ‘Indo –

African business”, “Indo-LAC business” and “Indo-CIS

Business”. Exim Banks commitment to promoting and supporting

trade with the African, LAC CIS regions.

8.10 International merchant banking services

Exim bank provides advisory services to Indian exporters to enable them

to offer competitive financial packages when they bid for exports.

8.11 exim bank as an international consultant.

Exim bank shares its expertise in the creation and operation of

a financial institution in a developing country, with countries

endeavoring to set up institutional infrastructure for international

trade. Our activities in this regard includes:

Feasibility study for establishment of an export credit and guarantee

facility for Gulf Co-operation Council (GCC) countries.

Setting up the Afriexim Bank, Exim Bank in Malaysia, and the

export credit guarantee company in Zimbabwe.

Designing and operational sing of export financing programmes in

turkey and South Africa.

50

Inputs regarding export marketing/export development for Armenia,

Vietnam and Ukraine.

Feasibility study, undertaken on the behalf of the government of

Mauritius, for “projecting Mauritius as an investment hub for Indian

firms.

8.12:- JOINT VENTURES

Global procurement consultants limited (GPCL) is a successful

consultancy company, promoted by Exim bank in 1996,in partnership

with leading private and public sector consultancy firms in India. GPCL

provides procurement related services particularly related to multilateral

agencies such as World Bank, Asian development bank and African

development bank. Global trade finance limited (GTF), a joint venture

which had its shareholders, Exim bank; FIM bank, Malta; and

international finance corporation, Washington and bank of Maharashtra

commenced its business in September 2001.GTF offers factoring for

export and domestic receivables with credit protection. The focus of

GTF’S activities is on market driven export-financing solutions for small

and medium sized Indian firms.

51

CHAPTER 9

PROMOTIONAL PROGRAMMES

9.1 Promotional activities

Exim Bank conducts Research Studies on products, sectors,

countries, macro economic issues relevant to international trade and

investment. These include your,

a) Sector studies assessing export potential: the sectors covered

are Computer Software, Floriculture, Medicinal Plants, Steel,

Jute, Sports Goods, Machine Tools, Organic Products,

Chemical and Pharma.

b) Bilateral trade and investment studies: Kazakhstan,

Kyrgyz Republic, Uzbekistan- Trade Potential. Israel, Sri

Lanka, Australia & New Zealand -Trade & Investment Potential

c) International trade related studies: Transaction Costs of

Indian Exports- An Analysis, Business Practices of Successful

Indian Exporters

The Bank disseminates on export opportunities and highlights

developments that have a bearing on Indian exports, through its

quarterly bulletin, Eximius: export advantage. Its Eximius: Export

advantage publication also carries a regular feature, Country Scan,

which gives updates on the trade/investment climate in various

countries. The Bank supports three quarterly publications viz. The

52

Bank also brings out a bi-monthly publication titled Agri-Export

Advantage in English, Hindi and 10 regional languages. The bank

supports three quarterly publications viz. Indo-Africa Business, Indo

– Latin America Business, and Indo- CIS business. Support with

these magazines demonstrates Exim Bank’s commitment to

promoting and supporting the trade with Africa, Latin America and

CIS regions.

9.2 Award for Business Excellence

Exim Bank, in association with the Confederation of Indian

Industry (CII), presents as Annual Award for Business excellence for

the best TQM practices adopted by an Indian company. The high

performance standards set down in order to qualify for the Award

serve to foster strong commitments to the TQM in the company’s

journey towards Business Excellence.

EXIM BANK INTERNATIONAL ECONOMIC

DEVELOPMENT RESEARCH ANNUAL (IEDRA) AWARD,

2008

In commemoration of Jawaharlal Nehru Birth Centenary (1889-

1989)

9.3 The award

Export-Import Bank of India has instituted an Annual Award

for research in International Economics, Trade & Development and

Related Financing. The objective is to promote research in

International Economics, Trade & Development and Related

Financing by Indian nationals at universities and academic

53

institutions in India and abroad. The Award will consist of a sum of

Indian Rupees One Hundred Thousand and a Citation.

The Award was initiated in commemoration of Jawaharlal

Nehru Birth Centenary (1889-1989).

9.4 The entry

Research work by Indian nationals in International Economics,

Trade & Development and Related Financing (either awarded a

Doctorate or accepted for award of Doctorate) from a university or

equivalent academic institution in India or abroad is a prerequisite

for eligibility of Award. The Award will be made to a person eligible

to receive an award in Indian Rupees. Exim Bank will accept, as

entry, thesis by which doctorate has been obtained/ accepted for

award of Doctorate between January 1, 2004 and September 30,

2008. Thesis can be submitted either in English or Hindi, and in the

latter case must be accompanied by a version in English.

Support to Indian Consultants for undertaking services

abroad

Under an agreement with the International Finance

Corporation (IFC), Washington, Exim Bank is a participant in the

trust funds set up by the IFC in different parts of the world. As a

result of this arrangement, Indian consultants can avail of its support

for undertaking specific assignment in select countries. including

Africa, Eastern Europe, CIS countries, China, South Asia, and the

Mekong Delta region.

54

9.5 ADFIAP DEVELOPMENT AWARD

The Association of Development Financing Institutions in Asia and

the Pacific (ADFIAP) Development Award recognizes and honours

ADFIAP member institutions, which have assisted projects that

have created a development impact in their respective countries.

The Bank has been conferred the 2006 'Trade Development

Award'. The Award is in recognition of the Bank's initiative for

supporting village and rural industries to explore markets overseas,

leveraging effectively upon the Bank's extensive institutional and

trade promotion linkages, and its support and financing

programmes.

55

CHAPTER 10

RUPEE RESOURCES OF EXIM BANK

10.1 Term Deposits:

Issued for tenors 1 to 5 years. Minimum size of each deposit is Rs.

10,000/-. Applicable rates

On the deposits for different tenors is published from time to time. An

incentive in the form of a higher rate is available to senior citizens. The

deposits are non-transferable.

56

10.2: Term Money:

Bank can borrow term money for 3-6 months from scheduled

commercial banks and cooperative Banks at mutually agreed rates.

10.3: Certificates of Deposit (CD)

Issued for tenors 1-3 years at mutually agreed rates in multiples of Rs 1

lakh with minimum amount of a CD from a single subscriber at Rs. 1

lakh. Eligible investors include individuals (other than minors),

corporations, companies, trusts, funds, associations etc. and non-resident

Indians (NRIs)

10.4: Commercial Papers (CPs)

Issued at a discount to the face-value at mutually agreed rates, for

maturities of 15 days - one year in denomination of Rs. 5 lakh (face-

value) or multiples there of Eligible investors Include individuals,

banking companies, other corporate bodies registered or incorporated in

India And unincorporated bodies, Non- Resident Indians (NRIs) and

Foreign Institutional Investors (FIIs) (investment By FIIs would be within

the limit set for their investments by the Securities and Exchange Board

of India (SEBI)).

57

10.5: Bonds

Issued for a minimum maturity of 3 years. In respect of bonds having

call / put or both options, the same would not be exercisable before the

expiry of one year from the date of issue of bonds. The coupon on the

bond may be fixed or floating (linked to a mutually acceptable 'reference

rate').

All the above instruments currently enjoy the highest safety rating from

CRISIL, ICRA and Fitch.

Distributors with proven track record can empanel with the Bank for

arrangement of term deposits

58

RECENT NEWS:

EXIM Bank of India extended a US$ 60 million line of credit to

Myanmar for financing of railway projects.

These projects will be executed by the India’s state-owned RITES

Ltd. This was announced by Mr. U Soe Tha, Minister for National

Planning & Economic development of Myanmar, after the signing

of a Memorandum of Understanding (MoU) by Mr. T C A

Ranganathan, Chairman & Managing Director, EXIM Bank and

Mr. Nyi Phyu Hla, Managing Director, Myanmar Foreign Trade

Bank at Federation House .

EXIM Bank has so far extended several lines of credit to Myanmar

aggregating US$ 250 million for a variety of projects such as railways,

telecom, refinery, truck assembly plant and electricity transmission lines

in Myanmar.

The Myanmar Government was encouraging the involvement of

the private sector in a big way. For instance, the government was

supporting the setting up of private banks and had begum

privatization of petrol filling stations.

Minister Tha said that about 400 foreign enterprises from 31

countries were doing business from and with Myanmar, accounting

for an investment of US$ 23 billion. In contrast only 5 Indian

59

companies were present in the country with an investment of US$

200,000.

The new areas for cooperation were identified as construction,

development of hydropower and manufacturing in Myanmar.

Exim bank signs LOC with Cambodia- prabhakar dalal, ED,

Export import bank of india signing a line of credit agreement for

US $ 15 mn with HE dr. Aun porn Moniroth, secretary of state,

Ministry of economy and finance of the government of Cambodia,

at Royal palace in phnom penh, in the presence of the president of

india, H.E. Pratibha devising patil, and the prime minister of

cambolia, H.E. Hun sen.

60

SUMMARY

The Exim Bank Letter of Credit policy can reduce a bank’s risks

on confirmations and negotiations of irrevocable letters of credit issued

by overseas financial institutions for the financing of U.S. exports.

This policy affords commercial and political coverage against the

failure of an overseas financial institution (issuing bank), whether

sovereign or private, to make payment or reimbursement to the insured

bank on an irrevocable letter of credit. Coverage is also provided for the

insured bank's refinancing of payments under a sight irrevocable letter of

credit of the issuing bank.

The policy applies to irrevocable letters of credit which conform

with the Uniform Customs and Practice for Documentary Credits (UCP),

1993 revision, publication number 500 of the International Chamber of

Commerce where the insured has a relationship with the foreign issuing

bank. The policy is not applicable to revocable, back-to-back, red clause

or conditional letters of credit.

Coverage applies to irrevocable letter of credit sales for goods

produced in and shipped from the United States during the policy period,

and for services

Performed by U.S. personnel either in the U.S. or in a host country.

Receivables for products, which are less than 50% U.S. content,

61

excluding mark-up, and certain defense products, are not eligible for

cover.

Terms up to 180 days from the date of first presentation of

documents may be extended for consumer goods, spare parts and raw

materials. On a case-by-case basis, agricultural commodities, fertilizer

and capital equipment may be insured on terms up to 360 days.

Principal amounts are covered up to the maximum insured

percentages stated below or as specified in the policy declarations.

Documented interest is covered up to 180 days after the date of the

issuing bank's default (or fewer days when the claim is settled earlier). On

letters of credit that are payable in U.S. dollars, the insured interest rate is

generally prime rate minus 0.5% or the rate stated in the credit agreement,

whichever is less. Exim Bank uses the prime rate published in the Wall

Street Journal, under the table "Money Rates."

The policy specifically excludes coverage for those transactions in

which there is an unresolved documentary dispute between the insured

and the issuing bank. Additionally, coverage is specifically excluded in

situations in which the issuing bank refuses documents at the time of

presentation and seeks a refund from the insured bank to which a

reimbursement has already been made.

62

CONCLUSION

The journey, along with many hurdles along the way, but

at every step was a higher learning & a better understanding of why

the Export Import Bank of India is well established in the minds of

many, today. While working on this project I came to realize that

the essence of Exim Bank lies with its ability to recognize the

changing global scenario and move ahead with the world, by

extending financial assistance to different countries in the form of

loans, advances, consultancy, rediscounting facilities, working

capital finance, project finance and not to mention its Lines of

Credits facility. Because of its range of differentiated and tailor-

made products and services, the Bank has been able to achieve

international recognition & today it can be truly called a catalyst

for India’s international trade. With the advent of globalization, the

barriers to trade are getting dismantled & the dividing lines between

national & global markets are slowly disappearing.

Towards facilitating inclusive globalization is the banks new

initiative, which has been seen through its involvement in creating export

capability in small & medium enterprises, grassroots business enterprises

& agro industries. Exim Bank recognizes that the these sectors have great

potential & with the right assistance, support, investment & expertise, the

purchasing power at the bottom of the pyramid can increase thus leading

to a gradual effect in all other sectors and thus the overall development of

63

the economy which was ultimately the aim of the Bank at the time of its

incorporation and still is.

Throughout the entire project we have referred to all the various

functions and duties that Exim bank has undertaken in all these years.

This project has mainly put light on Exim bank of India.Exim bank of

India has grown exceptionally well in all those years and catered to the

needs of all those thousands and millions of people in their export and

import regulations. It is the backbone of Indians foreign trade and today

that India’s foreign trade is touching heights, Exim bank has played the

major role in fulfilling that expectation.

It is now India’s one of the largest financial institution and is

acclaimed worldwide for all the functions it carries out. It has been

graded A+ + + by CRISIL.it has taken various functions apart from

export and import duties. Lastly we can say that it is not just a bank, but

an enormous financial institution, which is leaving no stone unturned in

making its mark globally.

64

BIBILIOGRAPHY

Websites

www.moneycontrol.com.

www.google.com.

en.wikipedia.org/wiki/Wealth management

www.eximbankindia.com

www.eximbankagro.com

www.rbi.org.com

www.eximcomm.com

Books

Banking Theory and Practice by Sundaram and Varshney.

Practice and law of Banking by B.S. Khubchandani.

Export Import Financing by Gerhard.W.Scheider

International banking and finance by Dipak Abhyankar.

65

Publications:

Export-Import Act of India 1981

News letters- Eximius, June 2008, March 2008.

Annual Report 2007-2008 – Exim Bank.

Brochure- Exim Bank Of India

Newspapers

Economic Times

Hindu Business Line

DNA

66