mail-box-lead-generation

written by | May 12, 2022

Everything You Need to Know About EXIM Bank

×

Table of Content


EXIM Bank of India is an institution which has been debated for the longest period, founded more than two decades before in 1982. Significant developments in the industrial and commerce landscape occurred in the two decades preceding the founding of EXIM bank.

Primary commodities and traditional manufacturers like cotton and jute textiles dominated Indian exports in the early 1960s and 1950s. Because export development opportunities were limited and inherent obstacles to export growth (such as weak infrastructure), the majority perspective was that increase in domestic demand alone could serve as a credible engine for economic growth in India's circumstances.

In 1978-79, the Ministry of Finance held talks to discuss the creation of an Export-Import bank. It was decided that a separate organisation would be needed to focus entirely on exporters' needs and aid in the development of novel methods for granting loans on reasonable terms. It could also be worried about the capital required to produce exports.

The bank provides term loans in Indian rupees as well as foreign currencies for export-oriented Indian enterprises to establish new production facilities, expand and modernise existing facilities and purchase production equipment or technology. Extending Lines of Credit (LOCs), regional financial institutions, national governments and commercial banks is a priority for the bank.

Did you know?

In the year 2000, the Export-Import Bank of India Act was passed. In September 1981, the bank was established, and in March 1982, it commenced operations.

Also Read: Import and Export Procedures & Documentation Followed in India

Export-Import Bank of India Act

                            

Exim Bank was founded by the Indian government under the Export-Import Bank of India Act, 1981 as an export credit provider, replicating worldwide export credit agencies. Through a variety of products and services, Exim Bank serves as a growth engine for industries and SMEs. This comprises technology imports and export product development, as well as export production, export marketing, pre-and post-shipment logistics, and international investment.

EXIM Bank and the Environment

The Charter of EXIM Bank empowers the Board of Directors to give or deny funding support based on the positive and negative environmental effects of proposed transactions.The goal of the EXIM Bank is to keep India competitive in the global economy while also ensuring that the projects it funds are environmentally friendly and encourage Indian exporters.

Environmental procedures and guidelines for social due diligence have been developed by EXIM Bank, which outline the bank's environmental goals. These procedures and guidelines outline the procedures that the environment division and engineering will follow and the criteria by which the division will assess project environmental impacts.

EXIM Bank Objectives

Since its inception, EXIM bank's goal has been obvious and transparent, to promote export marketing. Export marketing and import technology and product development, export production, post-shipment and pre-shipment and foreign investment are examples of export marketing and import technology and product development. A few EXIM bank mail targets are listed below.

  • The EXIM bank's strategy has evolved from a product-centric approach with export capability creation and export credits to a more customer-centric approach with a broad range of goods and services to enable enterprises at all phases of their operations.
  • One of the bank's aims is to provide funding to importers and exporters and serve as the financial institution in charge of coordinating the efforts of institutions that finance the exports and imports of products and services to boost India's international trade.
  • The bank intends to build commercially friendly relationships with a target group of externally oriented enterprises by offering a diverse range of products and services to assist them in their global expansion.
  • EXIM bank's vision has shifted from a product-centric approach with export loans and export skill formation to a more customer-centric approach with a full variety of goods and services to enable businesses at all phases of their business cycle. 
  • Today, we build commercially successful connections with a target group of externally oriented organisations by offering a broad range of products and services to assist them in their internationalisation efforts. In the future, we hope to use our export finance experience and leadership to create a long-term difference for Indian enterprises with worldwide ambitions. The bank's mission is to make it easier for Indian businesses to go global.

EXIM Bank Policies

Additionality

This regulation is in place to ensure that EXIM does not drown out the private sector and only supports transactions in which EXIM finance is required for an Indian export. When determining the additionality of a transaction, it uses the additionality guidance and checklist.

One-Stop-Shop

EXIM Bank is aggressively building "One-Stop-Shop" co-financing facilities to enable financing with other Export Credit Agencies (ECAs). Products and services from two (or more) countries can benefit from a single ECA financing package thanks to "One-Stop-Shop" arrangements. The parties would have to make separate financial arrangements if co-financing was unavailable, agreements with two (or more) ECAs to ensure that exports from various nations are supported. The country usually determines an ECA led transaction with the highest proportion of sourcing or the location of the principal contractor.

Impact on the Economy

The economic impact procedures of the EXIM bank are based on the bank's charter. The government evaluates whether extending EXIM bank financing support is likely to cause considerable injury to the Indian industry or would result in the industry producing substantially the same commodity subject to trade restrictions. If EXIM bank concludes that a transaction satisfies the statutory requirements, the transaction's economic impact can be utilised to refuse EXIM bank credit. The EXIM bank's economic impact procedures intend to:

  • Ensure that all transactions are reviewed for potential economic impact.
  • To identify transactions subject to applicable trade restrictions or pose a significant risk of harm to the Indian economy.
  • Only those transactions that require a more thorough economic effect study through a fair, consistent and publicly visible procedure.

Also Read: List of the Most Rewarding Export Products in India

Foreign Corrupt Practices and Other Anti-Bribery Measures

Firms and individuals seeking to do business in foreign markets should be aware of the Foreign Corrupt Practices Act of 1977 (FCPA), which prohibits corrupt payments to foreign officials to get or maintain a business. The FCPA's anti-bribery provisions make it illegal for an Indian and certain international securities issuers to make a corrupt payment to a foreign official to obtain or retain business for or with or divert business to another person. They also apply to foreign companies and individuals who engage in any activity supporting a corrupt payment.

Military

Enterprises and persons seeking to do business in international markets should be aware of the Foreign Corrupt Practices Act of 1977 (FCPA), which forbids corrupt payments to foreign officials for the goal of obtaining information, getting or maintaining a business. The FCPA's anti-bribery provisions make it illegal for a person and certain international securities issuers to make a corrupt payment to a foreign official to obtain or retain business for or with, or to direct business to, any person. They also apply to foreign companies and individuals who engage in any activity supporting a corrupt payment.

Conclusion

The EXIM bank of India is a rare example of a banking organisation whose concept and necessity have been questioned. Later, in 1982, the Indian government established it.

Its headquarters were in Bombay, Maharashtra, and David Rasquinha is the current Managing Director of the EXIM bank.

The EXIM bank plays a vital role in developing cross-border commerce and investment. We are currently operating as a growth driver for Indian businesses' spectrum of products and services, thanks to our long history. This comprises technological imports and export product development, export production, export marketing, pre-and post-shipment logistics and international investment. We are a stimulant and major participant in developing cross-border commerce and investment in a fast-changing economic environment.
Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: How does EXIM bank finance its operations?

Ans:

Fees and premia charged for services, interest earned from loans and loan principal repayment are all part of EXIM bank's programme earnings. Offsetting collections are kept for a particular year if the bank's programme revenues exceed the expected loss on those transactions (credit losses). These offsets are used to fund additional obligations throughout the year, such as administrative expenditures, claim payments, loan disbursements and prudent reserves to cover future losses. To fund medium and long-term loans, EXIM bank borrows from the Treasury.

Q: What is the location of EXIM bank?

Ans:

The EXIM bank is based in Washington, DC.

It also operates 12 regional export finance centres in the United States, which perform outreach and give support exclusively to small businesses in the United States.

Q: What is the EXIM bank's rule?

Ans:

EXIM Bank can fund up to 30% of the value of exports for locally produced or manufactured goods and services, subject to its legal limitation on funding defence commodities and services.

Q: Why was the Exim bank established?

Ans:

An Act of Parliament established the Export-Import Bank of India (Exim Bank) in 1982 to enable and boost India's foreign trade. It also provides funding for international joint ventures.

Q: Who is the EXIM bank's owner?

Ans:

This financial institution is fully owned by the Indian government and has locations in India and worldwide.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
×
mail-box-lead-generation
Get Started
Access Tally data on Your Mobile
Error: Invalid Phone Number

Are you a licensed Tally user?

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.