My Blackbook
My Blackbook
My Blackbook
SUBMITTED BY:
KHAN MEHREEN
RESEARCH GUIDE:
SABIHA SHAIKH
STUDYING AT :
ACADEMIOC YEAR:
2018-2019
Certificate
This is to certify that Ms KHAN MEHREEN has worked and duly completed her Project
Work for the degree of Bachelor of Management Studies under the Faculty of Commerce
in the subjec t of _______________________________________ and her/his project is entitled,
“EXPORT IMPORT BANK ” under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no part of it has been submitted previously for any Degree or Diploma of any University.
It is her own work and facts reported by her/his personal findings and investigations.
Date of submission:
Declaration by Learner
I the undersigned Miss KHAN MEHREEN here by, declare that the work
embodied in this project work titled EXP0RT IMPORT BANK forms my own
contribution tothe research work carried out under the guidance of SABIHA
SHAIKH a result of my own research work and has not been previously submitted
to anyother University for any other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has beenclearly
indicated as such and included in the bibliography. I, here by further declare that all
information of this document has been obtainedand presented in accordance with
academic rules and ethical conduct.
Certified by
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.
I would like to thank my Principal,ANJUM ARA AHMED for providing the necessary
facilities required for completion of this project.
I take this opportunity to thank our Coordinator ANAND DESHMUKH for his moral
support and guidance.
I would also like to express my sincere gratitude towards my project guide SABIHA
SHAIKH whose guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books
and magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported me
throughout my project.
INDEX
Chapter 6 BIBLIOGRAPHY 84
CHAPTER 1
INTRODUCTION
1.1 INTRODUCTION
Over three decades ago, in 1982, the Government of India launched a new institution in the form of Export-
Import Bank of India (Exim Bank), with a mandate to enhance exports and integrate India’s international
trade and investment with its economic growth.
While the mandate was demanding, what really set the Bank apart was the strategy adopted to fulfil it, which
essentially involved introduction of innovative products and services and proactive adaptation to new
challenges.
Commencing operations as a purveyor of export credit, Exim Bank today plays an important role in partnering
Indian industries in their globalisation efforts through a comprehensive range of financing and advisory
support programmes encompassing all stages of the export business cycle.
Exim Bank has played a pioneering role in promoting project exports from India and has been actively
encouraging Indian firms to participate in overseas project opportunities. With Exim Banks’ support many
Indian companies have been executing projects in overseas markets.
The achievements of the past three decades provide a strong foundation to Exim Bank from where it will
continue to catalyse India’s international trade and investment. The Bank is committed to go beyond
traditional financing and facilitate exports of a variety of products and services which have the potential to go
overseas, by creating a niche for them in the international market.
This brochure is one of the principal lending programmes of Exim Bank viz.
Buyer’s Credit under National Export Insurance Account (NEIA), and is for dissemination of information to
various Indian project exporters, as also prospective overseas borrower’s viz. Foreign Governments or their
nominated government – owned entities.
Buyer’s Credit under NEIA is a unique financing mechanism that provides a safe mode of non-recourse
financing option to Indian exporters and serves as an effective market entry tool to traditional as well as new
markets in developing countries, which need deferred credit on medium or large term basis
1.2 ORIGIN AND HISTORY
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.
History:
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.
Background:
Export-Import Bank of India (Exim Bank) is the coordinator and facilitator for the promotion of project
exports. The Bank, plays a pivotal role in supporting Indian companies in execution of projects by
offering both funded and non-funded facilities for overseas turnkey projects, civil construction contracts,
supplies as well as technical and consultancy service contracts. Project exports from India have been
increasing steadily over the years, indicating the growing stature of Indian expertise overseas in a wide
range of activities, and upward movement in the value chain of its export performance.
In order to provide further impetus to project exports from India, especially in the infrastructure sector,
Exim Bank, in April 2011, in conjunction with ECGC Ltd., introduced a new product / initiative, viz.
Buyer’s Credit under Government of India (GOI)’s National Export Insurance Account (NEIA), under
which the Bank finances and facilitates project exports from India.
NEIA is a Trust, set up by the Ministry of Commerce and Industry (MOCI), Government of India, for
providing medium to long term export credit insurance cover for promoting project exports from India,
administered by ECGC Ltd.
Exim Bank also extends Buyer’s Credit, on medium term, to overseas borrower without NEIA cover to
finance export of capital goods, plant and machinery, industrial manufactures, consumer durables and any
other items eligible for being exported under the ‘Foreign Trade Policy’ of the Government of India
The amount of the loan is generally not more than 85% of the contract value, with the balance 15% being
paid by the project authority as advance or down payment. Higher credit amount can be considered on a
case to case basis, subject to specific request from the Borrower. The interest rate is linked to Exim
Bank’s cost of funds plus a spread. The credit period would usually be 8 to 12 years, and longer credit
period (upto 15 years) would be considered on the merits of the proposal. The security includes a
sovereign guarantee where the borrower is other than the foreign government and any other security as
may be stipulated on a case-to-case basis.
The project is placed for approval of the Committee of Directions under the Department of Commerce,
MOCI for export credit insurance cover under NEIA. Exim Bank extends the credit directly to the overseas
buyer of projects from India without recourse to the Indian exporter.
The purport of EXIM banks vision is Together towards Tomorrow. Export Import bank of Bangladesh
Limited believes in togetherness with its customers as well as growth and progress of the services. To
achieve the desired goal, there will be pursuit of excellence in all stage with a climate of continuous
improvement, because in EXIM bank, they believe the line of excellence never ends. Bank‟s strategic plan
and networking will strengthen its competitive advantage over others in today‟s rapidly changing
competitive environment. Their personalized quality and services to the customers with trend of constant
improvement will be the cornerstone to achieve their operational success.
The year gone by posed several challenges to the global economy, which was reflected, inter alia, by
uneven growth and a decline in world trade. The Indian economy, however, stood out amidst the turmoil in
developed countries and emerging markets and was one of the fastest growing major economies of the
world. For India’s banking sector, the year was not an ordinary one. In the backdrop of a global slowdown,
increasing non-performing loans saw banks grappling with a sluggish industrial growth and sharply
deteriorating corporate results. While stress in the corporate sector has shown some signs of moderation, the
risks of low demand and weak debt servicing capacity remain. As a result, though Exim Bank withstood the
turbulence of the past year in terms of operating results, it has reported lower net profit for the year. The
Reserve Bank of India has initiated a string of measures to improve the health of the financial sector and
strong leadership for reforms are expected to stabilise the corporate sector soon.
Exim Bank has vigorously pursued with its mission to promote Brand India and support Indian companies
in their globalisation efforts. Over the last two years there has been firm support from the Government of
India in the form of regular infusion of capital in the Bank and this is expected to be maintained as the role
and expectations from the institution have been scaled up, especially for strategic project exports. Exim
Bank continues to maintain healthy capital to risk assets ratio and credit ratings on par with the sovereign.
CHAPTER 2
RESEARCH METHODOLOGY
2.1 To conduct any sort of report or research, it is essential to collect data from various sectors. These
data can be collected through primary data and secondary data. Both of these sources are used to prepare my
report.
1. Primary Sources:
For conducting my study, I have used the following primary sources:
Face to face conversation with the employees or officers
Personal experience gained by observation
Conducting a survey with the Online banking service users, of EXIM Bank
2. Secondary Sources:
I was not able to do this study with only observing or getting conversation with the employees of EXIM
Bank. For further information, I had to go through with secondary sources. For this I have collected relevant
data from “Google”, by using different articles and journals, which helped me a lot to contribute to my
literature review. For the other essential information of to know about EXIM Bank briefly, I had to go
through with the website of EXIM Bank Ltd. As my topic was based on online banking, so I had to go
through their online banking website too.
1. We have audited the accompanying financial statements of the General Fund of the Export-Import
Bank of India (‘the Bank’), which comprises of the Balance Sheet as at 31st March, 2016 and the Profit
and Loss Account and the Cash Flow Statement for the year then ended and a summary of significant
accounting policies and other explanatory information. Management’s Responsibility for the Financial
Statements
2. The Management of the Bank is responsible for the preparation of the financial statements in
accordance with the Export-Import Bank of India Act, 1981 (‘the Act’) and the Regulations framed
thereunder. This responsibility also includes maintenance of adequate accounting records in accordance
with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and
detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgements and estimates that are reasonable and prudent; and design, implementation and
maintenance of adequate internal financial controls, that were operating effectively for ensuring the
accuracy and completeness of the accounting records, relevant to the preparation and presentation of the
financial statements, that give a true and fair view and are free from material misstatement, whether due to
fraud or error.
3. Our responsibility is to express an opinion on these financial statements based on our audit.
4. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of
Chartered Accountants of India. Those Standards require that we comply with ethical requirements and
plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement.
5. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the Bank’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of the accounting estimates made by the Bank’s Management, as
well as evaluating the overall presentation of the financial statements.
6. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
7. In our opinion and to the best of our information and according to the explanations given to us, the said
financial statements, give the information in accordance with the requirements of the Act and the
Regulations framed thereunder and give a true and fair view in conformity with the accounting
principles generally accepted in India:
i) In the case of the Balance Sheet, of the state of affairs of the General Fund of the Bank as at 31st
March, 2016; ii) In the case of the Profit and Loss Account, of the profit for the year ended
31st March, 2016; and
iii) In the case of the Cash Flow Statement, of the cash flows for the year ended 31st March, 2016.
8. The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement have been drawn up in
accordance with the provisions of the Act and the Regulations framed thereunder.
9. We report that:
i) We have obtained all the information and explanations which, to the best of our knowledge and
belief, were necessary for the purpose of our audit and have found them to be satisfactory.
ii) The transactions of the Bank, which have come to our notice, have been within the powers of the
Bank.
10. In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with the
mandatory Accounting Standards issued by the Institute of Chartered Accountants of India.
11. We further report that:
i) The Balance Sheet and Profit and Loss Account dealt with by this report, are in agreement with the
books of accounts and the returns.
ii) In our opinion, proper books of accounts as required by law have been kept by the Bank so far as
appears from our examination of those books
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.
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.
2.5EXPORT CREDIT
Exim bank offers the following export credit facilities, which can be availed of by Indian companies,
commercial banks and international entities.
FOR INDIAN COMPANIES EXECUTING CONTACTS OVERSEAS…
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.
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.
The agreement was signed at the 4th CII-Exim Bank conclave on India-Africa Project Partnership 2008 in
New Delhi on. The agreement was signed by Mr. T C Venkat Subramanian, Chairman and Managing
Director of Exim Bank and Jean-Louis Ekra, President of Afreximbank. This agreement will facilitate and
boost India’s exports to member states of Afreximbank. The Line of Credit affords a risk free, non-recourse
export financing option to Indian exporters. Exim Bank is a non-regional shareholder of Afreximbank which
represents 38 member-states across Africa.
Exim Bank Of India And Lao Pdr Ink Credit Agreement
Export-Import Bank of India (Exim Bank) and the Government of Lao People's Democratic Republic have
signed a Line of Credit (LOC) Agreement for US$ 33 mn during the State Visit of the President of Lao PDR
to India. The LOC Agreement was signed in New Delhi, on Wednesday, August 27, 2008, by Mr. S.R. Rao,
Executive Director, on behalf of Exim Bank of India, and H.E. Mr. Somdy Douangdy, Minister of Finance,
on behalf of Lao PDR, in the presence of Hon'ble Prime Minister of India, Dr .Manmohan Singh, and
the President of Lao PDR, H.E. Mr. Choummaly Sayasone.This Facility, extended at the behest of
Government of India, is the first ever Line of Credit by Exim Bank to Lao PDR. The LOC will be utilised
to finance the Paksong S/S-Jiangxai 115 kV double circuit Transmission Line project, Nam Song 7.5 MW
Hydropower project and equipment for Rural Electrification Phase 2 project in Lao PDR. Under the LOC,
Exim Bank will reimburse 100% of contract value the Indian exporter, upfront upon the shipment of
goods. Besides promoting India's exports, Exim Bank's LOCs enable demonstration of Indian expertise
and project execution capabilities in emerging markets.
With the signing of this LOC Agreement, Exim Bank has now in place 101 Lines of Credit, covering over
90 countries in Africa, Asia, Latin America, Europe and the CIS, with credit commitments amounting to
US$ 3.32 bn, available for utilization for financing exports from India. Exim Bank's LOCs afford a risk-
free, non-recourse export financing option to Indian exporters.
CHAPTER-3
LITERATURE REVIEW
015-16
Global partnerships have evolved as the world increasingly focuses on sustainable development and shared
prosperity. In an increasingly globalized world, sustainable development can be achieved through
collaboration among state and non-state partners, including international organizations, development banks,
aid agencies, governments at all levels, business, academia, think tanks, civil society organizations, among
others. Such partnerships generate employment and economic opportunities for all segments of the population.
India has successfully carved its place in the global arena as a partner in economic development; and initiatives
by institutions like Exim Bank of India highlight such endeavors. Over the years, the Bank has forged
important partnerships with other like-minded institutions the world over.
The cover page of this Annual Report reflects the theme of partnerships between countries and institutions
for sustainable development with the symbolic representation of intertwining threads leading to the formation
of a strong rope. With Exim Bank’s support, Indian companies, execute sustainable projects across sectors
and across geographies assisting people who are at the bottom of the pyramid. The Bank is actively engaging
with different partners to attain the objective of helping to raise the living standard of partner countries through
strategic intervention. Green bonds issued by the Bank (the first international issue from India) would support
green financing and the Bank’s intervention in financing renewable energy will go a long way in supporting
environment friendly and sustainable infrastructure in partner countries; a win-win situation for the partner
country as well as India and the global community. A large number of projects supported by Exim Bank
overseas have changed the socio-economic landscape of partner countries in generating employment,
upgrading transport infrastructure by constructing road and railways, providing food and energy security and
improving healthcare services, enhancing connectivity through telecommunication, among others. In addition,
many of these projects support employment and growth of manufacturing sector in India, as major
components of inputs in these projects are secured from India, thus consistently supporting initiatives of the
Government such as ‘Make in India.’
Exim Bank is committed towards strengthening such partnerships, focusing on sustainable development
and strategically maximising socio-economic benefits.
Exim Bank is proud to be an active partner of the Government of India's initiatives of hosting the BRICS
Annual Meeting and the African Development Bank’s Annual Meetings in 2016 and 2017, respectively
015-16
3.2 ECONOMIC ENVIRONMENT
GLOBAL ECONOMY
TGlobal growth moderated to 3.1 per cent in 2015 from 3.4 per cent in 20141, primarily reflecting a continued
fall in growth in emerging market and developing economies amidst post-crisis lows in commodity prices,
weaker capital flows and subdued global trade. Growth in the emerging market and developing economies
moderated for the fifth consecutive year (4 per cent in 2015, compared to 4.6 per cent in 2014), while a modest
increase was seen in the advanced economies (1.9 per cent in 2015, compared to 1.8 per cent in 2014).
WORLD TRADE
Growth in volume of global merchandise trade is estimated to fall by 2.4 per cent in 20151 compared to 3.2
per cent in 2014, stemming from falling import demand in China, Brazil and other emerging economies,
falling prices for oil and other primary commodities, as well as significant fluctuations in exchange rates.
The world trade prices of non-fuel primary commodities1 contracted by 17.5 per cent in US dollar terms in
2015, while oil prices lost momentum and contracted by 47.2 per cent during the same period.
INDIAN ECONOMY
The Indian economy grew at 7.6 per cent during FY 2015-16, compared to 7.2 per cent in the preceding
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year, becoming one of the fastest growing major economies in the world. Growth was mainly on the back of
positive factors such as higher public investment, buoyant consumption and lower interest rates. It is
noteworthy that economic growth continued to pick up despite subdued global demand that has significantly
dampened India’s exports and two consecutive years of belownormal monsoons, which impacted farm
output and productivity.
AGRICULTURE
The Indian agricultural sector registered a slow but positive growth of 1.1 per cent in FY 2015-16, as
compared to a contraction of 0.2 per cent in the previous year due to drought. A decline in production of
food grains in FY 2015-16 at 0.5 per cent was not as steep as the decline of 4.9 per cent witnessed in the
previous year2. Similarly, a decline in production of oilseeds at an estimated 4.1 per cent, was much lower
compared to a 16 per cent decline recorded in the previous year. Sectoral growth was mainly driven by
allied segments consisting of livestock products, forestry and fisheries, with a combined growth of 5.0 per
cent in FY 2015-16. The share of agriculture and allied sector in GDP, declined to 15.3 per cent in FY 2015-
16 from 16.3 per cent in the previous year.
INDUSTRY
The industrial sector registered a strong growth of 7.3 per cent in FY 2015-16 compared to
5.9 per cent in the previous year. Accounting for 17.5 per cent of the GDP in FY 2015-16, manufacturing
was the main driver of the sectoral growth, with growth of 9.5 per cent during the year, followed by mining
and quarrying, electricity, gas and water supply and construction. The share of industry in GDP remained
unchanged at 31.2 per cent in FY 2015-16.
Growth of the general Index of Industrial Production (IIP) was at 2.4 per cent in FY 2015-16 as compared to
2.8 per cent in FY 2014-15. As per the sectoral classification of IIP, industrial production in electricity
slowed down with a growth of 5.6 per cent during FY 2015-16 from 8.4 per cent recorded in the preceding
year; while growth of mining and manufacturing increased to 2.2 per cent and 2 per cent, respectively, in
FY 2015-16, from 1.4 per cent and 2 per cent, respectively, in FY 2014-15.
According to use-based classification of IIP, growth in consumer goods, basic goods and intermediate goods
were at 3.5 per cent, 3.0 per cent and 2.5 per cent, respectively, in FY 2015-16, while capital goods
witnessed a decline of 2.9 per cent. Manufacturing growth was mainly driven by furniture (44.3 per cent),
motor vehicles, trailers and semi-trailers (7.5 per cent), wearing apparel (6.7 per cent), coke, refined
petroleum products and nuclear fuel (6 per cent), chemicals and chemical products and radio, TV and
communication equipments (3.8 per cent each), wood and products of wood and cork (3.2 per cent), paper
and paper products (3.1 per cent), textiles (2.6 per cent), machinery and equipment (2.2 per cent), other
015-16
non-metallic products (1.5 per cent) and fabricated metal products, except machinery and equipment (1.4
per cent).
SERVICES
While the services sector continued to be the major driver of the economy, growth moderated to 9.2 per cent
in FY 2015-16 from 10.3 per cent in FY 2014-15, mainly reflecting significant slowdown in the
growth of public administration, defence and other services to 6.9 per cent from 10.7 per cent and
moderation in the growth of financial, real estate and professional services to 10.3 per cent from 10.6 per
cent; and in trade, hotels, transport, communication and broadcasting services from 9.8 per cent to
9.5 per cent during the same period. The share of the services sector in India’s GDP stood at 53.5 per cent in
FY 2015-16 as against
52.5 per cent in FY 2014-15.
INFRASTRUVTURE
The overall growth of the eight infrastructure and core sectors, viz., coal, crude oil, natural gas, petroleum
refinery products, fertilizers, steel, cement and electricity eased to 2.7 per cent in FY 2015-16 from 4.5 per
cent in FY 2014-15. During the period, industries that registered a decline in growth were natural gas ((-)
4.2 per cent), steel and crude oil
((-) 1.4 per cent each). Performance of the fertilizer industry has improved substantially by registering a
growth of 11.3 per cent compared to a contraction of
0.1 per cent in the previous year. Other sectors i.e. electricity, cement, coal and refinery products recorded a
growth of 5.2 per cent, 4.7 per cent, 4.6 per cent and 3.8 per cent, respectively.
INFLATION
Headline inflation, based on the Consumer Price Index (CPI) (combined for rural and urban areas),
moderated to 4.9 per cent during FY 2015-16 as against 6.0 per cent in FY 2014-15. Moderation in CPI
inflation was broad-based, supported by lower inflation of food articles and items under the nonfood, non-
fuel category. Lower non-food, non-fuel category was largely supported by moderation on inflation of
housing (rent), transport, communication, education and other services.
Headline wholesale price index (WPI) inflation declined following the global trend of declining commodity
and producer prices. WPI inflation has remained in the negative territory since November 2014 and was (-)
2.5 per cent in FY 2015-16 as compared to 2.0 per cent in FY 2014-15. WPI-based food inflation continues
to remain moderate at 3.2 per cent during FY 2015-16, despite the below average monsoon this year and the
sporadic spurt in the prices of pulses and a few other essential commodities in the second half of the year.
015-16
CAPITAL MARKETS
India’s Net Foreign Direct Investment during FY 2015-16 stood at US$ 36.0 billion, up from US$ 32.6
billion in the preceding year. Net portfolio investment in India decreased sharply to (-) US$ 3.6 billion in
FY 2015-16 from US$ 40.9 billion in the preceding year.
CHEMICALS
The chemical industry is a significant contributor to India’s national economic growth. The Index of Industrial
Production (IIP) for chemicals and chemical products grew by 3.8 per cent during FY 2015-16, after
registering a marginal decline of (-) 0.3 per cent and fractionators stood at 231.3 million metric tons (MMT)
during FY 2015-16, as compared to 220.7 MMT in the previous fiscal year. With substantial increase in
refining capacity in India, exports of petroleum products have picked up since FY 2005-06, although the
slowdown in global economy has affected the exports in recent years. Amidst an increasingly challenging
environment of declining prices and rising competition, exports of petroleum products witnessed a sharp
decline of (-) 46.4 per cent during FY 2015-16, to reach a level of US$ 30.4 billion from
during FY 2014-15. The growth in IIP for chemicals and chemical products was higher than the 2.4 per cent
growth in the overall IIP during this period. In terms of exports, chemical and related products (including
pharmaceuticals) witnessed a year-on-year growth of 1.3 per cent during FY 2015-16 to reach
US$ 32.1 billion. Chemical and related products had a share of 12.3 per cent in the overall exports during this
period, registering nearly two percentage point increase over FY 2014-15. The Indian chemical industry (other
than fertilizers) was among the top 10 sectors attracting cumulative FDI inflows of US$ 11.9 billion during
the period April 2000- March 2016 with a share of 4.1 per cent in total FDI inflows (US $ 288.6 billion) into
India.
PETROLEUM PRODUCTS
Government of India started encouraging energy companies to invest in refineries at the end of the 1990s,
thus helping the country to become a net exporter of petroleum products in 2001, despite being a significant
importer of crude oil. According to the Petroleum Planning and Analysis Cell, production of petroleum
products by refineries US$ 56.8 billion during the previous year. The share of petroleum product exports in
total exports has witnessed a consistent increase from 15.7 per cent in FY 2009-10 to 20.1 per cent in FY
2013-14. However, this export share exhibited a decline in the fiscal year FY 2014-15 to touch 18.3 per cent
and further to 11.6 per cent during FY 2015-16. During April 2000 - March 2016, petroleum and natural gas
sector received FDI inflows of US$ 6.7 billion.
PHARMACEUTICALS
The Indian pharmaceutical market is the third largest in terms of volume and the thirteenth largest in terms of
value globally. The export of pharmaceutical products was valued at US$ 12.9 billion in FY 2015-16,
registering a year-on-year growth of nearly 11.4 per cent. Share of pharmaceuticals in India’s total exports
has increased from 3.7 per cent in FY 2014-15 to 4.9 per cent in FY 2015-16. The major export destinations
for India’s pharmaceutical sector during FY 2015-16 were: the USA (with a share of 39.0 per cent) followed
by South Africa (4.1 per cent), the UK (3.6 per cent), Nigeria (3.0 per cent) and Russia (2.7 per cent).
CAPITAL GOODS
The capital goods industry is a strategic segment for any economy. Some of the prominent capital goods
produced in India include heavy electrical machinery, textile machinery, machine tools, earthmoving and
construction equipment including mining equipment, road construction equipment, printing machinery,
dairy machinery, industrial refrigeration and industrial furnaces. In FY 2015-16, the capital goods industry
registered a negative year over year growth of 2.9 per cent, after witnessing a recovery in FY 2014-15.
During FY 2015-16, capital goods exports also declined by (-) 4.0 per cent over the corresponding period of
the previous year to reach US$ 18.0 billion. Imports of capital goods during the same period registered a year-
on-year growth of 4.1 per cent to reach US$ 41.1 billion.
ELECTRONICS
While the CAGR for India’s electronic item imports remained strong during FY 2011-12 to FY 2015-16 at
3.9 per cent, India’s electronic item exports recorded a CAGR of (-) 12.4 per cent during the same period.
During FY 2015-16, India’s export of electronic items declined for the fourth consecutive year to reach
US$ 5.5 billion. Import of electronic items during the same period were valued at US$ 38.1 billion, witnessing
a year-on-year growth of 8.7 per cent. During FY 2015-16, major export to FY 2015-16, from US$ 10.6 billion
to
US$ 18.0 billion.
FOOD PROCESSING
The food processing sector is one of the major sectors in India in terms of production, growth, consumption
and export, and has been accorded a priority status by the Government of India. The Indian food processing
industry accounts for 32 per cent of the country’s total food market and 13 per cent of India’s exports.
India’s food processing sector covers fruits and vegetables, spices, meat and poultry, milk and milk products
alcoholic and non-alcoholic beverages, fisheries, plantation, grain processing and other consumer product
groups like confectionery, chocolates and cocoa products, soya-based products, mineral water and high
protein foods. Processed food exports increased at a CAGR of 11.2 per cent during the period FY 2010-11.
TRADE POLICY
• The government has expanded the coverage of the Merchandise Export from India Scheme (MEIS) by
adding 110 new items in October 2015. The incentive rate/country coverage of 2,228 items has been
enhanced.
• The Directorate General of Foreign Trade (DGFT) launched a ‘DGFT’ mobile application in June 2015,
which allows exporters/importers to access foreign trade policy and other related documents in an easy-to-
use searchable format and check status of transmission of various authorisations and shipping bills, etc.
• A Council for Trade Development and Promotion has been constituted in July 2015, to ensure continuous
dialogue with the governments of states/union territories on measures for providing an international trade-
enabling environment and for making the states active partners in boosting India’s exports.
• In September 2015, DGFT, in collaboration with the Indian Institute of Foreign Trade (IIFT), launched
‘Niryat Bandhu at Your Desktop’, an online certificate programme in export-import business.
INVESTMENT POLICY
• A consolidated foreign direct investment (FDI) up to 49 per cent is allowed in defence sector under
automatic route from the earlier government approved route. Proposals for foreign investment in excess of
49 per cent will be considered by Foreign Investment Promotion Board.
• FDI policy on Construction Development sector has been liberalised by relaxing the norms pertaining to
minimum area, minimum capitalisation and repatriation of funds or exit from the project.
• 100 per cent FDI under automatic route is permitted in completed projects for operation and management
of townships, malls/shopping complexes and business centres.
• Up to 100 per cent FDI has been allowed in coffee/rubber/cardamom/palm oil and olive oil plantations via
the automatic route.
• Consolidated FDI up to 74 per cent is allowed in private sector banks.
• 100 per cent FDI is permitted under automatic route in Duty Free Shops located and operated in the
Customs bonded areas.
• Regional Air Transport Service (RSOP) is eligible for foreign investment up to 49 per cent under automatic
route.
• 100 per cent FDI is now permitted under automatic route in Limited Liability Partnerships (LLP) operating
in sectors/activities where 100 per cent FDI is allowed, through the automatic route and there are no FDI-
linked performance conditions.
• 100 per cent FDI has been allowed in the broadcasting sector, in DTH, teleports, mobile TV and cable
networks. Of this, 49 per cent is allowed under automatic route and beyond that will need permission from
Foreign Investment Promotion Board.
As for the up-linking of non-news and current affairs TV channels, 100 per cent FDI has been permitted under
the automatic route.
INCOME/EXPENDITURE ;
The Bank registered Profit before tax of ` 4.53 billion on account of General Fund during FY 2015-16
as against a Profit of ` 11.35 billion for the year FY 2014-15. After providing for income tax of ` 1.38
billion, Profit after tax amounted to ` 3.16 billion during FY 2015-16 as against ` 7.26 billion during
FY 2014-15. The main reason for the decrease in profit is an increase of 121% in provisions for
contingencies from ` 939 crore for the year ended March 31, 2015 to ` 2,077 crore for the year ended
March 31, 2016. The higher provisioning is on account of additional provisions made for Non
Performing Assets (NPAs) covering incremental slippages during the quarter ended March 31, 2016
as also additional provisioning on stressed assets to cushion apprehended future defaults. Out of this
profit, an amount of ` 0.53 billion is transferred to Reserve Fund. In addition, the Bank has transferred
` 0.15 billion to Sinking Fund and ` 2.17 billion to Special Reserve under section 36(1)(viii) of the
Income Tax Act, 1961. The balance of ` 0.32 billion will be transferred to Government of India (GOI)
as provided in the Export-Import Bank of India Act, 1981.
Business income including interest on loans, exchange, commission, brokerage and fees, etc. during FY
2015-16 was ` 55.65 billion as compared to ` 48.63 billion in FY 2014-15. Investment income, interest on
bank deposits, etc. during FY 2015-16 was ` 32.16 billion as compared to ` 27.58 billion in FY 2014-15.
Interest expenses in FY 2015-16 at ` 60.78 billion were higher by ` 6.81 billion mainly due to the increase in
borrowings. Administrative expenses as a per cent of total expenses (excluding provisions for
contingencies) worked out to 2.52 per cent during FY 2015-16 as against 2.38 per cent during FY 2014-15.
Profit before tax of the Export Development Fund during FY 2015-16 was ` 47.94 million as against ` 48.76
million during FY 2014-15. After providing for tax of ` 16.65 million, the post tax profit amounted to `
31.29 million as against ` 32.12 million during FY 2014-15. The profit of ` 31.29 million is carried forward
to next year.
ANNUAL REPORT 2015-16
BORROWINGS ;
Total borrowings of the Bank were at
933.17 billion as on March 31, 2016, higher by 18.56 per cent compared to total borrowings of ` 787.11
billion as on March 31, 2015.
RESOURCES:
During the year, the Bank received capital of ` 13 billion from the Government of India. As on March
31, 2016, the Bank’s total resources including paid-up capital of ` 63.59 billion and reserves of ` 51.27
billion aggregated ` 1,048.03 billion. Exim Bank’s resource base includes Bonds, Certificates of
Deposits, Commercial Paper, Term Deposits, Term Loans and foreign currency deposits/borrowings/
long-term swaps. During the year, the Bank raised borrowings of varying maturities aggregating `
369.65 billion comprising rupee resources of ` 231.83 billion and foreign currency resources of
US$ 2.08 billion equivalent. Foreign currency resources of US$ 1.80 billion equivalent were raised
through bonds, bilateral/club/syndicated loans and US$ 0.28 billion by way of Buy-Sell swaps/on-
shore deposits. As on March 31, 2016, the Bank had a pool of foreign currency resources equivalent to
US$ 10.64 billion and outstanding Rupee Resources of ` 470.13 billion. Market borrowings as on
March 31, 2016, constituted 100 per cent of the total borrowings and 89 per cent of the total resources
of the Bank.
ASSET QUALITY:
As per RBI prudential norms for Financial Institutions a credit/loan facility in respect of which
interest and/or principal has remained overdue for more than 90 days, is defined as a Non-Performing
Asset (NPA). The Bank’s gross
NPAs at ` 42.75 billion worked out to 4.17 per cent of the total loans and advances as on March 31, 2016
as compared to 2.94 per cent as on March 31, 2015. The Bank’s NPAs (net of provisions) of ` 8.55 billion as
on March 31, 2016 were at 0.86 per cent of loans and advances. The NPA Provision Coverage Ratio (PCR)
as on March 31, 2016 was 80 per cent.
ASSET CLASSIFICATION;
‘Sub-standard assets’ are those where interest and/ or principal remains overdue for more than 90 days. Sub-
standard assets that have remained as NPAs for a period exceeding 12 months are classified as ‘doubtful
assets.’ ‘Loss assets’ are those considered uncollectable. Out of gross NPAs at 4.17 per cent as on March
31, 2016, sub-standard assets worked out to 2.76 per cent and doubtful assets worked out to 1.41 per cent.
Net NPAs at 0.86 per cent of net loans and advances as on March 31, 2016, are fully towards sub-standard
assets, while doubtful assets have been fully provided for. The Bank did not have loss assets as on March
31, 2016.
QANNUAL REPORT 2015-16
CAPITAL ADEQUACY:
The Capital to Risk Assets Ratio (CRAR) was 14.55 per cent as on March 31, 2016, as compared to
15.34 per cent as on March 31, 2015, as against a minimum 9 per cent norm stipulated by RBI. The
Debt-Equity Ratio as on March 31, 2016 was 8.12:1 as compared to 7.95:1 as on March 31, 2015.
EXPOSURE NORMS:
Reserve Bank of India (RBI) has prescribed credit exposure limits for All-India Term Lending
Institutions at 15 per cent of the financial institutions’ capital funds, effective from March 31, 2002,
for exposure to individual borrowers and at 40 per cent for group borrowers. An additional exposure up to 5
per cent (i.e. a total exposure up to 20 per cent of capital funds of the Financial Institution for Single
Borrowers and 45 per cent of capital funds for Borrower Groups) can be taken in exceptional circumstances,
with the prior approval of the Board. The exposure ceilings for individual borrowers and borrower groups
can be exceeded by an additional five percentage points (i.e. 5 per cent of total capital funds) and ten
percentage points (i.e.10 per cent of total capital funds), respectively (over and above the maximum limits
of 20 per cent and 45 per cent, respectively), provided the additional credit exposure is on account of
infrastructure projects in India. The Bank’s credit exposures to single and group borrowers as at March 31,
2016 were within the limits stipulated by RBI. There was one borrower as on March 31, 2016 for whom
exposure over 15% of capital funds was assumed with the approval of the Board/Management Committee.
Exposure to this borrower as on March 31, 2016 stood at 19.61% of the capital funds of the Bank.RBI has
advised Financial Institutions to adopt internal limits on exposures to specific industry sectors so that the
exposures are evenly spread over various sectors. The industry exposure limits adopted by the Bank for each
industry sector are 15 per cent of the Bank’s credit exposure to all industry sectors. The Bank’s exposure to
a single industry sector was not more than 15% per cent of its total exposure as at March 31, 2016
Today‟s world of business or market place is a place of competition. A company can sustain properly in a
market place, if it becomes successful to cope up with this competition. When a new business or new
product enters in a market place, it is obvious that on the upcoming day a competitor will stood up side by
side of that business. This problem can be solved by competitive advantage of a business.
According to Jack Welch, “If you don‟t have a competitive advantage, don‟t compete”
Every business has their individual competitive advantage, which they maintain to differentiate their
product or service from their competitor‟s products or services. This competitive advantage can be the price
of their product or quality of their product or the service quality they are providing. All this strategies are
followed to make their customers satisfied, so that they purchase their product again and again and become
a loyal customer of that brand.
Service quality and customer satisfaction are inarguably the two core concepts that are at the crux of the
marketing theory and practice (Spreng and Mackoy, 1996).
In today's world of intense competition, the key to sustainable competitive advantage lies in delivering high
quality service that will in turn result in satisfied customers (Shemwell et al., 1998).
Now-a-days businesses are focusing more on their intangible assets, whereas earlier it was believed that a
business could become successful by providing good products or service only. But now businesses are
focusing more on service quality, customer Satisfaction management (CSM) as well as Customer
Relationship Management (CRM).
According to Claes Fornell Customer satisfaction is defined as "the number of customers, or percentage of
total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds
specified satisfaction goals."
But how to achieve this customer satisfaction, that is a vital issue and here are several numbers of arguments
for this concept.
“The service management literature argues that customer satisfaction is the result of a customer‟s perception
of the value received, where value equals perceived service quality relative to price”(Hallowell, 1996, p.
29).
“The first determinant of overall customer satisfaction is perceived quality; the second determinant of
overall customer satisfaction is perceived value” (Fornell et al., 1996, p. 9).
Customer satisfaction is recognized as being highly associated with „value‟ and is based, conceptually, on
the amalgamation of service quality attributes with such attributes as price. (Athanassopoulos, 2000, p. 192)
Different businesses follow different strategies to establish customer satisfaction. As we know that, every
individual customer is different from the other one. The human psychology works differently toward a
particular brand or product. So it is very important to find out the needs or desires of your customers. One
may become satisfied with the price of the product, other may not price sensitive. He or she might prefer the
quality of the product or service, rather than the price of that product.
3.5 EXIM BANK’S INSTITUTIONAL INFRASTRUCTURE
TREASURY
The Bank’s integrated treasury handles fund management functions including investment of surplus funds,
money market and forex operations and securities trading. The Bank has segregated front/middle/back
office functions and has set up a state-of-the-art dealing room. The range of products offered by the Bank’s
treasury to its borrowers include foreign exchange deals, collection/negotiation of export documents,
issuance of inland/foreign letters of credit/guarantees, structured loans, etc. The Bank
uses financial derivative transactions for raising cost effective funds and hedging its balance sheet
exposures, with an objective of reducing market risks. The Bank is a member of the Indian Financial
Network (INFINET) and has registration authority status from Institute for Development Research in
Banking Technology (IDRBT), the certifying authority. The Bank holds a digital certificate to deal through
the Negotiated Dealing System - Order Matching segment (NDS-OM) of RBI, which provides the electronic
dealing platform for trading in GOI securities. The securities/foreign exchange transactions of the Bank are
routed through the Guaranteed Settlement Facility provided by the Clearing Corporation of India Ltd.
(CCIL). The Bank is an active member of Collateralised Borrowing and Lending Obligation segment of
CCIL. The Bank is also a member of Clearcorp Order Matching System (CROMS), the Repo Dealing
System of CCIL. CROMS is a Straight Through Processing enabled anonymous Order Matching Platform
launched by CCIL for facilitating dealing in market repos in all kinds of Government Securities on T+0/
T+1 basis. CCIL acts as a central counterparty to all CROMS trades and settlements are guaranteed by
CCIL. The Bank has centralised SWIFT facility (with connectivity to London branch) which is capable of
handling multiple Bank Identifier Codes.
INFORMATION TECHNOLOGY
The Bank continued its initiatives in enhancing the use of knowledge management tools, communication
across its various constituents for better sharing of information, user empowerment and system intelligence
capabilities. Systems were supported and upgraded in various areas including those of operational business
intelligence, bank-wide system, document management and workflow, networks, infrastructure and security.
The Bank strengthened its practices and procedures in compliance with international standards for IT
Governance. The Bank’s revamped corporate website (www.eximbankindia.in) continued to disseminate
information in an organised manner on business opportunities and leads in international trade and also on
the various research activities conducted by the Bank. Besides, it features relevant information on the
Bank’s various lending programmes and information and advisory services. The Bank also maintains
websites for the Asian Exim Bank Forum. Exim Bank is the first and only financial institution who initiated
and implemented RTGS/NEFT and is now independently handling payments and settlements. Bank
integrated its core banking system with payment channels (RTGS/NEFT and SWIFT) which not only
improved the fund management but also brought the funds appropriation cycle to real time. Bank switched
to system based asset monitoring and implemented early warning signals to avoid future slippages. The
Bank implemented SharePoint portal for automation of the internal processes and moved towards
digitisation in line with Digital India initiative.
CORPORATE GOVERNANCE
Exim Bank ensures transparency and integrity in communication and makes available full, accurate and
clear information to all concerned. The Bank is committed to and is continuously striving to ensure
compliance with best practices of corporate governance as relevant to the Bank. The Bank has established a
framework of strategic control and is continuously reviewing its efficacy. Business/financial performance
related matters, analytical data/information are reported to the Board/Management Committee of the Board
(MC) periodically for review. The Bank has put in place a Board approved Compliance Policy and a senior
official has been made responsible in respect of compliance issues with all applicable statutes, regulations
and other procedures, policies as laid down by the GOI/RBI and other regulators and the Board and
deviation, if any is reported to the Audit Committee (AC). The Bank’s Board held 5 meetings and the MC
held 8 meetings during the year.
AUDIT COMMITTEE
The Bank’s AC of the Board provides direction to the total audit function of the Bank in order to enhance its
effectiveness as a management tool and to followup on all issues raised in the statutory/external/
internal/concurrent audit reports and RBI inspection reports. The AC reviews the quarterly financial
statements every quarter before submission of the same to the Board. The AC also periodically reviews the
functioning of the Bank’s Fund Management Committee (FMC) and Asset-Liability Management
Committee. The AC met 6 times during FY 2015-16.
ASSET-LIABILITY MANAGEMENT
The Asset-Liability Management Committee (ALCO) of the Bank oversees the monitoring and management
of market risk with support from the Bank’s mid-office. Liquidity/interest rate risks are managed by ALCO
as per the Integrated Risk Management Policy approved by the Board. The role of the ALCO includes, inter
alia, reviewing the Bank’s currency-wise structural liquidity and interest-rate sensitivity positions vis-a-vis
prudential limits prescribed by the RBI/Board, monitoring results of periodical stress testing of cash flows
and identifying a suitable Asset Liability Management (ALM) strategy based on the quantum of interest-rate
risk as measured through:
a) assessment of sensitivity of net interest income and
b) b) sensitivity of economic value, using duration- gap analysis, to interest rate movement.
Regular stress testing of currency-wise liquidity position is carried out and a Contingency Funding Plan is
drawn up periodically to estimate the worst-case fund shortfall in each currency. Value-at-risk is computed
for the Bank’s held-for-trading and available-forsale portfolio of GOI securities. The FMC decides on the
investments/disinvestments and raising of resources as per the Fund Management/Resources Plan approved
by the Board at the beginning of each financial year and reviewed during the year. The AC of the Board
periodically reviews the functioning of the ALCO/FMC.
RISK MANAGEMENT
The Bank has an Integrated Risk Management Committee (IRMC), which is independent of operating
groups and reports directly to the top management. The IRMC reviews the Bank’s position in regard to
various risks (portfolio, liquidity, interest rate, off-balance sheet and operational risks) and oversees the
operations of the ALCO, the FMC and the Credit Risk Management Committee (CRMC), all of which have
cross-functional representation. While the ALCO deals with issues relating to ALM policy and processes
and analyses the overall market risk (liquidity, interest-rate risk and currency risk) of the Bank, the CRMC
deals with credit policy and procedures and analyses, manages and controls credit risk on a Bank-wide
basis. The Bank has in place an advanced Credit Risk Model that enables a broad-based credit decision
support
(by incorporating a range of qualitative as well as quantitative parameters/measures) and better portfolio
management capability. A Rating Committee is in place to independently review the credit ratings assigned
by sponsor officers to the respective proposals. The Bank also undertakes an annual review of the Business
Continuity and Disaster Recovery Plans of all its offices. Each plan is vetted for completeness with regard
to critical Business Continuity Risk Events and safeguards in place, for mitigating the impact thereof.
RIGHT TO INFORMATION
Exim Bank of India, as a public authority as defined in the Right to Information Act, 2005, is compliant
with the Act. Citizens of India may apply for information under the provisions of the Act by communicating
the same to the Central Public Information Officer of the Bank or any of the Assistant Public Information
Officers of the Bank as mentioned on the website.
JOINT VENTURE
Global Procurement Consultants Ltd. (GPCL) conceived and promoted by Export-Import Bank of India as a
private sector outfit in the year 1996, is a joint venture between Exim Bank and 11 other reputed private and
public sector companies. GPCL was a pioneering concept brought to reality through a synergetic partnership
among industry leaders in sectors such as Agriculture, Energy, Industries, Mining, Transportation, Water
Resources and more. GPCL, in the past year, has broadened its range of services built around The
\
procurement function to cover areas such as project identification, concept studies, preparation and review
of reports, functioning as a lender’s engineer, undertaking due diligence of a project, project monitoring,
evaluation, capacity building and a variety of support services to the bilateral and multilateral lending
agencies. The company recorded a consultancy income of ` 44.59 million in 2015-16 with a pre-tax profit of
` 12.70 million.
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CHAPTER-4
AND PRESENTATION
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The Bank’s Research and Analysis Group offers a range of research insights on aspects of international
economics, trade and investments through qualitative and quantitative research techniques. The research
work carried out in the Group under the broad classification of regional, sectoral and policy related studies,
are published in the form of Occasional Papers, Working Papers, Books, etc
The research studies undertaken during the year are:
• Multilateral Developpment Bank-Funded Projects: Recent Trends and Opportunities for Indian Exporters
• Focus Africa: Enhancing India’s Engagements with Southern African Development Community (SADC)
• Act East: Enhancing India’s Engagements with Cambodia, Lao PDR, Myanmar and Vietnam
(CLMV)
4.2
Broad Terms And Conditions of EXIM
Eligible Indian Indian exporters with satisfactory track record and sound financials.
companies
Quantum of The Buyer’s Credit would generally not cover more than 85% of the
Credit contract value, with the balance 15% being paid by the project authority
as advance or down payment.
Rate of Interest The interest rate payable by eligible overseas borrowers under the
Programme will have a tenor linked pricing. The current rates are as
follows:
• LIBOR (6M) + 1.25% p.a. for tenor ≤ 8 years;
• LIBOR (6M) + 1.50% p.a. for tenor of >8 - 12 years; and
LIBOR (6M) + 1.75% p.a. for tenor of >12-15 years. These rates will
be subject to review by Exim Bank on yearly basis (or more frequently
if there are upheavals in the external environment).
Interest Charges and fees payable by the Indian company including a suitable
Differential and interest differential, as determined by Exim Bank.
Charges / Fees
payable by the
Indian company
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NEIA Guarantee NEIA’s Comprehensive Risk Cover policy, indicative guarantee fees to
Fee be borne by seller / buyer, as may be agreed.
Details of Guarantee fees for the principal payable as per EGCG country
classification is stated as under:
Country Classification by Guarantee Fee rate Guarantee Fee rate
ECGC for 100% coverage for 150 %
coverage
Countries Rated 2% 3%
A1, A2
Countries Rated 3% 4.5%
B1 , B2
Countries Rated 3.5% 5.25%
C1, C2 and D
Guarantee fee on interest component would be payable at 1% p.a. on an
annual basis.
Tenor / Credit period would usually be 8 to 12 years, and longer credit period
Repayment (upto 15 years) will be considered on merits of the proposal.
Period
Security • Sovereign guarantee in the event the borrower is other than the
Ministry of Finance of the borrowing country.
• Any other security as may be stipulated on a case-to-case basis.
The cost of the lender’s engineer will be borne by the Indian Exporter.
Indian Content Goods and services for minimum 75% of the value of goods and
services covered under the Scheme must be of sourced from India. A
suitable relaxation, not exceeding 10%, may be considered for
exceptional reasons, especially in case of projects having civil
construction.
4.3 Export Import Bank of India - Small & Medium Enterprises & Agricultural finance
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 upto 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 upto 19 employees as ‘very small’, between 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
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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.
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 verysimple 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 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).
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 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.
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 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. Apart from financing, the Bank also provides a range of advisory services to Agri
exporters. 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, Government of India, NABARD, APEDA, Small Farmers' Agri-Business
Consortium (SFAC), and National Horticultural Board etc. Apart from financing, the Bank also provides a
range of advisory services to Agri-exporters. 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.
Initiatives by Exim Bank for both Small and Medium Enterprises & Agri finance:
0 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
0 Set up units to produce value-added products from organic tamarind grown in the area
0 Steps are on to set up an export oriented coco-peat projects
0 To market products made out of palm leaves and handmade papers in Europe through our overseas
offices.
1) To devise marketing strategy for marketing local handicrafts to foreign tourists through 5 star hotels.
2) Exim Bank has signed Memorandum Of Cooperation with BASIX, Hyderabad. BASIX promotes
development for the rural poor and women, mainly through Micro-credit and Micro Finance.
Highlights of MoC:-
a) joint consultancy studies, b) productivity
enhancement,
c) market linkages, capacity building, d) entrepreneurship
development,
e) commercialization of India's rural sector in overseas market
f) technical assistance to micro and small-enterprises in the farm and non-farm sectors in other
developing countries,
3) Exim Bank along with BASIX to organise skill upgradation workshop for handloom weavers in
Mahabubnagar Mandal & for tussar silk weavers in Kosgi, Andhra Pradesh
4) BASIX in association with Govt. of Rajasthan and UNDP is engaged in discussions for developing
export clusters in Rajasthan including Stone Carving and Dari Cluster in Lawan, Dausa and Pottery
Cluster in Basawa.
a) Exim Bank is engaged in helping the clusters in product development and establishing export
market linkages, organizing workshops and training programs for skill upgradation of rural artisans.
b) Exim Bank’s Dubai ( formerly Budapest ) office helped in exporting sandstone slabs to Hungary
5) Exim Bank has signed a Memorandum of Cooperation with Uravu (an NGO involved in employment
generation programs in the bamboo sector for tribal & poor families in Waynad, Kerala) to provide
larger visibility to bamboo-based handicraft products. Highlights of MoC:-
a) Facilitate promotion of Uravu's or its associates' products in overseas market.
b) Identification of suitable buyers / partners by Exim Bank for facilitating export
business of Uravu and its associates.
c) Exchange of information on international markets for various products, technology, trade, business
and investing opportunities to facilitate increased co-operation for commercial exploitation in overseas
markets.
d) Conducting joint studies and research in areas of mutual interest
6) Exim Bank has initiated discussion with handloom weavers cooperative societies in Fulia (West
Bengal) for marketing their products overseas
7) National Institute of Fashion Design, Handloom & Handicraft Export Promotion Council and
Directorate of Handloom, Govt. of West Bengal participated in the discussions at Exim’s office in
Kolkata
8) One suggestion under discussion is to form a marketing company with equity participation by the
weavers co-op, West Bengal Govt. and Exim Bank which will take up marketing of the products
9) Feasibility report under preparation by Indian Institute of Social Welfare & Business Management,
Kolkata
10) Exim Bank is also associated with rural knowledge centre of M.S.Swaminathan Research
Foundation for providing technology inputs to rural areas.
Recent Developments :
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.
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 based solution provider to enable small enterprises to prepare business plans with
international market in focus
EXPORT CONTRACTS:
During FY 2015-16, 95 contracts amounting to ` 225.51 billion covering 39 countries were secured by 50
Indian exporters, as against 105 contracts worth ` 497.81 billion covering 40 countries, secured by 56 Indian
exporters during FY 2014-15. The contracts secured during the year comprised 55 turnkey contracts valued
at ` 114.12 billion, 18 construction contracts valued at ` 97.87 billion, 10 supply contracts valued at `
12.37 billion and 12 technical consultancy and services contracts valued at ` 1.15 billion.
There has been an apparent decline in the project export contracts secured by Indian companies during
the year ended March 31, 2016, vis-àvis the previous year; this actually reflects a data gap. Under the
Working Group Mechanism, the Bank had to mandatorily accord post-award approval to all project
export contracts above US$ 100 mn; consequently, the Bank also served as a central agency for
collation of data on project export contracts secured by Indian companies. Subsequently, the RBI, in
July 2014, decided to dispense with the structure of the Working Group. The RBI further announced
that Exim Bank/ commercial banks can now consider awarding post-award approvals without any
monetary limit and permit subsequent changes in the terms of post award approval within the relevant
Foreign Exchange Management Act guidelines/regulations. In view of the above developments, the
Bank no longer has access to comprehensive data on project exports. The figures for the current
financial year, therefore, represent only those project export
contracts that were referred to the Bank for approval and assistance and are not comparable with figures for
the previous year.
Some major projects:
• Engineering, Procurement, Construction contract for design, construction, installation, commissioning
and testing of Border Infrastructure Project in Oman, being executed by Engineering Projects (India) Ltd.
• Contract of Design Competition for the Re-
Front End Engineering Desing and Engineering, Procurement, Construction and Commissioning of the
Effluent Treatment Plant of the Refinery and Petrochemical Integrated Development project, Pengerang,
Malaysia, being executed by VA Tech Wabag Ltd.
• Contract for design, supply, installation, testing and commissioning of 183 km double circuit 400 kV
overhead transmission line and double wired 72 fibres optical ground wire in Abu Dhabi, being executed
by KEC International Ltd.
• Execution of a Road construction and maintenance project in Madrid City, Spain, being executed by
IL&FS Transportation Networks Ltd.
• Engineering, Procurement and Construction of 2X35 MW Peat-Fired Power Plant in Rwanda, being
executed by Shapoorji Pallonji & Company Pvt. Ltd.
• Contract of Engineering, Procurement and Construction of Floating, Production, Storage and Offloading
vessel awarded to Shapoorji Pallonji & Company Pvt. Ltd.’s Joint Venture, Armada Madura EPC Ltd.
(AMEL), Marshall Islands.
BUYER’S CREDIT
Buyer’s Credit is a unique programme of Exim Bank under which the Bank facilitates Indian exports
by way of extending credit facility to overseas buyers for financing their imports from India. Under
Buyer’s Credit programme, Exim Bank makes payment of eligible value to Indian exporters, without
recourse to them. During FY 2015-16, the Bank extended short term
Buyer’s Credit facility aggregating ` 5.17 billion to 6 overseas companies. Disbursements under
Buyer’s Credit Programme aggregated ` 15.80 billion for xports to countries that include Bangladesh,
Cote d’Ivoire, Ghana, Kenya, Mozambique, Nigeria, South Africa, Tanzania, Thailand, UAE, USA,
Uganda, United Kingdom, Zambia and Zimbabwe. The products exported under Buyer’s Credit
included transport vehicles and auto spare parts, engineering goods, nd jewellery, steel wires and wire
rods, fuel and furnace oil, yarn, etc. Several exporters from s agro-based products and commodities,
gold and diamomall and medium enterprises were beneficiaries under the Buyer’s Credit Programme,
receiving non-recourse payment. The Bank has laid strong emphasis on enhancing India’s Project
Exports, the funding options for which have been strengthened with the introduction of the Buyer’s
Credit under GOI’s National Export Insurance Account (BC-NEIA) programme. The Bank has
sanctioned an aggregate amount of US$ 2.19 billion, for 22 projects, valued at US$ 2.49 billion, as on
March 31, 2016, including the supply, erection and commissioning of a water treatment plant and
distribution to reservoirs across the Dambulla region in Sri Lanka; setting up of an integrated LPG and
bitumen storage facility at the Beira Port in Mozambique; plant and design-build contract for civil,
mechanical and engineering works for the Aluthgama, Mathugama and Agalawatta integrated water
supply project in Sri Lanka; plant and design – build contract for civil, mechanical and engineering
works for Polgahawela, Pothuhera and Alawwa Integrated Water Supply Project in Sri Lanka; Plant
and Design–Build Contract for Civil, Mechanical and Engineering Works for Kundasale-Haragama
Water Supply Project in Sri Lanka; and supply of vehicles and spares to Zimbabwe, Tanzania and
Senegal. The Bank has also given in-principle commitments for an aggregate amount of
US$ 5.11 billion supporting 36 projects valued at US$ 6.27 billion, under the BC-NEIA at the behest of
several leading Indian project exporters.
LINES OF CREDIT:
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 developmental and infrastructure projects, equipment, goods and services from India, on
deferred credit terms. During the year, the Bank extended nine LOCs, aggregating US$ 2.61 billion, to
support export of projects, goods and services from India. LOCs extended by Exim Bank during the
year include LOCs to the Governments of Bangladesh, Cote d’Ivoire, Democratic Republic of Congo,
Guinea, Guyana, Myanmar, Tanzania and Zimbabwe. These LOCs will finance and catalyse exports
by way of financing projects such as electricity interconnection project, development of power
distribution project, strengthening of health systems, renovation/upgradation of thermal power plant,
implementation of a microwave radio link, road linkage project and financing various social and
infrastructure development projects (such as power, railways, road transportation, information and
communication technology, shipping, health and technical education sectors). Exim Bank has built up
a portfolio of 203 LOCs spread across 63 countries, with credit commitments aggregating US$ 14.27
billion, under which projects are at various stages of implementation.
The Bank has a comprehensive programme covering equity finance, loans, guarantees and advisory services
to support Indian outward investment. During the year, 31 corporates were sanctioned funded and
non-funded assistance aggregating ` 56.96 billion for part financing their overseas investments in 15
countries. So far, Exim Bank has provided finance to 563 ventures set up by 436 companies in 78 countries.
Overseas investments supported during the year include acquisition of a colouring business for food,
beverages and industrial pigments in Australia, establishment of a university in Antigua, acquisition of a
company manufacturing engineering products in Romania and acquisition of a logistics company in
Australia.
Aggregate assistance extended for overseas investment amounts to ` 491.46 billion covering various
sectors including pharmaceuticals, home furnishings, readymade garments, construction, paper and
paper products, textiles, garments, chemicals, dyes, computer software and IT, engineering goods,
natural resources (coal and forests), metal and metal processing, agriculture, agro-based products,
steel, oil and gas.
• A vendor agreement was signed by Panchachuli Women Weavers Association with USA based e-
commerce company Novica to sell handwoven products in the USA market via its e-commerce platform.
EVENTS/ EXHIBITIONS;
The Bank in partnership with Surajkund Mela Authority assisted 15 craftsmen to display and sell their
products at Surajkund Mela which was held in Haryana during February 2016. The internationally
acclaimed event drew large number of buyers and helped the artisans find new market opportunities.
The Bank also supported weavers and artisans during the Kala Ghoda Arts Festival event held in Mumbai
during February 2016. The Festival served as a platform for grassroot artisans to showcase their products
and helped in securing several new enquiries and direct sales.
The Bank, in association with Concern India Foundation and Secure Giving, organised and supported
Traditional and Tribal Art Exhibitions in Chennai, Mumbai and New Delhi. Traditional and tribal paintings
originating from various states across India; namely, West Bengal, Gujarat, Odisha, Madhya Pradesh,
Rajasthan, Bihar, Telangana and Andhra Pradesh were exhibited and sold.
The Bank also offered assistance to Jaipur based, Anoothi, by way of booth space at Home Expo India event
in New Delhi. The event was organised by Export Promotion Council for Handicrafts. The event provided
access to a large number of buyers and helped Anoothi find new business opportunities in both local and
overseas marke
The Bank in association with the ADB organised a series of seminars on business opportunities in ADB
funded projects at Chennai, New Delhi, Guwahati and Jaipur. The seminars have enabled sharing of
information on the nature of business opportunities for suppliers, contractors and consultants under
multilateral funded projects and outlined learnings for Indian companies for effective participation in such
projects. Similarly, two seminars on business opportunities in the World Bank funded projects were
organised at New Delhi and Bengaluru. A workshop on procurement reforms in World Bank funded
projects was also organised at New Delhi.
A knowledge sharing seminar on ‘Energy Efficiency Financing for Indian Banks’ was organised by the
Bank in association with EBRD in Mumbai. At the seminar, the EBRD delegation presented the energy
efficiency financing track-record of the EBRD, which has allowed it to grow its energy efficiency
investments to approximately 25 per cent of the overall annual business volume of the Bank. The aim of the
seminar was to create interest among Indian Banks to adopt similar energy efficiency financing structures in
their institutions, so as to identify more consistently energy efficiency opportunities among their clients and,
hence, to scale up this business line.
• Two seminars in Delhi and Ahmedabad on “Capacity Building Programme on Promoting Trade and
Investments with BRICS countries” in association with Federation of Indian Chambers of Commerce and
Industry.
• A seminar at Bhubaneswar on “International Trade Facilitation” in association with World Trade Centre.
• A series of 9 seminars were conducted in association with FIEO on topics such as “Opportunities and
Challenges in Foreign Trade”, “Enhancing Foreign Trade in India”, “Energising Entrepreneurs for
International Trade”, “Promoting International Trade and Investments” in Noida, Pune, Vizag, Varanasi,
Madurai, Mangalore, Jaipur, Vadodara and Kanpur.
in Africa. KPDC is Exim Bank’s joint venture company with IL&FS, AfDB and State Bank of India.
The Bank also organised a seminar titled “Focus Africa” on October 27, 2015, which was inaugurated by
Mr. Arun Jaitley, Union Minister for Finance, Corporate Affairs and Information and Broadcasting,
Government of India. The Seminar saw participation of senior level delegates from institutions and
Governments of the African countries and senior representatives from the African and Indian business
community. There was also a special session by Mrs. Nirmala Sitharaman, Union Minister of State
(Independent Charge) for Commerce and Industry, Government of India. Mr. Piyush Goyal, Union Minister
of State (Independent Charge) for Power, Coal, New and Renewable Energy, Government of India, also
spoke at the seminar.
The Bank organised a number of bilateral meetings with representatives from African nations during the
IAFS to improve the Bank’s relations with corresponding institutions and governments in Africa.
ADFIAP AWARD:
The Bank was conferred the Outstanding Development Project Award 2016 under the “Trade Development”
category by the Association of Development Financing Institutions in Asia and the Pacific (ADFIAP)
during its 39th Annual Meeting held in Apia, Samoa. The ADFIAP Development Award recognises and
honours ADFIAP member institutions, which have assisted projects that have created a development impact
in their respective countries. Awards are given to members, which in the judgment of the ADFIAP Awards
Board, have implemented or enhanced outstanding and innovative development projects during the
immediate past year. ADFIAP has recognised Exim Bank’s contribution to development by conferring
the Trade Development Awards for the Bank’s various innovative products. The ADFIAP Trade
Development Award was in recognition of Exim Bank’s support to Nyaborongo Hydropower Plant at
Rwanda which contributes nearly 18 per cent to the national power grid, as the country strives to reach its
target of 563 MW by 2017.
EXIM BANK SUPPORT TO INDIAN STATES FOR PROMOTION OF EXPORTS;
Being the premier export finance institution of the country, set up to finance, facilitate and promote India’s
international trade, the Bank has been actively engaged in promoting exports from Indian states and
supporting regional entrepreneurs to explore opportunities overseas.
The Bank brought out a Study titled, “Exports from West Bengal: Potential and Strategy”, highlighting
industries which are traditionally strong in the State and which could be further strengthened, while
addressing the challenges faced by them in the State. The Study was released at the 2nd Global Bengal
Business Summit in January 2016 by the Hon’ble Chief Minister of West Bengal.
With its presence through Regional Offices (ROs) in various Indian States, the Bank is desirous of further
extending funding facilities to various exporters so as to provide them opportunity to access the global
market. Towards this end, the Bank and the Government of Andhra Pradesh have entered into an MOU for
promotion of exports from Andhra Pradesh. Exim Bank seeks to support the exporters having operations in
Andhra Pradesh in achieving higher exports by facilitation of market linkages through its market
advisoryservices, which will assist in identifying suitable partners. Besides, the Bank would help develop
skills through capacity building workshops and help the exporters’ participation in select trade fairs and
exhibitions.
The solar projects, mainly located in Africa and South America, are identified by International Solar
Alliance (ISA). These will include on-grid as well as off-grid projects like rooftop solar and irrigation
pumps powered by solar panels. Exim Bank has already provided Lines of Credit (LOCs) worth $226
million to finance 16 solar projects in various developing countries.
Export-Import Bank of India (Exim Bank) will finance 27 solar power projects worth $1.4 billion spread
across 15 countries. The solar projects, predominantly located in Africa and South America, are identified
by International Solar Alliance and will include on-grid as well as off-grid projects like rooftop
solar and irrigation pumpspowered by solar panels, reported BusinessLine.
“Exim Bank has already provided Lines of Credit (LOCs) worth $226 million to finance 16 solar projects in
various developing countries,” David Rasquinha, managing director, Exim Bank was quoted as saying in the
report.
Rasquinha was speaking on the sidelines of ‘Financing Solar Projects under Government of India’s Lines of
Credit’ programme held in Chennai recently. The programme was organized by Ministry of External Affairs
in collaboration with the EXIM Bank to create awareness about the opportunities available through the
Government of India’s Lines of Credit in solar energy.
“As an agent of Government of India, we are trying to promote solar power projects across the world,”
Rasquinha said.
T. S. Tirumurti, Secretary, Economic Relations, Ministry of External Affairs, in his address to the audience,
talked about the GoI’s Development Partnership, which he remarked was a key aspect of the India’s foreign
policy. The Development Partnership is a pillar of South-South cooperation, and the Lines of Credit
mechanism is a major part of the initiative through which India assists developing countries by providing
them with low-interest soft loans.
4.11 LINES OF CREDIT PROCEDURAL FLOW CHART
1. Exim Bank signs agreement with Borrower and announces when effective.
2. Exporter checks procedures and service fee payable, if any, 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 his negotiating bank, in
India.
6. Importer establishes L/C in favor of Exporter.
7. Exporter ships goods.
8. Exim Bank/commercial bank negotiates shipping documents and pays exporter.
9. EXIM Bank reimburses commercial bank on receipt of claim and debits LOC account of the Borrower.
10. Borrower repays EXIM Bank on due dates
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.
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.
What are the goods eligible for being financed under the LOCs?4.12bles, raw materials and commodities is
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 debts.
4. Does the overseas importer have to open Letters of Credit (L/Cs)? Does the importer pay normal charges
payable on opening L/Cs?
Under most of the LOCs of Exim Bank, the overseas importer of Indian goods needs to open, through his
Bank, a Letter of Credit in favour of the Indian exporter, which states that the eligible value of contract
would be reimbursed by Exim Bank, directly, or where specifically designated, through the negotiating
bank in India, as per the terms of the contract approval and in accordance with the LOC Agreement
between Exim Bank and the recipient of the LOC. Since the L/C opening bank, in such cases, does not
undertake payment obligation, the L/C opening bank would only levy nominal handling charges to the
importer at whose instance the L/C is opened. Exim Bank itself can undertake negotiation of documents
under the L/Cs opened under the LOCs.
4.12 Balance Sheet as at 31st March, 2016
i)Financial Statements
a) Basis of preparation
The Balance Sheet and Profit and Loss account of Export-Import Bank of India (Exim Bank)
(General Fund and Export Development Fund) have been prepared in accordance with the
accounting principles followed in India. The financial statements have been prepared under the
historical cost convention on an accrual basis unless otherwise stated. The accounting policies
that are applied by the Bank are consistent with those used in the previous year. The form and
manner in which the Balance Sheet and the Profit and Loss Account of Exim Bank are prepared
have been provided in the Export-Import Bank of India, General Regulations, 1982 approved by
the Board of Directors with the previous approval of Government of India under Section 39 (2) of
Export-Import Bank of India Act, 1981 (28 of 1981). Certain important financial ratios / data are
disclosed as part of the “Notes to Accounts” in terms of Reserve Bank of India (RBI) Circular
DBS.FID.No.C-18/01.02.00/2000-01 dated August 13, 2005 and thereafter.
b) Use of estimates
The preparation of financial statements requires the management to make estimates and
assumptions considered in the reported amount of assets and liabilities (including contingent
liabilities) as of the date of the financial statements and the reported income and expenses for the
reporting period. The management believes that the estimates used in the preparation of the
financial statements are prudent and reasonable.
Loans and Advances shown in Balance Sheet comprise only principal outstanding net of provisions for
Non-Performing Assets (NPA). Interest receivables are grouped under “Other Assets”.
Loan Assets are classified into the following groups: Standard Assets, Sub-standard Assets, Doubtful
Assets and Loss Assets, taking into consideration the degree of credit weaknesses and extent of
dependence on collateral security for realisation of dues. Classification of loan assets and
provisioning are as per RBI guidelines issued to All-India Term Lending Institutions.
iv) Investments
(a) Fixed Assets are stated at historical cost less accumulated depreciation.
(b) Depreciation is provided for on straight-line method basis at the following rates:
Asset Depreciation Rate
Owned Buildings 5%
Furniture and Fixtures 25%
Office Equipments 25%
Other Electrical Equipments 25%
Computers and Computer Software 25%
Motor Vehicles 25%
Mobile Phones and other electronics items subject to rapid
33.33%
technological obsolescence
(c) In respect of assets acquired during the year, depreciation is provided for the entire year in the
year of purchase and in respect of assets sold during the year, no depreciation is provided in the
year of sale.
(d) When a depreciable asset is disposed off, discarded, demolished or destroyed, the net surplus or
deficit is adjusted in the Profit and Loss Account.
vi) Impairment
The carrying amounts of assets are reviewed at each Balance Sheet date based on internal/external
factors to provide for impairment in the value of the assets or reverse impairment losses recognised
in previous periods, as applicable. Impairment loss is recognised when the carrying amount of an
asset exceeds recoverable amount.
(a) Assets and liabilities denominated in foreign currency are translated at the exchange rate notified
by the Foreign Exchange Dealers’ Association of India (FEDAI) at year end.
(b) Income and expenditure items are translated at the average rates of exchange during the year.
(c) Outstanding foreign exchange contracts are revalued at rates of exchange notified by the FEDAI
for specified maturities and the resulting profits/losses are included in the Profit and Loss
account.
(d) Contingent liabilities in respect of guarantees, acceptances, endorsements and other obligations
are stated at the rates of exchange notified by FEDAI at year end.
viii) Guarantees
Provisioning for guarantees is made taking into account the likely losses on projects till their
completion, for uncovered portion under ECGC policies.
ix) Derivatives
The Bank presently deals in derivative contracts such as Interest Rate Swaps, Currency Swaps, Cross-
Currency Interest Rate Swaps and Forward Rate Agreements, for hedging its assets and liabilities.
Based on RBI Guidelines, the above derivatives undertaken for hedging purposes are accounted on
accrual basis. Qualitative and Quantitative disclosures pertaining to outstanding derivative contracts
are reported in the “Notes to Accounts” in accordance with RBI’s Master Circular “Disclosure norms
for Financial Institutions” on the Balance Sheet date.
(a) Provident Fund, Gratuity Fund and Pension Fund are defined benefit schemes administered by
the Bank and the Bank’s contributions to these funds are charged to the Profit and Loss Account
for the year.
(b) Gratuity and Pension are defined benefit obligations. Liabilities towards these obligations are
provided for on the basis of actuarial valuation at the end of each financial year based on the
projected unit credit method.
(c) Liability towards leave encashment is provided for on the basis of actuarial valuation at year end.
xi) Accounting for taxes on Income
a) Provision for current tax is made, based on the tax payable under the relevant statute.
b) Deferred tax on timing difference between taxable income and accounting income is accounted
for, using the tax rates and the tax law enacted or substantially enacted as on the Balance Sheet
date. Deferred tax assets are recognised only to the extent that there is a virtual certainty of
realisation
As per AS 29 – “Provisions, Contingent Liabilities and Contingent Assets” issued by the Institute of
Chartered Accountants of India (ICAI), the Bank recognises provisions only when it has a present
obligation as a result of a past event, it is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and when a reliable estimate of the amount of the
obligation can be made.
Contingent liabilities are disclosed unless the possibility of an outflow of resources embodying
economic benefit is remote.
Contingent assets are neither recognised nor disclosed in the financial statements.
1. Agency Account
As Exim Bank is acting only in the capacity of an agency to facilitate certain transactions in Iraq
relating to Indian contractors, foreign currency receivables advised to the Bank equivalent to ` 45.54
billion (previous year ` 42.96 billion) held on agency account including a sum of ` 41.15 billion
(previous year ` 38.82 billion) assigned to Government of India (GOI) are not included in the above
Balance Sheet.
2. Income-Tax
The capital of the Bank is wholly subscribed by the Central Government and the Bank does not have
any share capital. The balance of profit transferable to the Central Government in accordance with
Section 23 (2) of The Export-Import Bank of India Act, 1981 is not termed as dividend.
Consequently, dividend distribution tax is considered not payable, in the light of the judgement
passed by the Income Tax Appellate Tribunal in case no. ITA No. 2025/Mum/2000 on December 18,
2006 and hence, no provision has been made for the same.
3. a) Contingent Liabilities
Guarantees include expired guarantees of ` 1.92 billion (previous year ` 2.73 billion), yet to be
cancelled in books.
b) Claims not acknowledged as debts
The amount of ` 1.85 billion (previous year ` 1.85 billion) shown under Contingent Liabilities as
“Claims on the Bank not acknowledged as debts”, pertains to claims/counter-claims filed against
the Bank mostly by Bank’s defaulting borrowers in response to legal action initiated against them
by the Bank. None of the claims/counter-claims is considered as maintainable in the opinion of
Bank’s solicitors and none of them has reached the stage of final hearing. Based on professional
advice, no provision is considered necessary.
c) Forward Exchange Contracts, Currency/Interest Rate Swaps
i) The outstanding forward exchange contracts as at March 31, 2016 have been fully hedged.
The Bank undertakes derivatives transactions (Interest Rate Swaps, Forward Rate Agreements
and Currency-cum-interest rate swaps), for the purpose of Asset-Liability Management as per
RBI guidelines issued vide circular Ref. No. MPD.BC.187/07.01.279/1999-2000 dated July 7,
1999 and thereafter. The Bank also unwinds and re-enters such transactions based on
requirements/market conditions. The outstanding derivative transactions are captured in the
interest rate sensitivity position, which is monitored by the Asset Liability Management
Committee (ALCO) and reviewed by the Board. The credit equivalent of derivatives is
arrived at as per ‘Current Exposure’ method prescribed by RBI. The fair value and the price
value of a basis point (PV01) of derivatives are disclosed separately in the ‘Notes to
Accounts’ as stipulated by RBI. The premium or discount arising at inception of forward
exchange contracts is amortised over the life of the contracts. Any profit or loss arising on
cancellation of forward exchange contracts is recognized as income/expense for the year.
ii) The Bank is permitted to be a ‘market maker’ for offering long-dated Foreign Currency -
Rupee Swaps to clients/non-clients.
d) Profit/Loss on Exchange fluctuation
Assets and liabilities denominated in foreign currency are translated at the exchange rate notified by
the Foreign Exchange Dealers’ Association of India (FEDAI) at year end. Income and
expenditure items are translated at the average rates of exchange during the year. The notional
profit on such translation of the retained earnings on foreign currency operations during the
current year is ` 0.12 billion (previous year ` 0.07 billion).
4. Disclosure relating to Micro, Small and Medium Enterprises under the Micro, Small and Medium
Enterprises Act, 2006: There have been no reported cases of delayed payments to Micro, Small and
Medium Enterprises.
CHAPTER 5
CONCLUSION
Exim Bank is an emerging commercial bank and it plays a vital role in both small andmid term
financing of industrial and service enterprise. Since the commencement of banking operation, it has gained
enormous popularity. The bank has made significantprogress within a very short time period due to its
dynamic management.Exim Bank only completed twelve years of banking service. At the initial stage
of business, every institution has to go through the different path of survival. To achievethe confidence of
the customer, the bank must execute some improvements in itsmarketing and operational areas-Exim Bank
should try to win customers faith byproviding them efficient and dependable services, credit facility and
updating withuser friendly modern technologies. The bank should redesign all sorts of bankingprocedures to
be more users friendly, attractive and impressive.
This is an attempt is made to find out the performance rendered by the EXIM bank of India.
Developing countries like India concentrates more on increasing the value and volume of the export
turnover to attain economic developments to provide employment opportunities to utilize all the available
resources and to finance for exports. But the export sector involves high amount of risk. The Indian
exporters have to be protected from several types of risks involved in export business. Here EXIM bank
plays vital role. By improving the performance of export, bank is in better position to extend its services to
all types of exporters effectively. July 2013, Volume: 1 Issue: 7 139 EXIM banking of course, extends
beyond international banking which in its narrow sense relates to delivery of trade products and services to
business and trade Customers. Thus, The EXIM bank of India is regarded as the drivers behind global trade
and corporate globalization.This is an attempt is made to find out the performance rendered by the EXIM
bank of India. Developing countries like India concentrates more on increasing the value and volume of the
export turnover to attain economic developments to provide employment opportunities to utilize all the
available resources and to finance for exports. But the export sector involves high amount of risk. The
Indian exporters have to be protected from several types of risks involved in export business. Here EXIM
bank plays vital role. By improving the performance of export, bank is in better position to extend its
services to all types of exporters effectively. July 2013, Volume: 1 Issue: 7 139 EXIM banking of course,
extends beyond international banking which in its narrow sense relates to delivery of trade products and
services to business and trade Customers. Thus, The EXIM bank of India is regarded as the drivers behind
global trade and corporate globalization.
The achievements of the past three decades provide a strong foundation to EXIM Bank from where it
will continue to catalyze India’s international trade and investment. The Bank is committed to go beyond
traditional financing and facilitate exports of a variety of products and services which have the potential to
go overseas, by creating a niche for them in the international business arena. The Bank operates a wide
range of financing programmes aimed at enhancing the export competitiveness of Indian companies. In
special cases EXIM Bank is providing import finance programmes also. The Bank has in place an
innovative facility to support globalisation of rural industries through its grassroots initiatives. But it is very
clear from the data disclosed by bank in its annual reports that Bank is more focused towards the project
exports than other finance programs of the bank. Therefore the exporters (other than project exporters) are
not getting satisfactory financing services from EXIM Bank. They rely on other commercial banks to get the
credit for their export orders.
BIBLIOGRAPHY
BOOKS;
WEB SITES:
www.rbi.org.in
www.eximbankindia.com
www.commerce.nic.in
www.eximbankagro.com
www.eximcomm.com.