Export Import Bank of India (EXIM Bank) was established by an act of Parliament the

Export-Import Bank of India Act 1981 on the 1st January 1982. It is a wholly government
owned financial institution, se: up for the purpose of financing, facilitating and promoting
India's foreign trade. The Bank commenced operations on the 1st March 1982.
The Export-Import Bank (Exim bank) was set up on January 1, 1982 to take over the
operations of international finance wing of the IDBI
Various objectives of the EXIM Bank are:
To financing, facilitating and promoting India’s foreign trade.

To provide financial assistance to exporters and importers

To function as a head financial institution for coordinating the working of other institutions
engaged in financing of exports and imports of goods and services.

Financial capacity
The authorised capital of Exim bank is Rs. 200 crore and paid-up-capital is Rs. 100 crore
wholly subscribed by the Central Government.

The bank can raise additional resources through borrowing from Government of India, from
RBI and from the market through the issue of bonds and debentures.

The Bank provides financial as well as value-added services to Indian exporters. Assistance is
given to export-oriented units (EOUs) by way of term loans in Indian rupees or foreign
currencies for setting up new production facilities, expansion/modernization or upgradation
of existing facilities and for acquisition of production equipment or technology.

Organisation and Management:

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

The Exim Bank is managed by a Board consisting of a Managing Director who is the
Chairman and 17 Directors representing different areas. They are Secretary to the Department
of Industrial Board, Commerce Secretary, Finance Secretary, Secretary to Banking, Secretary
IDBI, Secretary ECGC Secretary RBI, 3 directors representing other scheduled commercial
banks, 4 Directors chosen from export community and 3 others representing ministries and
departments.

EXIM bank plays a role of coordinator, financer, consultant and remoter with regard to
India's foreign trade. These services of EXIM bank can be studied under two broad
categories:

Fund based Assistance of EXIM Bank:

Exam bank also provides refinance facilities to the commercial bank and financial institutions
against their export-import financing activities.

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Functions of Exim Bank

The important functions of Exim Bank are as follows:

It provides direct financial assistance to exporters of plant, machinery and related service in
the form of medium-term credit.

Underwriting the issue of shares, stocks, bonds, debentures of any company engaged in
exports.

Providing finance for joint ventures in foreign countries.

Undertaking merchant banking functions of companies engaged in foreign trade.

It provides rediscount of export bills for a period not exceeding 90 days against short-term
usance export bills discounted by commercial banks.

The bank gives overseas buyers credit to foreign importers for import of Indian capital goods
and related services.

Developing and financing export oriented industries.

Fee based services

Providing technical and administrative assistance to the parties engaged in export and import
business

Collecting and compiling the market and credit information about foreign trade.

Activities of Exim Bank:

Line of credit: The Exim bank provides line of credit to foreign importers so that exports
from India can increase. Under line of credit, exim bank will provide finance to the Central
bank of the borrowing country which in turn will provide to the commercial bank and
ultimately the credit will reach the importer. This kind of credit is safe as there is guarantee of
funds at every stage.
Buyer's Credit is our unique credit facility programme that motivates Indian exporters to
explore new geographies. Through this programme, the overseas buyer can open a "letter of
credit" in favour of the Indian exporter and can import goods and services from India on
deferred payment terms

Buyer's Credit: Under this scheme, the EXIM bank offers credit to overseas buyers to
finance import of eligible goods from India on deferral credit terms.

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Line of Credit: Under this scheme, the EXIM bank offers credit to foreign governments and
their agencies and overseas financial institutions to finance import of eligible goods from
India.

letter of credit

A commercial letter of credit is a guarantee from the issuing bank that the amount stated in
the letter will be paid when certain conditions are met. A buyer of imported goods obtains the
letter from his bank before placing an order. The seller of the goods verifies through his bank
that the letter of credit is valid and then ships the buyer's order. The seller then takes the
required documentation to the bank to collect on the letter of credit, the seller's bank draws
the money from the issuing bank, and the issuing bank collects from the buyer.

forfeiting
A forfaiter is typically a bank or a financial firm that specializes in export financing.
Forfaiting is a form of export financing in which the exporter sells the claim of trade
receivables to the forfaiter and gets an immediate cash payment.

 Step 1 : Forfaiter and Exporter agreed upon a Forfaiting Agreement. 

 Step 2 : Sales Contract has been signed between Exporter and Importer.
 Step 3 : Shipment is initiated by the exporter.
 Step 4 : The importer obtains a guarantee from his bank.
 Step 5 : The importer obtains a guarantee from his bank.
 Step 6 : Exporter gives documents to forfaiter.
 Step 7 : Forfeiter controls the documents pays for them as indicated on the Forfaiting
Agreement.
 Step 8 : Forfeiter presents documents to bank at maturity date.
 Step 9 : Importer pays to bank at maturity date.
 Step 10 : Bank pays to forfeiter at maturity date. 

EXIM Bank widely includes the following:

•Direct financial assistance
•Foreign investment finance
•Term loaning options for export production and export development
•Pre-shipping credit
•Buyer's credit
•Lines of credit
•Reloaning facility
•Export bills rediscounting
•Refinance to commercial banks

Working Capital Finance (For Exporting Companies)

Funded

Working Capital Term Loans [< 2 years]

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Long Term Working Capital [up to 5 years]

Export Bills Discounting

Export Packing Credit

Cash Flow financing

Non-Funded

Letter of Credit Limits

Guarantee Limits

Export Finance

Pre-shipment Credit: Pre shipment Finance is provided for WC for purchasing of Raw
material, Processing, packaging,, Transportation, warehousing of the goods meant for Export

Post Shipment Credit: Post- shipment Finance is provided in order to bridge the gap between
shipment of Goods and the realisation of Proceeds

Buyers' Credit

Suppliers' Credit [including deferred payment credit]

Bills Discounting

Export Receivables Financing

Warehousing Finance

Export Lines of Credit (Non-recourse finance)

Lease Finance: It provides lease finance for importing capital equipment. Under cross border
leasing, the lessor may be in a foreign country, while the lessee will be in India. The Exim
bank helps the Indian lessee in obtaining the capital equipment on lease by making the lease
payment in terms of foreign exchange. It also helps for import leasing, wherein both the
lessor and lessee will be Indians but the equipment imported on lease may be from U.S. A or
U.K.

Finance to export projects: Export projects in Third World countries are financed. India has
taken up various export projects in Third World countries, such as railway project in
Tanzania. Similarly, projects on some of the oil wells in Kuwait and Iraq taken up by Oil and
Natural Gas Commission (ONGC) are also financed by Exim bank.

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Established by the Government of India, commenced operations in 1982 under the Export-
Import Bank of India Act, 1981

The Export-Import Bank (Exim bank) was set up on January 1, 1982 to take over the
operations of international finance wing of the IDBI and to provide financial assistance to
exporters and importers and to function as a head financial institution for coordinating the
working of other institutions engaged in financing of exports and imports of goods and
services.

The bank can raise additional resources through borrowing from Government of India, from
RBI and from the market through the issue of bonds and debentures. Exam bank also
provides refinance facilities to the commercial bank and financial institutions against their
export-import financing activities.

Its main objects are:

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

 To pay specific attention to the exports of capital goods;

 Export projection;

 To facilitate and encourage joint ventures and export of technical services and
international and merchant banking;

 To extend buyers’ credit and lines of credit;

 To tap domestic and foreign markets for resources for undertaking development and
financial activities in the export sector.

The important functions of Exim Bank are as follows:

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Financing of export and import of goods and services both of India and of outside India.

2. Providing finance for joint ventures in foreign countries.

3. Undertaking merchant banking functions of companies engaged in foreign trade.

4. Providing technical and administrative assistance to the parties engaged in export and
import business.

Offering buyers’ credit and lines of credit to the foreign governments and banks.

6. Providing advance information and business advisory services to Indian exports in respect
of multilaterally funded projects overseas.

(i) It provides direct financial assistance to exporters of plant, machinery and related service
in the form of medium-term credit.

(ii) Underwriting the issue of shares, stocks, bonds, debentures of any company engaged in
exports.

(iii) It provides rediscount of export bills for a period not exceeding 90 days against short-
term usance export bills discounted by commercial banks.

(iv) The bank gives overseas buyers credit to foreign importers for import of Indian capital
goods and related services.

(v) Developing and financing export oriented industries.

(vi) Collecting and compiling the market and credit information about foreign trade.

Finance for exports and Imports: Exim bank helps by providing finance for exports and
imports of goods as well as services from India.

Finance on deferred basis: Exim bank provides finance on deferred basis for importing
capital equipment and other machinery.

Line of credit: The Exim bank provides line of credit to foreign importers so that exports
from India can increase. Under line of credit, exim bank will provide finance to the Central

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bank of the borrowing country which in turn will provide to the commercial bank and
ultimately the credit will reach the importer. This kind of credit is safe as there is guarantee of
funds at every stage.

Refinance in foreign exchange: The Exim bank obtains bulk loan in foreign currencies in
the foreign exchange market and provides refinance to the financial institutions, providing
export finance. Different types of exporters may require different foreign currencies and these
are obtained by the Exim bank at a competitive interest rate and are given to commercial
banks for lending to exporters. It is due to this, the commercial banks are able to provide pre-
shipment and post-shipment finance to different exporters.

Contribution to Equity fund: The Exim bank also contributes to the shares, debentures of
Indian companies involved in exports. Export companies while raising capital, may issue
shares which may be partly financed by Exim bank.

Consultancy Services: The Exim bank also provides technical, administrative and other
assistance to exporters. Export projects are analyzed by the Exim bank from the point of view
of technical, managerial, marketing and financial feasibility.

History of Exim bank:

For a long time, the need for a separate institution for export finance was not felt in the
country due to the closed market conditions and India’s limited share in world export. It is
only during the 1980s, the need to increase India’s export was felt, owing to increased foreign
debts, which compelled India to go for an Apex institution and the Export Import Bank
(Exim Bank) was set up in 1982.

Need for Exim Bank:

Besides, the change in the world market and the creation of World Trade Organization
(WTO) compelled India to give a fillip to its export finance. All along, it was felt that the
Indian exporter needs only rupee finance. But it is only due to a change in the export policy
of promoting more value added export, the role of Exim bank was very much felt. It is time
Exim bank provided finance for research and development as indigenous research plays a
crucial role owing to intellectual property rights.

Functions of Exim Bank

The following are the functions of Export Import bank:

1. Finance for exports and Imports: Exim bank helps by providing finance for exports and
imports of goods as well as services from India. One of the major export policies adopted by
government of India is the export of value added items. For example, all along we have been

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exporting Hades and skins from India. Now, it is ‘processed leather’ in the form of leather
goods. So, the exporter who was earning 1 or 2 dollars while exporting Hades and skins will
now earn 25 to 30 dollars when he exports in the form of leather goods. Similarly, import of
raw materials such as gold will be financed by Exim bank, since it will be exported as jewels
which is again a value added export.

2. Finance on deferred basis: Exim bank provides finance on deferred basis for importing
capital equipment and other machinery. The cost of capital equipment in foreign countries
will be more and the Indian importer cannot afford to pay lump sum payment in foreign
exchange. The Exim bank provides guarantee on behalf on the importer and enables the
importer to make payment on installment basis to the foreign exporter. Or, the bank itself
may pay in bulk to the foreign exporter and receive installment payments from the Indian
importer.

Lease Finance: It provides lease finance for importing capital equipment. Under cross border
leasing, the lessor may be in a foreign country, while the lessee will be in India. The Exim
bank helps the Indian lessee in obtaining the capital equipment on lease by making the lease
payment in terms of foreign exchange. It also helps for import leasing, wherein both the
lessor and lessee will be Indians but the equipment imported on lease may be from U.S. A or
U.K.

Finance to export projects: Export projects in Third World countries are financed. India has
taken up various export projects in Third World countries, such as railway project in
Tanzania. Similarly, projects on some of the oil wells in Kuwait and Iraq taken up by Oil and
Natural Gas Commission (ONGC) are also financed by Exim bank. All the necessary
equipment and the manpower required for such projects will be financed by the Exim bank.

5. Line of credit: The Exim bank provides line of credit to foreign importers so that exports
from India can increase. Under line of credit, exim bank will provide finance to the Central
bank of the borrowing country which in turn will provide to the commercial bank and
ultimately the credit will reach the importer. This kind of credit is safe as there is guarantee of
funds at every stage.

6. Refinance in foreign exchange: The Exim bank obtains bulk loan in foreign currencies in
the foreign exchange market and provides refinance to the financial institutions, providing
export finance. Different types of exporters may require different foreign currencies and these
are obtained by the Exim bank at a competitive interest rate and are given to commercial
banks for lending to exporters. It is due to this, the commercial banks are able to provide pre-
shipment and post-shipment finance to different exporters.

7. Contribution to Equity fund: The Exim bank also contributes to the shares, debentures of
Indian companies involved in exports. Export companies while raising capital, may issue
shares which may be partly financed by Exim bank. The bank may extend this facility as a
temporary finance as it will not retain the shares permanently. As a part of investment policy
or by way of portfolio investment, it may invest in the shares and debentures of companies
involved in exports.

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8. Consultancy Services: The Exim bank also provides technical, administrative and other
assistance to exporters. Export projects are analyzed by the Exim bank from the point of view
of technical, managerial, marketing and financial feasibility. When it finds a project viable,
on the above grounds, it will not hesitate to fund it.

Apart from the above assistance, it is also providing discounting facilities for export bills.
There is also export finance for computer software exports. The exporters are provided with
market development assistance so that they can undertake advertising and sales promotion
activities in foreign countries. The bank signed a memorandum of understanding (MOU) with
European Bank for Reconstruction and Development. The total assistance provided by the
Exim bank has exceeded more than Rs. 3,000 crores. In the coming years, the bank is likely
to play a major role in the export of automobiles and other non traditional items.

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