ABOUT THE STUDY

This study covers the major aspects of the EXIM bank including the products and services offered by the bank, its role in developing the Indian economy by way of helping foreign trade growth since its inception in 1982, the crucial role it plays in the Asian EXIM banks forum and also throws some highlight onto the recent initiatives taken by the bank and the recent results that it has achieved. Moreover, certain examples have also been provided in the end so as to give evidence to the essential role that the bank plays.

Objective of the study

EXIM bank, as mentioned previously, is the apex institution providing foreign trade finance. This study will throw light on the working of this apex institution and its contribution to the Indian economy so far. The objective of this study is to understand the vastness involved in foreign trade and financing foreign trade; and how the EXIM bank has played a role in facilitating foreign trade. The study also provides information about the evolution of the EXIM bank and it talks about the Asian EXIM banks forum too, so as to provide insight into the role EXIM bank plays on a global scale. This study gives a birds-eye-view of the EXIM bank, covering the essential aspects of the bank.

Hence, as the topic suggests, the objective of this study is to understand and give importance to the role played by the EXIM bank of India in the growth of foreign trade and the developmental role played in facilitating enhanced regional trade.

Research methodology

Type of research of this study is a descriptive one.

The source of data collection is secondary; the internet and annual reports published by the bank.

1. INTRODUCTION

1.1What is EXIM bank?

A financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses.

Institutional credit support plays a catalytic role in accelerating the pace of economic development of a country. In the context of developing economy of India, bank finance plays a crucial role in pushing the economy on to the progressive pathway and helping develop India.

There are 3 apex institutions in the country, which deal with major economic activities, viz. industry, agriculture and foreign trade. The Industrial Development Bank of India extends term industrial loans; the National Bank for Agricultural loans; and the Export Import Bank extends term loans for foreign trade. All these institutions are wholesale banks. They work closely with commercial banks and other state level financial institutions that operate the retail banking system in the country. The Export Import bank of India (EXIM Bank) functions as the apex financial institution which provides economic assistance to importers and exporters and has constantly strived to contribute towards Indias globalization efforts. The main objective of EXIM Bank is to promote foreign trade and particularly increase exports from India.

1.2Indias foreign trade

India's exports are growing with a positive outlook. A key part of India's sizzling economic miracle is its trade with the rest of the world, including the United States. The export potential of certain commodities in India has not been fully tapped. There is a growing need and importance of exports for our country. That is where export finance comes into picture and so do financial institutions providing export finance. Also, recent years have witnessed the emergence of developing countries as Indias import sources. The following statistics and charts give an insight into Indias growth of exports and imports.

Foreign trade growth for the past years is shown as below: (in Rupees Crore)

Trends in Indias Merchandise Trade(shown graphically) (in Rs. billion)

Indias exports, region wise(in US $ billion)

Buoyancy in Indias foreign trade can be attributed to the enhanced trade with other developing countries, and with Asian region in particular. Indias total exports to developing countries are now higher than exports to industrial countries. Consequently, developing countries now account for a larger share in Indias total exports, as compared to that for industrial countries.

Indias Imports, region wise (in US $ billion)

Recent years have also witnessed the emergence of developing countries as Indias import sources. Indias imports from other developing countries are now larger than imports from industrial countries. Sustained rise in imports from the Asian region has underlined this trend. In fact, Indias imports from the Asian region rose from US$ 2.7 billion in 1990 to US$ 48 billion in 2006 an 18-fold rise.

Active engagement in global trade has become one of the key factors in the growth of firms and the prosperity of countries. This is true not only in the case of major trading nations, but also with respect to developing countries like India. Liberalization of the foreign trade sector has been a cornerstone of the reforms of the Indian economy, with the result that the countrys share in global trade has been rising in recent years, as also the contribution of the foreign trade sector to the overall Indian economy.

2. HISTORY AND PROFILE OF EXIM BANK

Export Import Bank of India, also known as EXIM Bank of India, was established by an Act passed by the Indian Parliament in September 1981. Export Import Bank of India is fully owned by the Indian government and it started its operations in March 1982.

Capital The authorised capital of the 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:(i) Loans/grants from Central Government and Reserve Bank of India ;(ii) Lines of credit from institutions abroad ;(iii) Funds raised from Euro Currency markets ;(iv) Bonds issued in India.

It is; An Act to establish a corporation to be known as the Export-Import Bank of India forproviding financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country's international trade and for matters connected therewith or incidental thereto.

2.1Vision, Mission and Objectives of the bank

The bank has evolved its vision in the following way:

EXIM Banks mission is to facilitate globalisation of Indian Business. Their mission statement: To develop commercially viable relationships with externally oriented companies by supporting their internationalisation efforts, through a diverse range of products and services.

Functions of exim bankThe main functions of the EXIM Bank are as follows:(i) Financing of exports and imports of goods and services, not only of India but also of the third world countries;(ii) Financing of exports and imports of machinery and equipment on lease basis;(iii) Financing of joint ventures in foreign countries;(iv) Providing loans to Indian parties to enable them to contribute to the share capital of joint ventures in foreign countries;(v) to undertake limited merchant banking functions such as underwriting of stocks, shares, bonds or debentures of Indian companies engaged in export or import; and(vi) To provide technical, administrative and financial assistance to parties in connection with export and import.

The objectives of EXIM bank are:

To translate national foreign trade policies into concrete action points

To provide alternate financing solutions to the Indian exporter, aiding him in his efforts to be internationally competitive

To develop mutually beneficial relationships with the international financial community

To initiate and participate in debates on issues central to India's international trade

To forge close working relationships with other export development and financing agencies, multilateral funding agencies and national trade and investment promotion agencies

To anticipate and absorb new developments in banking, export financing and information technology

To be responsive to export problems of Indian exporters and pursue policy resolutions.

2.2Ownership and Management Structure

The EXIM Bank, as mentioned earlier, is fully owned by the Government of India and is managed by a Board of Directors with representation from the Government, financial institutions, banks and business community.

The Bank is professionally run with a staff which is drawn from six major streams: commercial and development banking, engineering, economics, accountancy, computer technology and business school graduates.

Currently, the EXIM bank has a high-powered Board of Directors comprising of the following professionals:

A Deputy Governor of Reserve Bank of India,

Chairmen of IDBI (Industrial development bank of India),

Personnel from ECGC (Export credit Guarantee Corporation),

Representatives of the Ministries of Finance, Commerce, Industry, External Affairs and Planning, Chairmen of scheduled banks and professionals from trade and industry.

What they all have in common, however, is an underlying passion for professional excellence. The creative synergy produced by a brain trust composed of individuals with vastly different styles of thinking has helped the Bank to constantly innovate, and come up with original solutions - solutions beyond banking.

Hence, the board of directors consists specifically of the following 16 personnel:

Chairman and Managing Director 5 Directors from Government of India 3 Directors from Scheduled Banks 4 Directors who are other Professionals/Experts 1 Director nominated by RBI 1 Director nominated by IDBI 1 Director nominated by ECGC

Over the last decade the staff at EXIM bank has increased from 147 personnel to 222.

EXIM Bank offers a congenial and challenging work environment. The work environment at the Bank emphasizes on office automation, open office system, an independent 'doer's' work culture, minimization of hierarchical constraints in organizational functioning, and multi-disciplinary inputs in decision making.

Also, skill upgradation is a continuing process in the Bank. The professionals undergo training in areas of relevance to the Bank in India and abroad and the corresponding training programmes are chosen and designed to develop technical and managerial skills in the professionals and an ability to initiate and innovate.

2.3Global Footprint of EX IM Bank of India

EXIM Bank of India has consciously sought to create a network of alliances with multilateral agencies, export credit agencies, development banks, and trade and invesment promotion bodies to create an enabling environment for economic cooperation. The Banks Head Office is in Mumbai. It has nine regional offices in India including Ahmadabad, Bangalore, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai, New Delhi an d Pune.

DOMESTIC OFFICES

It also has five offices overseas in Dubai, Johannesburg, London, Singapore and Washington D.C. The representative office in Washington, D.C. exists since 19 85.Over the years, EXIM Bank has developed 35 lending programmes covering all stages of the export cycle namely Import of Technology, Export Product Development, Export Production, Export Marketing , Pre-shipment, Post-shipment, Investment A broad.

2.4Corporate philosophy

EXIM Banks corporate philosophy is built on two pillars: People-orientation & Customer-focus. The Bank believes that its people are its key resource. Therefore, the Bank seeks to develop its human resources by motivating them through ugh challenging assignments, upgrading their skills through training programmes, and recognizing professional excellence. The Banks high level of office automation and a lean and multi-skilled staff enables optimum efficiency and profitability. Also, customer-responsiveness is germane to the Banks philosophy. The Bank constantly seeks to innovate and improve its product s, processes and delivery mechanisms, and thereby minimize response time and maximize customer equity. Their interactive mode of analysis and decision-making, through multidisciplinary cross-functional groups ensures that the best possible business solution is offered to the customer.

Hence, with strong business fundamentals, and in line with the increasingly competitive global trading environment, the Bank proactively seek s to enhance the competitive edge of Indian companies through a comprehensive range of financing programmes and advisory and support services which encompass all stages of the export business cycle. Towards facilitating globalization, the Bank is also involved in creating export capability in small and medium enterprises, grassroots business enterprises and agro industries. Indias project exports have evolved over the years to exhibit expertise in a wide range of activities thereby reflecting technological maturity, industrial capabilities, and growing sophistication of Indian exports, and the Banks pioneering and pivotal role in this direction has served to catalyze such exports. With India increasingly emerging as a major global investor, the Banks endeavors in this direction can be assessed from the fact that as man y as 176 Indian ventures set up by over 147 companies in 54 countries, in bot h industrial and developing as well as emerging economies, have been supported, with the Bank taking direct equity participation in select cases to enhance such ventures.

Moreover, a distinct feature worth mentioning is the EXIM bank logo:

The EXIM Bank aims to promote India's international trade. The logo reflects this. The logo has a two-way significance. The import arrow is thinner than the export arrow. It alsoreflects the aim of value addition to exports.

3. THEORETICAL PERSPECTIVE

3.1Export financing

Export financing is an important area of export business. It refers to the credit facilities extended to the exporters. In India, the export credit facilities are generally provided directly by commercial banks. RBI and EXIM bank offer refinance to the commercial banks. EXIM bank, in certain cases, participates with commercial banks in extending medium and long-term credit to exporters.

Export financing can be divided into pre-shipment and post-shipment facilities:

Pre-shipment: Pre-shipment finance includes a loan to an exporter for financing the purchase of raw materials/components, processing and manufacturing or packing of finished goods meant for exports to overseas markets. Pre-shipment finance is offered in the form of (i) Packing credit (ii) Advance against incentives and (iii) Pre- Shipment Credit in Foreign Currency (PCFC). Packing credit facilities are provided to the exporters for making necessary arrangements for executing export contracts.

Post-shipment: Post-shipment credit is extended after the shipment of goods till the date of realisation of export proceeds. This would include discounting of export invoices after the goods have been shipped.

Medium and short term loans: Finance short or medium term, is provided exclusively by the Indian and foreign commercial banks which are members of the Foreign Exchange Dealers Association. The Reserve Bank of India functions as refinancing institutions for short and medium term loans respectively, provided by commercial banks.

EXIM bank of India, in certain cases, participates with commercial bank in extending medium term loans to exporters. Commercial banks provide finance at a concessional rate of interest and in turn are refinanced by the Reserve Bank and the EXIM Bank of India at concessional rates. In case they do not wish to avail refinance, they are entitled for an interest rate subsidy.Export Credit & Guarantee Corporation (ECGC) also plays an important role through its various policies and guarantees providing cover for commercial and political risks involved in export trade.

3.2Import financing

Imports play an important role in the economy of every country, rich and poor alike. Rich countries need to import capital goods, raw materials and technology to ensure an optimum utilization of their production capacity. They need to import a wide variety of consumer goods to enable their people to enjoy a high standard of living. Poor countries need to import technology and capital equipment and sometime strategic raw materials to develop industries for accelerating pace of their development. In India the pace of industrialization, level of exports and consequently the rate of economic growth are heavily dependent upon imports. A low level of imports usual1y indicates low purchasing power of its people and also emergence of recessionary trends in economy.

India followed a restricted import policy till mid-eighties. Nothing could be imported without a license involving cumbersome procedures along with intricate documentation. Although some liberalization measures were taken in second half of eighties, real breakthrough came only in 1991. Steady progress was made in nineties in replacement of quantitative restrictions, licensing and discretionary control over imports by deregulation, simplification of procedures and protection through tariff and exchange rates. Export Import policies of 1992-97, 1997-2002 and 2002-07 were the steps in this direction. It is against the background of nature and significance of Indias import trade, it is important to know import financing methods and techniques.

Import financing involves making payment to foreign entities for the goods purchased from them. From the management decision making viewpoint, it means making decision regarding terms of payment.

This would involve:

Choosing one among several alternatives such as financing import under letter of credit, financing against bills under collection, financing imports against deferred payment, financing under foreign credit or taking import loans by export-import bank of India Arranging funds

Choice of financial institution

Choice of instrument to be used for making payment

Choice of intermediary, through whom the payment is to be made.

3.3The Regulatory Frame Work

The principal objectives of Indias Export Import Policy are to accelerate the countrys transition to an internationally oriented economy with a view to derive maximum benefit from the expanding global market. Various policy objectives are achieved basically through three legislations.

These are:

Foreign Trade (Development and Regulation) Act 1993,

Foreign Exchange Management Act 1999 and

Indian Customs and Excise Act 1962. 3.4Methods of Import Finance

The methods of import financing include:

financing under L/ C

financing against bills under collection,

financing against deferred payment,

financing under foreign credit and

finance by EXIM Bank of India

Generally, in international trade, clean credit is rare. The supplier and buyers are geographically very far and may not trust each other. The supplier either insists on advance payment or a guarantee for payment. At the same time, the buyer would also like to protect his interest and ensure that he gets the ordered goods. This is solved by a Letter of credit opened through a bank.

In this method, importer can request his banker to open a letter of credit in favour of his supplier. The L/C would include all details of goods (quantity, quality, description, etc.) and various other commercial terms and conditions. Upon shipment of goods, the supplier submits full set of documents to the bank and gets paid as per the terms of L/C if all documents are as per the L/C terms; importer obtains release of these documents from the bank either upon payment or debit to his loan account as per his arrangement with the bank. Importer gets the goods from the shipping line/forwarder against the submission of original documents received through the bank. Importer gets a loan from the bank either on Trust Receipt or hypothecation of imported goods to pay for the imports.

Where an importer contracts to pay installments, permission of RBI needs to be taken. He can obtain a loan from the bank to pay for the installment.

Imports under credit extended international financial institutions and foreign governments can be financed either through commitment (i.e. Government of India commits a part of loan to the importer and gets paid in Indian rupees) or reimbursement method i.e. after paying the supplier, the bank gets reimbursed by loan giving agency.

Also, the EXIM bank of India lends to importers to finance their export related imports.

4. ROLE OF EXIM BANK

4.1An overview

The 3 aspects where the EXIM bank stands out and plays an important role are;

EXIM banks strategy which involves catering to Indian enterprises across all sections of the economy.

Its aim to start from the Grassroot Rural Enterprises to SMEs, large Corporates & finally Line of credits to Developing Countries.

Their endeavor to support enterprises in their globalisation efforts as also to help in poverty alleviation through export linkages.

The Banks functions are segmented into several operating groups including:

Corporate Banking Group which handles a variety of financing programmes for Export Oriented Units (EOUs), importers, and overseas investment by Indian companies.

Project Finance / Trade Finance Group which handles the entire range of export credit services such as suppliers credit, pre-shipment credit, buyers credit, finance for export of projects & consultancy services, guarantees, forfeiting.

Lines of Credit Group - Lines of Credit (LOC) is a financing mechanism that provides a safe mode of on-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. EXIM Bank extends LOCs to sovereign governments, central banks, regional development banks, overseas financial institutions and other entities overseas, to enable buyers in those countries, to import equipment, goods and services from India, on deferred credit terms.

Agri Business Group, which has been put in place to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing.

Small and Medium Enterprises Group has been established to cater to the specific financing requirements of export oriented SMEs. The Group handles credit proposals from SMEs under various lending programmes of the Bank.

Export Services Group offers a variety of advisory and value-added information services aimed at trade and investment promotion.

Apart from these, there are the Support Services groups, which include: Research & Planning, Corporate Finance, Loan Recovery, Internal Audit, Management Information Services, Risk Management, Information Technology, Legal, Human Resources Management and Corporate Affairs. Four- pronged role: EXIM Bank plays a four-pronged role with regard to Indias foreign trade: those of a coordinator, a source of finance, consultant and promoter.

Coordination Role:EXIM Bank is the Coordinator of the Working Group Mechanism for clearance of Project and Services Exports and Deferred Payment Exports (for amounts above a certain value - currently US$ 100 million). The Working Group comprises EXIM Bank, Government of India representatives (Ministries of Finance, Commerce, and External Affairs), and Reserve Bank of India, Export Credit Guarantee Corporation of India Ltd. And commercial banks that are authorised foreign exchange dealers. This inter-institutional working group accords clearance to contracts (at the post-award stage) sponsored by commercial banks or EXIM Bank, and operates as a one-window mechanism for clearance of term export proposals. On its own, EXIM Bank can now accord clearance to project export proposals up to US$ 100 million in value.

Financing Services:EXIM Bank offers a diverse range of financing services for the Indian exporter, including a variety of Export Credit facilities, and Finance for Export Oriented Companies.

The role the bank plays as a promoter and a consultant are explained in the next chapter under the sub- topic Value- added services.

4.2The products and services offered by EXIM bank

A broad classification of the products and services offered by EXIM bank is shown in the chart below:

This shows the presence of EXIM bank across all stages of the business cycle.

Further, as shown in the chart below, the banks major programs are further divided into Export credit, Finance for export-oriented units and value- added services. Also, detailed services are classified as shown below. This data is as per the 2007-08 annual report of EXIM bank.

A) Export credit facilities

EXIM Bank offers the following Export Credit facilities, which can be availed of by Indian companies, commercial banks and overseas entities.

For Indian Companies executing contracts overseas

Pre-shipment credit

EXIM Bank's Pre-shipment credit facility, in Indian Rupees and foreign currency, provides access to finance at the manufacturing stage - enabling exporters to purchase raw materials and other inputs.

Supplier's Credit

This facility enables Indian exporters to extend term credit to importers (overseas) of eligible goods at the post-shipment stage.

For Project Exporters

Indian project exporters incur Rupee expenditure while executing overseas project export contracts i.e. costs of mobilization/acquisition of materials, personnel and equipment etc. EXIM Bank's facility helps them meet these expenses.

For Exporters of Consultancy and Technological Services

EXIM Bank offers a special credit facility to Indian exporters of consultancy and technology services, so that they can, in turn, extend term credit to overseas importers.

For commercial Banks

EXIM Bank offers rediscounting facility to commercial banks, enabling them to rediscount export bills of their SSI customers, with usance not exceeding 90 days.

They also offer Refinance of Supplier's Credit, enabling commercial banks to offer credit to Indian exporters of eligible goods, who in turn extend them credit over 180 days to importers overseas. Other Facilities for Indian Companies

Indian companies executing contracts within India, but which are categorized as deemed exports in the Foreign Trade Policy of India or contracts secured under international competitive bidding or contracts under which payments are received in foreign currency, can avail of credit under the banks Finance for Deemed Exports facility, aimed at helping them meet cash flow deficits.

For Overseas Entities

Buyers Credit

Overseas buyers can avail of Buyers Credit from EXIM Bank, for import of eligible goods from India on deferred payment terms.

Buyers Credit is a unique programme of EXIM Bank under which the Bank facilitates Indian exports by way of extending credit facility to the overseas buyers for financing their imports from India. Under Buyers Credit Programme, EXIM Bank makes payment of eligible value to Indian exporters, without recourse to them. Buyers credit is a safe and non-recourse mode of financing option available to Indian exporters, especially to small and medium enterprises, and motivates them to enter overseas markets.

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 goods and services from India on deferred credit terms. The Indian exporters can obtain payment of eligible value from EXIM Bank, without recourse to them, against negotiation of shipping documents. LOC is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool.

Eligible Goods

Capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the EXIM Policy of the Government of India.

B) Finance for export- oriented units

According to EXIM bank, for the purpose of financing, an Export Oriented Company is defined as any company with a minimum export orientation of 10% of net sales, or annual export sales of Rs. 5 crores, whichever is lower.

Many types of finance services are offered by the EXIM bank under this program. They are as follows:

Project Finance

For Setting up EOUs

EXIM Bank offers term loans for setting up new projects, and for acquisition of assets for modernization / upgradation / expansion of existing units. The Bank also extends 100% refinance to commercial banks, for term loans sanctioned by the lending bank to an EOU.

For Textile and Jute Industries

The Bank also extends finance to eligible units in textile and jute industries under the Technology Upgradation Fund Scheme, to enable them to upgrade their manufacturing facilities.

For Software Industry

The Bank offers a comprehensive financing / services package for the software industry. These include project / equipment finance, working capital finance, overseas investment finance, besides support for obtaining product / process certification, export marketing, and export product development. Also, to address the perceived constraint in the availability of trained software professionals, EXIM Bank extends term loans to software exporters for establishment/expansion of software training institutes. Further, the Bank also facilitates setting up of software technology parks (STPs).

For Indian Companies involved in Port Development and related activities

EXIM Bank extends terms loans to Indian companies involved in construction of ports / jetties, and for acquisition of fixed assets for stevedoring, cargo handling, storage and related activities like dry docks and ship breaking. Equipment Finance

Finance for Production Equipment:To cater to the non-project related capital expenditure of EOUs, EXIM Bank offers a line of credit for acquisition of imported / indigenous equipment, including equipment for packaging, pollution control.

For Vendors of EOUs:Under the Export Vendor Development Finance facility, the Bank offers term loans to vendors of EOUs, to enable them to acquire plant and machinery and other assets required for increasing export capability.

Working Capital Finance

EXIM Bank provides term loans (of 1 year, 1-2 years, and upto 5 years tenor) to eligible EOUs, to help them meet their working capital requirements.

For Exporting Companies

1) Funded

Working Capital Term Loans [less than 2 years] Long Term Working Capital [upto 5 years] Export Bills Discounting Export Packing Credit Cash Flow financing

2) Export Finance

Pre-shipment Credit Post Shipment Credit Buyers' Credit Suppliers' Credit [including deferred payment credit] Bills Discounting Export Receivables Financing Warehousing Finance Export Lines of Credit (Non-recourse finance) Equity Participation (In Indian Exporting Companies)To part finance project expenditure(Project, inter alia, includes new project/ expansion/ acquisition of business/company/ brands/research & development)

3) Non-Funded

Letter of Credit Limits Guarantee Limits

For Non- Exporting Companies

A few important aspects here are:

a. EXIM financing is available in Indian Rupees and in Foreign Currency

b. Term finance, except for long term working capital, is available for periods up to 10 years [in select cases 15 year finance can also be made available]

c. For interest rates there are fixed & floating options

Overseas investment finance or Finance for Ventures Overseas

The Bank has a comprehensive programme in terms of equity finance, loans, guarantees and advisory services to support Indian outward investment. EXIM Bank offers term loans to Indian companies, both for equity investment in their ventures overseas as well as for on lending purposes. Besides, EXIM Bank also undertakes direct equity stake in Indian ventures abroad, to enable Indian companies to supplement their equity with EXIM Banks equity contribution.

In short, EXIM bank provides:

Finance for Indian Company's equity participation in the overseas Joint Venture/ Wholly Owned Subsidiary

Direct Finance (Term & Working Capital) to the overseas Joint venture / Wholly Owned Subsidiary

Finance (for equity/debt component) for acquisition of overseas businesses / companies including leveraged buy-outs including structured financing options

Direct Equity by EXIM Bank in the overseas Joint Venture/ Wholly Owned Subsidiary of an Indian Company.For example:Mumbai based United Phosphorus, with support from EXIM Bank, has acquired the manufacturing facility of 'AdvantaSemillas', Argentina, a company producing hybrid seeds of sunflower, corn, sorghum etc.

C) Value added services

EXIM bank believes that financial programs need to be supplemented with certain advisory services, knowledge building initiatives and information.

EXIM Bank offers a diverse range of information, advisory and support services, which enable exporters to evaluate international risks, exploit export opportunities and improve competitiveness.

Advisory services include:

Multilateral agencies funded projects overseas (MFPO)

Information and support services to Indian companies are provided to help improve their prospects for securing business in multilateral agencies funded projects.

This includes the following:

Dissemination of business opportunities in funded projects

Providing detailed information on projects of interest

Information on Procurement Guidelines, Policies, Practices of Multilateral Agencies

Assistance for Registration with Multilateral Agencies

Advising Indian companies on preparation of Expression of Interest, Capability Profile

Bid Intervention

Promoting Indian consultancy: The bank has tie-ups with:

International Finance Corporation, Washington D.C.

Eastern & Southern African Trade & Development Bank (PTA Bank)

African Management Services Company (AMSCO), Netherlands

Examples of these are:

Gems &Jewellery Study Zambia, Financial Training Mission Kenya, Cement Project Cameroon, Software Madagascar, Wool Knitting Vietnam, Textile Nigeria, Refrigeration Ghana and Financial Training Poland.

EXIM bank as a consultant

It has acted as a consultant for:

Feasibility study for establishment of an export credit and guarantee facility for Gulf Cooperation Council countries. Regional cooperation in export finance and export credit guarantees for ESCAP. Study on promotion of international competitiveness and exports of manufactured goods for ESCAP. Setting up the Afrexim Bank Designing of Export Financing Programmes - Turkey Setting up an EXIM Bank in Malaysia Designing of Export Marketing Seminars for SMEs in Vietnam Export Development Project: Ukraine Enterprise Support Fund: Armenia Establishing an Export Credit Guarantee Company in Zimbabwe Advisory services to Industrial Development Corporation of South Africa for international finance products Study on Projecting Mauritius as an Investment Hub for Indian Firms Blue Print for setting up of an EXIM Bank in Zimbabwe

Knowledge building includes:

Eximius centres for learning in Ahmedabad, Bangalore and Pune

EXIM bank organises seminars and workshops in areas such as international trade & investment, export marketing, quality, packaging, business opportunities in multilateral agencies funded projects, sector and country specific programmes

It also involves guest faculty from network partners such as World Bank, UNIDO, Asian Development Bank, African Development Bank.

Research studies The bank undertakes research studies on products, sectors, countries, macro-economic issues relevant to international trade and investment.

Sector Studies EXIM bankalso undertakes sector studies in the following:Petroleum products, floriculture, medicinal plants, vanilla, biotechnology, machine tools, textiles, horticulture products, chemicals, pharmaceuticals, leather and plantation.

Macro-Economic Environment StudiesEXIM bank has written essays on globalization and wages in developing countries and has done an analysis about the transaction costs of Indian exports.

Information

The bank provides information about:

Exporters/importers, industry/market reports, trade regulations & laws, country reports, international quality standards, partner identification and product display.

Examples of Information Services are:

Hungarian Pharmaceutical Sector

Importers of Sanitary ware, Castings in North America

Importers of Agro-chemicals in Eastern Europe

Study for ear buds market in Hungary

Study of the Indian Wine market for a Hungarian Company

Partner identification for an Italian Sanitary ware manufacturer

Study of the Indian Crane Industry for a Finnish company

Regulatory Framework for setting up a Pharma Project in China

Market report for Computer Monitors in India for a Singaporean firm

Study on Bicycle market in Eastern Europe for Indian Cycle exporter

Market Potential for Denim in South East Asia

Study on India's Food Sector Other facilities Finance for R & D and Export Product Development: EXIM Bank offers term loans to EOUs for development of new technology to satisfy domestic and international environmental standards, and to help them develop and / or commercialize new product / process applications.

Finance for Services Sector: Services sectors financed by EXIM Bank include entertainment, health care, hospitality and shipping.

Acquiring Natural Resources: EXIM Bank selectively provides terms loans to Indian companies in their endeavor to acquire overseas natural resources in terms of acquiring mining / exploration rights in overseas locations. EXIM finance will be available to Indian companies for acquisition of such rights either on its own or in joint venture with an overseas partner, subject to a reasonable proportion of the resources being destined for India.

Underwriting: EXIM Bank extends underwriting commitment to Indian exporters, to help them raise finance from capital markets through public / rights issues of equity shares / debentures.

Export Marketing Finance: EXIM Bank offers term loans to Indian companies, to aid them in their efforts to penetrate and retain their presence in overseas markets, particularly in developed countries.

Import Loans

EXIM Bank finances bulk imports of consumable inputs and canalised items undertaken by manufacturing companies.

Guarantee Facility

EXIM Bank issues different kinds of guarantees for EOUs. These include:

a) Export obligation guarantees;

b) Deferred payment guarantees and

c) Guarantees in favour of commercial banks / lending institutions abroad on behalf of Indian exporters.

Export Marketing Services

The Bank provides assistance to Indian companies, to enable them establish their products in overseas markets through its Export Marketing Services, starting from identification of prospective business partners to facilitating placement of final orders. The Export Marketing service leverages the Banks high international standing, in-depth knowledge and understanding of the international markets and well established institutional linkages, coupled with its physical presence, to support Indian companies in their overseas marketing efforts on a success fee basis.

They offer service offered across sectors such as marine products, textiles - yarns, fabrics, apparels, food processing - ready to serve, spices and condiments, office stationery and Ayurveda medicines/cosmetics.

4.3Project Exports

The growth of Project Exports from India over the last three decades and the growing recognition of Indian expertise in the global market. The analysis is based on extensive data available within EXIM Bank of India as the principal financial institution for promoting Indian Project Exports.

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. From a modest beginning in the early seventies, Indian companies have made impressive progress in a number of areas like civil construction projects (road, railways, dams, airports, etc.), turnkey projects (power generator, transmission and distribution, industrial plants, etc.), technical services (engineering design, project engineering, operation and maintenance of industrial plants, etc.) and earned a niche for themselves in the developing country markets. Major policy initiatives since the past decade have been instrumental in preparing India for a period of rapid export growth as also becoming a major player in an increasingly inter-dependent world economy.

Status

Towards the end of 2004, there were 140 project export contracts valued at over Rs. 17,800 crore (approximately US$ 4 billion) under execution in 39 countries across Asia, Africa and Europe by 31 Indian companies. The projects ranged from building hydroelectric power stations in Bhutan, transmission line projects in Tunisia to operations and maintenance of cement plant in Saudi Arabia. Many of these projects are funded by MFAs (multilateral funding agencies) and the contracts have been won by the Indian companies against stiff international competition.

The following graph shows the trends in project exports from India supported by EXIM Bank from the years 2000 to 2004

Project Export contracts under execution as on 31st March, 2008, supported by EXIM bank

5. OTHER INITIATIVES TAKEN BY THE EXIM BANK

5.1Film finance Brief about the Indian film industry:The Indian film industry is an integral part of the Indian socio-economic psyche and the most popular source of entertainment in the country. Indian film industry was conferred Industry Status in the year 2000 and is mainly private funded. Indian Film industry is the world's biggest film industry in terms of the number of movies produced and released in a year. The total number of admissions (people attending movies) is almost over 3 billion, which is almost double the US markets and three times that of the rest of Asia. The Indian film industry comprises of a cluster of regional film industries, like Hindi, Telugu, Tamil, Kannada, Malayalam, Bengali etc. This makes it one of the most complex and fragmented national film industries in the world.The EXIM Bank has till date (upto the year 2007) sanctioned loans more than Rs 33.15 crores for film production. The first three films financed by EXIM Bank have been commercially successful across India and overseas markets. Nature of Finance: Cash flow financing for film production. Cash flow financing for film distribution/exhibition in overseas markets. Term loans for fixed assets finance. Term financing for export market development.

Examples of some films financed by EXIM Bank are:Honeymoon Travels Pvt. Ltd., Kabul Express, Dhoom -2, Don, Fanaa, BuntyAurBabli, Salaam Namaste, Veer Zaara, The Rising, Dhoom, Hum Tum, CheeniKum, ThodaPyaarThoda Magic, BachnaAeHaseena.

5.2SME &Agri- financeRecognizing the criticality of the agriculture sector for India's economic growth in general, and growth in exports in particular, EXIM Bank of India has launched a series of new initiatives for the promotion of India's agro-exports. It undertakes/provides support for the following:i) Fair Trade CertificationFair Trade is an organized movement which promotes equitable standards for international labour, environmentalism, and social policy in areas related to the production of labeled and unlabelled goods, which may range from handcrafts to agricultural commodities. The movement focuses in particular on exports from developing countries to developed countries.Fairtrade offers an alternative vision of right trade and production practices and clearly demonstrates that trade can play an important part in contributing to poverty reduction and achieving sustainable development.The Fairtrade certification system covers a growing range of products, which includes non-food products such as handicrafts and sports balls, and food products such as bananas, honey, coffee, oranges, cocoa, cotton, dried and fresh fruits and vegetables, juices, nuts and oil seeds, quinoa, rice, spices, sugar, tea and wine. Companies offering products that meet the Fairtrade standards can apply for licenses to use the International Fairtrade Certification Mark for those products.

ii) Good Agricultural Practices (GAP)The concept of Good Agricultural Practices (GAP) has evolved in recent years in the context of a rapidly changing and globalising food economy.According to the Food and Agriculture Organization (FAO), GAP is the application of available knowledge to address environmental, economic and social sustainability for on-farm production and post-production processes, resulting in production of safe and healthy food and non-food agricultural products. Many farmers in developed and developing countries already apply GAP through sustainable agricultural methods such as integrated pest management, integrated nutrient management and conservation agriculture. These methods are applied in a range of farming systems and scales of production units, facilitated by supportive government policies.Presently, GAP is formally recognised in the international regulatory framework for reducing risks associated with the use of pesticides, taking into account public and occupational health, environmental and safety considerations.Several supermarkets, retailers and Government bodies around the world have GAP in addition to their own codes of practice, which their suppliers need to satisfy. This trend of increasing adoption of GAP by both public and private sectors may create incentives for its adoption by farmers by minimising the risk of contamination, right from pre-planting stage of crop to post-harvest stage of the crop and by opening new market opportunities, provided they have the capacity to respond.GAP applies to a broad section of food/agricultural commodities, which include fruits and vegetables, livestock, flowers and ornamental plants, medicinal/aromatic plants, and aquaculture.

iii) Active and Intelligent Food PackagingThe main purpose of food packaging is to protect the food from microbial and chemical contamination, oxygen, water vapor and light, promotion of convenience and providing product information. The type of packaging used therefore has an important role in determining the shelf life of a food. The various packing concepts include, passive packaging, active packaging and intelligent packaging.With changes in the way food products are produced, distributed, stored and retailed, reflecting the continuing increase in consumer demand for improved quality and extended shelf life for packaged foods, are placing greater and greater demands on the performance of food packaging. Considering these aspects, innovative active and intelligent packaging concepts are being developed.iv) Organic Dairy FarmingOrganic milk is defined as the milk produced by cows reared on system of inputs with no chemical, pesticides, fungicides, fertilizers and use of medicines. Use of sewage sludge is alsoprohibited.With the increase in incidences of livestock diseases such as Bovine Spongiform Encephalopathy (BSE) and foot-and-mouth disease (FMD), and other pesticide contamination in food and milk products, interest in organic dairy farming have been considerably increasing all over the world. The main objective of organic dairy farming is food safety, consumer protection, animal health and welfare and sustainability.Moreover, www.eximbankagro.com is the premier portal for information and links on agro-exports. EXIM Bank brings out a bi-monthly publication namely 'Agri Export Advantage'. This publication is being brought out in English, Hindi and all major regional languages. The publication seeks to provide the stakeholders of Indian agribusiness with news from international perspective to make them aware of the competitive global agri-environment. The bi-monthly newsletter also includes market analysis of agri-products, government schemes and assistance, region-specific agri-business updates, coverage of important international events, WTO related updates and EXIM Bank's activities on agribusiness. 5.3Rural initiativeEXIM banks rural initiative is a departure from the traditional role that it plays.Its objectives for such a rural initiative are to reduce poverty through Export Linkage and to provide benefit of globalisation to grassroot rural enterprisesAlso, these objectives were brought into picture because: In India, 70% of the population lives in rural areas and 30% lives in urban areas. In comparison, the global average is 30% rural and 70% urban. Moreover, only 1 out of 4 enjoys globalization benefits. Hence 75% of the population is out of the globalization process. So, globalization has become very urban centric in India. EXIM Bank believes that there is a strong linkage between export development and poverty reduction. For a country like India, with a large (70%) rural population, creation of export capability in rural grassroot enterprise is a must. Globalization will be successful and acceptable only if benefits reach the rural population. Rural enterprises suffer from various handicaps including image, quality, capacity, packaging, delivery, etc. NGOs and SHGs are the front for rural enterprises. Through proper guidance and support, rural grassroot enterprises can access the global market and realize better prices for their products thereby contributing to poverty reduction. EXIM Bank's experience in working with NGOs/SHGs and rural enterprises is encouraging. EXIM Bank is leveraging its presence in both India as well as overseas, which is facilitating linkage between rural grassroot enterprises and corporates and with overseas buyers and agencies with the objective of bringing the benefits of globalization to the rural population.The Bank is also actively involved in extending export market access support to rural products through innovative export marketing services, effectively utilizing its overseas offices and institutional linkages as also by the provision of Lines of Credit facility to overseas buying houses and departmental stores for importing a variety of products from India. EXIM Bank has thus been able to leverage such lines of credit to promote export of agro and rural products, and has procured orders from Singapore, South Africa, Hungary and USA for such products.The Bank has earmarked funds for setting up the Rural Technology Export Development Fund to promote exports as also enhance the export-worthiness of rural grassroots innovative technologies from India. Thus, EXIM Banks efforts are not only aimed at facilitating the visibility of rural products in the international market but also to find alternative channels through partnership arrangements with institutions and corporates in India.The core objectives/ operations of EXIM banks rural initiative are: Creation of Export Capability in Grassroot Enterprises Enhance purchasing power of bottom of the pyramid Spin off benefit to other sectors of economy.

5.4Promotional Programmes Award for Business Excellence:EXIM Bank, in association with Confederation of Indian Industry (CII), presents an Annual Award for Business Excellence for the best TQM practices adopted by an Indian company. The high performance standards set down in order to qualify for the Award serve to foster strong commitments to TQM in the companys journey towards Business Excellence. Support to Indian Consultants for undertaking services abroad:Under an arrangement with International Finance Corporation (IFC), Washington, EXIM Bank is a participant in the trust funds set up by the IFC in different parts of the world. As a result of this arrangement, Indian consultants can avail of our support for undertaking specific assignments in select countries including Africa, Eastern Europe, CIS countries, China, South Asia, and the Mekong delta region. Global Trade FinanceGlobal Trade Finance Limited (GTF) is the only provider of international factoring, domestic factoring and forfeiting services under one roof in India. GTF has established itself as a market leader in international factoring providing value added services to its clients. GTF is headquartered in Mumbai with six regional offices - one each in New Delhi,Bangalore, Chennai, Hyderabad, Ahmedabad and Kolkata. GTF aims to be the premier export and import solution provider in India offering professional quality services on an e-commerce platform.GTF commenced operations in September 2001, as a joint venture promoted by the EXIM Bank of India; West LB, Germany; and IFC, Washington (the private sector arm of World Bank). In December 2004, the shareholding pattern became 40% with EXIM Bank; 38.5% with FIM Bank, Malta; 12.5% with IFC, Washington; and 9% with Bank of Maharashtra. The current shareholding pattern since March 2008 is 92.03% with State Bank of India and 7.97% with Bank of Maharashtra. An independent Board of 7 Directors manages GTF. It has received the necessary licenses and Authorized Dealer status from RBI for conducting export and import factoring and forfeiting business and foreign currency operations in India. GTF is a member of Factors Chain International, a global association of international factoring companies Established in 1968, FCI has played a major role in bringing factoring into most countries and today has a membership of 216 factoring companies operating in 62 countries. GTF also has arrangements with credit insurers over the world for providing credit protection.International trade, on the basis of LC's is gradually becoming extinct. "Open Account" and "Extended Credit" is becoming a pre-requisite for increasing sales volume in global market. GTF helps this need with its export factoring product that provides credit assessment, credit protection, financing, and collection services to exporters for regular sales on open account terms. GTF uses a high end customized IT platform to process and deliver its services. With a short turnaround time in approval of facilities, GTF is the only factoring company in India to offer online web access to its clients for accessing their accounts. GTF's "Client Access" module is custom made to suit its business profile and caters to client requirements.

Global Network of EXIM Banks and Development Finance Institutions The Global Network of EXIM Banks and Development Finance Institutions (G-NEXID), was set up in Geneva in March 2006 through the Banks initiative, under the auspices of UNCTAD. With the active support of a number of other EXIM Banks and Development Financial Institutions from various developing countries, the network has endeavored to foster enhanced South-South trade and investment cooperation, characterized among others, by the launching of the G-NEXIDs website (www.gnexid.org) and annual meetings of the Forum. Observer Status in UNCTAD underscores support for the Forum, while acceptanceof the vision of the Forum by developing countries can be assessed from the fact that the membership of the Forum has reached 23 by March 2008.5.5Eximius Display CentreEximius, from the Latin language means 'set apart and eminent'.Product display facilities of international standards are offered to Indian companies in India and abroad by the bank.The display centre at the Head office was set up in mid-1994. It exhibits a range of products manufactured and exported by Indian companies to discerning markets including USA and Japan. Around 50 companies whose products are displayed at the head office are among the five hundred that have been financed and nurtured by Bank. The products represent three broad categories: industrial products, consumer durables and consumer products.Their offices in Budapest and London have display centers which allow Indian companies to display their products for longer periods.

5.6Eximius Centre for Learning: A Place of Global Excellence ConceptIt is EXIM bank's initiative which is addressed at enhancing the capabilities of the industrial and financial communities in India and other developing countries, and bringing proposals of trade and investment to them. It offers them access to contemporary thinking in international trade and finance, entry to markets and technologies, and support in joining the global economy.The programmes are result-oriented and practical, designed to ensure that concrete outcomes emerge from every meeting. The eventual aim is to establish an international hub of information interchange between industries and institutions, and amongst industries in different countries;, a beacon for all developing counties and a place of global excellence, in learning and in business.Activities carried out: The Centre aims to keep the companies, which wants to go global, abreast of the changing global scenario. It conducts two events viz., organizes meeting between industry groups in different countries and businesspersons in India and involves skill building through interactive workshops and seminars that involve the participant in the learning process thus enhancing the competencies of the participants. "Virtual Faculty"- a concept which enables it to source the best available instructors to address the issues of the day. The Centre has tailor-made courses for the officials of the export credit agencies in other developing countries. It has also holds in-house programmes. Apart from organizing the above programmes, it also conducts research on issues of importance to its constituency that focuses on generating information, its usefulness and its immediate implementation within reasonable time frame.

5.7Non-funded activities undertaken:EXIM Bank issues following guarantees directly or in participation with other banks, forproject export contract. Bid Bond Bid Bond is generally issued for a period of six months.

Advance Payment GuaranteeExporters are expected to secure a mobilization advance of 10-20% of the contract value which is normally released against bank guarantee and is generally recovered on a pro-rata basis from the progress payments during project execution.

Performance Guarantee Performance guarantee for 5-10% of contract is issued, valid upto completion of maintenance period normally one year after completion of contract period and/or grant of Final Acceptance Certificate (FAC) by the overseas employer. Format of guarantee is expected to be furnished by exporter, at least four weeks before actual issue, to facilitate discussions and formal approval.

Guarantee for Release of Retention MoneyThis enables the exporter to obtain the release of retention money (normally 10% of contract value) before obtaining Final Acceptance Certificate (FAC) from client.

Guarantee for Raising Borrowings OverseasBridge finance may be needed at the earlier phases of the contracts to supplement the mobilisation advance. Bridge finance up to 25% of the contract value may be raised in foreign currency from an overseas bank against this guarantee issued by a bank in India. Request for overseas borrowings must be supported by currency-wise cash flows, also indicating the outstanding letters of credit and L/C drawal schedule.

5.8EXIM bank in the United States of AmericaThe U.S. forms one of the most important markets for Indian companies. Being the leading economy of the world, it offers tremendous potential to Indian companies for expanding their business. EXIM Bank of India offers a wide range of financial and advisory services to Indian companies to facilitate bilateral trade and investment between India and the U.S. As mentioned previously in the profile of the bank; EXIM Bank of India has a representative office in Washington, D.C. since 1985 and the activities of the office include: Interaction with international banks; multilateral institutions such as the World Bank, International Finance Corporation, Multilateral Investment Guarantee Agency, International Monetary Fund; export credit agencies such as Export-Import Bank of the United States, other US Government agencies, industry associations as well as U.S. based corporations; Advising and helping structure financial support for Indian companies setting up joint ventures/subsidiaries in the United States and other countries in the Americas (North, Central, South America and the Caribbean); Advising and assisting Indian companies seeking to secure procurement business in World Bank financed projects; Assisting Indian exporters and importers in forming business relationships with entities in the United States and other countries in the Americas; and Identifying, appraising and negotiating with banks in the Americas for extending lines of credit to enhance trade between India and North and South America and the Caribbean. In the US, some recent examples of overseas investments / projects by Indian companies thathave been facilitated by the Bank include:i.Acquisition of a coffee company ii.Funding of joint venture in the pharmaceuticals sector; iii.Acquisition of a glassware manufacturing facility; iv.Acquisition of a drug store; v.Acquisition of a company providing geo-spatial mapping services; vi.Acquisition of a BPO service provider;vii.Acquisition of an auto ancillaries unit.

6. FINANCIAL HIGHLIGHTS OF EXIM BANK

(Data as per annual report of 2007-08) (Rs. in million)

2002-032003-042004-052005-062006-072007-08Cumulative(2003-08)

LOANS

Approvals78283926571585352048872676623280451240877

Disbursements5320369575114352150389220760271587963362

Loan Assets877361077511291041759312288622877671235328

GUARANTEES

Approvals93281079215887432644997821994165848

Issuance7275574316602219591697220386100333

GuaranteePortfolio161331576923727340233536034556

RESOURCES

Paid- up Capital65006500850095001000011000

Reserves131711493316625177031874121064

Notes, Bonds &Debentures649027670198972126727154230179273

Deposits912121922824547022839

OtherBorrowings1646721583210643290961684111149

Total Resources123189155192156922210401262439349397

PERFORMANCE

Profit Before Tax(PBT)26863042314437693909533431816

Profit After Tax(PAT)20662292257927072994333022522

Balance of net profits transferred/ transferable to Central Government45047065486895610085886

Calculation of Ratios (In terms of %)Ratios/ Year2003-042004-052005-062006-072007-08

PBT to Capital46.841.941.940.150.8

PBT to Net worth14.213.514.414.017.5

PBT to Assets2.22.02.11.71.7

During the year, the Bank received share capital of Rs. 1 billion from the Government of India. As at March 31, 2008, the Banks total resources comprising paid-up capital of Rs. 11.00 billion and reserves of Rs. 21.06 billion, aggregated to Rs. 325.32 billion. EXIM Banks resource base includes bonds, certificates of deposit, commercial paper, term loans and foreign currency deposits/ borrowings/ long term swaps.

During the year, the Bank raised borrowings of varying maturities aggregating to Rs. 140.4 billion comprising rupee resources of Rs. 89.05 billion and foreign currency resources of US$ 1.28 billion equivalent. Foreign currency resources of US$ 1.08 billion equivalent were raised through bilateral / club loans and US$ 197 million by way of FRNs. As on March 31, 2008, the Bank had a pool of foreign currency resources equivalent to US$ 3.53 billion. Capital Adequacy

The Capital to Risk Assets Ratio (CRAR) was 15.13 per cent as on March 31, 2008, as compared to 16.38 per cent as on March 31, 2007, as against the minimum 9 per cent norm stipulated by RBI. The Debt-Equity Ratio as on March 31, 2008 was 8.97:1, as compared to 7.34:1 as at March 31, 2007.

7. RECENT INITIATIVES TAKEN BY THE EXIM BANK

According to the chairman, T.C. Venkat Subramanians statement (Annual report 2008);

The share of India in global merchandise exports has surpassed 1 per cent and the country has continued its impressive performance in the global exports of commercial services with a share of 2.7 per cent. This optimism has also been reflected in the Foreign Trade Policy which has set a target of achieving a 5 per cent share of world trade in both goods and services by the year 2020.

Hence, as the countrys premier export finance institution and in line with the Government of Indias foreign trade policy coupled with the increasingly competitive global environment, EXIM Bank proactively endeavors to enhance the competitive edge of Indian companies in their internationalisation efforts by constantly bringing about a change in the comprehensive range of financing programmes and advisory and support services at all stages of the export cycle.

7.1Business, Social initiatives and Research studies

A. Business initiatives

i) To enhance market diversification, the Bank has laid special emphasis on extension of Lines of Credit (LOCs) as an effective market entry mechanism especially for small and medium enterprises. During the year 2007-08, 17 LOCs were extended aggregating US$ 704 million to support export of projects, goods and services from India. The Bank now has in place 89 LOCs covering 89 countries in Africa, Asia, CIS, Europe and Latin America with credit commitments aggregating US$ 3.0 billion. The Bank is also proactively seeking to expand geographical reach and volumes under the LOC programme.

ii) The Bank has played a pivotal role in supporting Indias project exports and renewed focus in this direction has seen 147 Indian exporters securing 977 contracts amounting to Rs. 326.8 billion covering 92 countries. This clearly demonstrates the increasing competitiveness and capabilities of Indian consultants, suppliers and contractors to execute diverse range of projects.With Indian companies increasingly venturing overseas to mark their global presence, the Bank has endeavored to provide a further impetus to the global aspirations of Indian corporates. Banks focus in this direction is evident in its support to 41 corporates who were sanctioned funded and non-funded assistance during the year for part financing their overseas investments in diverse sectors covering different markets. The Bank has so far supported 223 ventures set up by over 180 companies in 61 countries, both in industrial countries and developing and emerging markets.

iii) EXIM Bank signed an agreement with International Finance Corporation (IFC), Washington, under the Global Trade Finance Program (GTFP). Under this arrangement, EXIM Bank will be able to confirm Letters of Credit, guarantees and other trade instruments issued by approved banks in more than forty developing countries. Some of the countries have a higher risk profile due to absence of a proper credit enhancement mechanism for carrying out documentary credit trade. The role of EXIM Bank as Confirming Bank would enable Indian exporters to access such markets without payment risks.

iv) To enhance support provided to the SME sector, a vibrant and important sector of the Indian economy, the Bank has entered into a cooperation arrangement with International Trade Centre, Geneva for implementing a unique Enterprise Management Development Services (EMDS) program, which is an IT based solution provider to enable small enterprises to prepare business plans with international market in focus. This is a pioneering initiative for supporting SMEs and for providing term loans and export finance facilities to the identified units to help them in their globalisation efforts. The Bank thus supports small enterprises through capacity building and assistance in formulation of viable proposals. It is envisaged that the learning from this programme would be transferred to other developing countries, and thus assist in capacity creation and institution building in the global arena.v) Finance for imports- bulk import finance under bulk import finance programme, sanctions and disbursements amounted to Rs. 8.11 billion and Rs. 9.40 billion, respectively.Moreover under import finance programme, companies were sanctioned term loans aggregating Rs. 8.15 billion. Disbursements amounted to Rs. 4.78 billion.

Seminars conducted

During the year, the Banks Eximius Centre for Learning conducted 39 programmes on a wide range of topics to keep Indian companies abreast of developments in the global market. These included eleven country/region specific Business Opportunities seminars. A seminar series on the opportunities for investment in British Midlands Region was organised at Kochi, Pune and Jaipur. Similar seminars were organised at Coimbatore, Kochi and Thiruvananthapuram on the opportunities in the kingdom of Bahrain; and at Pune, Ahmedabad, Ludhiana, Chennai and Hyderabad on the business and investment opportunities in the State of Victoria in Australia. Also, three seminars on Business Opportunities in Asian Development Bank Funded Projects were conducted at Mumbai, New Delhi and Kolkata.

New offices opened

During the year, the Bank opened a representative office in Dakar, Senegal, West Africa. The Dakar office of EXIM Bank is expected to play a key, catalytic role in enhancing trade and investment between India and the West African Region in general and with the Francophone countries in particular. The Dakar office has been conferred special status Accord de Siege by the government of Senegal on par with multilateral institutions located in Senegal.

Also, the Banks endeavors to create an enabling environment through synergies has been strengthened by Memoranda of Cooperation signed with a number of trade and investment promotion agencies, export credit agencies, banks and financial institutions such as African Export-Import Bank; CBI Netherlands; CorporacionAndina de Fomento, Venezuela; Export Finance and Insurance Corporation, Australia; Gulf Investment Corporation, Kuwait; The Ceylon Chamber of Commerce, Sri Lanka; as also in India with the Ministry of Panchayati Raj, which aims at enhancing its export promotion activities through the Rural Business Hub initiative; with Small Industries Development Bank of India (SIDBI) and REPCO Bank to further cooperation and to provide support to grassroot enterprises and SMEs.

Asian EXIM Banks Forum meeting

Conceived and initiated by EXIM Bank of India in 1996, the 13th Annual Meeting was held in Bali, Indonesia, in November 2007. (Details about the Asian EXIM bank forum are given in a later sub topic)

EXIM Bank of India, with the support of a number of other EXIM Banks and Development Finance Institutions (DFIs) from various developing countries in Asia, Africa, CIS and Latin America, has facilitated a Global Network of EXIM Banks and DFIs called G-NEXID in Geneva, under the auspices of UNCTAD, to boost South-South cooperation in trade and investment. G-NEXID has been granted observer status by UNCTAD which underscores support for the Forum, while acceptance of the vision of the Forum by developing countries can be assessed from the fact that the membership of the Forum has reached 23 by March 2008.

B. Social initiatives

As part of its endeavors in supporting social causes, EXIM Bank is supporting the Rugby Team of the Kalinga Institute of Social Sciences (KISS), which won the Under-14 International School Rugby Championship held in London, UK, in September 2007. KISS provides education for more than 5000 tribal children of Orissa with focus on formal and livelihood education and scope for all-round development. EXIM Banks support would encompass training facilities with associated infrastructure, participation in select domestic/ international tournaments.

Towards facilitating inclusive globalisation, and in line with the Government of Indias focus on village and rural sectors, the Bank has in place an innovative facility to support globalisation of rural industries through its Grassroots Initiative. The programme seeks to address the needs of relatively disadvantaged sections of society while creating expanded opportunities for traditional crafts persons and artisans, and rural entrepreneurs of the country. Towards this end, the Bank has consciously sought to establish, nurture and foster a variety of institutional linkages with select non-governmental organisations (NGOs) / Self Help Groups (SHGs), with a view to assisting their members with capacity building, training and access to national and global markets.

The Bank has earmarked separate funds for setting up Rural Technology Export Development Fund to promote exports as also enhance the export worthiness of rural grassroots innovative technologies from India. Thus, EXIM Banks efforts are not only aimed at facilitating the visibility of rural products in the international market but also to find alternative channels through partnership arrangements with institutions and corporates in India.

C. Research studies

Research studies brought out by the Bank during the year include:

Trade and Environment: A Theoretical and Empirical Analysis

Indian Pharmaceutical Industry: Surging Globally

Regional Trade Agreements: Gateway to Global Trade

Knowledge Process Outsourcing: Emerging Opportunities for India

Indian Mineral Sector and its Export Potential

The Bank also brought out a publication titled Healthcare Tourism: Opportunities for India which highlights opportunities and challenges and outlines strategies for India to emerge as a major healthcare tourist destination.

7.2Recent results achieved by the EXIM bank of India

The robust economic growth and buoyancy in Indias external sector has been reflected in the Banks business performance which has exhibited distinct growth. Loan approvals aggregated Rs. 328.1 billion, an increase of 23 per cent over the previous year, while disbursements at Rs. 271.6 billion also registered a rise of 23 per cent. Loan assets of the Bank have risen to Rs. 291.5 billion, a rise of 25 per cent over the previous year.

Profit after tax amounted to Rs. 3.33 billion as compared to Rs. 2.99 billion in the previous year. Capital to Risk Assets Ratio stood at 15.13 per cent, while net NPAs to net loan assets decreased to 0.29 per cent as on March 31, 2008. During the year, the authorised capital was increased by Central Government from Rs. 10 billion to Rs. 20 billion. The Bank also received share capital of Rs. 1 billion from the Government of India, increasing the paid-up capital to Rs. 11 billion.

Institutional interactions

The Bank has developed relationships, both structured and informal, with agencies and institutions involved in promotion of trade and investment which have served to supplement the various endeavors of the Bank. CII, FICCI, ASSOCHAM, NASSCOM, FIEO, EEPC, Project Exports Promotion Council of India (PEPC), The Council of EU Chambers of Commerce in India, other Export Promotion Councils, Chambers of Commerce and Economic Research Institutes have been a valuable source of learning and support. The Bank has also received strength and value from interaction with industry, banks, financial institutions, Export Credit Guarantee Corporation of India Ltd., Ministries of Government of India, particularly the parent Ministry of Finance, Reserve Bank of India and Indian Missions overseas.7.3Some examples where EXIM bank plays a role in financing or advising:

Line of Credit of US$ 20 million was extended by EXIM Bank to Government ofRwanda to finance construction of a hydro power project in Rwanda.

Line of Credit agreement of US$ 30 million extended from EXIM Bank of India to Afrexim bank.

A Line of Credit of US$ 35.20 million for financing infrastructure projects in water supply and power sectors in Cambodia was signed.

Tractor Assembly Plant in Mali (W. Africa) was financed under EXIM Bank Line of Credit of US$ 30 million to Government of Mali.

A turnkey project for fuel tanks for a petroleum company in Sharjah, UAE is under execution by Vijay Tanks and Vessels Ltd., Vadodara, with financial support from EXIM Bank.

A project supported by EXIM Bank for an NGO, Trust for Village Self Governance at Kuthambakkam Village in Tamil Nadu, aimed at generation of employment for rural poor women was undertaken.

Mid-sized company manufacturing auto forgings in Birmingham, U.K., was acquired byEl Forge Ltd., Chennai, with financial support from EXIM bank.

ABG Shipyard Ltd., Surat, one of Indias major private sector shipbuilders is supported by EXIM Bank for its export business through long term export credit and guarantee facilities.

Seminar on Business Opportunities with Asian Development Bank (ADB) was jointly organised by EXIM Bank of India and Federation of Indian Export Organizations, in collaboration with ADB, in Mumbai to encourage more Indian companies to participate in ADB (Asian development bank) funded projects overseas.

8. AML/PML MEASURES OF EXIM BANK

At EXIM bank there exists a summarized policy framework on know your customer (KYC), anti-money laundering (AML) and prevention of money laundering (PML) measures of the bank. The Bank has framed the KYC policies incorporating the following key elements:

a) Customer Acceptance Policy

The banks customer acceptance policy, as given on their web-site is as follows:

The Bank would not establish any business relationship with anonymous or fictitious entities/ shell banks

The Bank would keep the customer profile as confidential and details contained therein shall not be divulged for cross selling or any other purposes without the concurrence of the customer.

The Bank would not establish business relationship or close an existing business relationship where the Bank is unable to apply appropriate customer due diligence measures i.e. the Bank is unable to verify the identity and /or obtain documents required as per the risk categorization due to non-cooperation of the customer or non-reliability of the information furnished to the Bank.

The Bank would exercise due care before admitting new borrowers so as to ensure that the identity of the borrower does not match with any person with known criminal background or banned entities.

b) Customer Identification Procedures

EXIM Bank has a detailed Customer Identification Procedure in place and obtains the documents depending upon the status of the customer.

c) Monitoring of Transactions

All the disbursements made to the customers and all the receipts from the customers would be by way of crossed cheques /demand drafts and through other proper Banking channels such as account transfers only.Moreover, the Bank generally would not undertake any cash transaction except for very small value transactions for administrative purposes.

d) Records containing information

EXIM Bank would maintain records of all 'suspicious transactions'. 'Suspicious transactions' means a transaction whether or not made in cash which, to a person acting in good faith -

1. Gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime;

2. Appears to be made in circumstances of unusual or unjustified complexity; or 3. Appears to have no economic rationale or bonafide purpose.

The records pertaining to suspicious transaction would contain the date on which the transaction was conducted, the nature of the transaction, the amount and the currency in which the transactions was executed.

e) Procedure and manner of maintaining information

EXIM Bank would maintain information in respect of transactions with its client referred to above in hard and soft copies in accordance with the procedure and manner as may be specified by RBI and SEBI, as the case may be, from time to time. The Bank would observe the procedure and the manner of maintaining information as specified by RBI or SEBI, as the case may be.

f) Retention of records

The records referred to in above in Records containing information would be maintained for a period of ten years from the date of the transaction.

g) Appointment of Principal Officer

Officer in the rank of general manager is appointed as principal officer of EXIM Bank who is responsible for monitoring and reporting of all transaction and sharing of information as required under the law for the purpose of KYC, AML and also for PML.

9. ASIAN EXIM BANKS FORUM

The Asian EXIM Banks Forum was initiated by Export-Import Bank of India (EXIM India) in 1996 for enhancing regional cooperation & forging a stronger link among member institutions.

Over the years, a number of export credit agencies were created during the course of economic development of many Asian countries in line with their governments' export-oriented strategy.

It could also be seen that EXIM Banks and export credit agencies had evolved and are still evolving into widely different financial institutions depending upon the business environment in the respective countries, their foreign trade profile, country risk considerations, development of local financial markets.

Hence, to enhance cooperation and forge a stronger link among its member institutions, the first meeting of Asian EXIM Banks was held in India, at the initiative of the EXIM Bank of India in 1996, which led to the formation of the Asian EXIM Banks Forum.

Its member institutes consist of:

The Export-Import Bank of China, PT Bank Ekspor Indonesia, EXIM Bank of Korea, Philippine export-import credit agency, export-import bank of India, Japan bank for international cooperation (JBIC), export-import bank of Malaysia Berhad, the export import bank of Thailand, the export finance and insurance corporation.

At the Asian EXIM banks forum annual meetings are held to:

Serve as a forum for discussing a wide range of issues

Focus - fostering common understanding and sharing information.

Endeavour -

To meet the challenges faced as an export credit agency in Asia

To explore possible areas for further regional cooperation.

Hence it can be seen now, that with the help of the Asian EXIM banks forum, there has been a significant rise in trade with developing countries. The following graph shows the same:

Asians regions exports (US $ billion)

There has been a reorientation of Asian regions trade towards developing countries. While Asias exports to industrial countries have risen five-fold from US$ 259 billion in 1990 to US$ 1.2 trillion in 2006, Asias exports to developing countries have risen eight-fold from US$ 188 billion to US$ 1.6 trillion. Moreover, underlying this trend has been the sharp rise in intra-Asian exports. Increased intra-Asian exports have boosted regional trade in the Asian region.

Asian Region's imports (US $ billion)

Since 2000, Asias imports from developing countries have surpassed Asias imports from industrial countries, with the trend increasing in subsequent years. While Asians imports from industrial countries rose from US$ 554 billion in 2000 to US$ 957 billion in 2006, imports from developing countries rose much faster from US$ 616 billion to US$ 1.6 trillion. There has also been a sharp rise in intra-Asian imports, from US$ 481 billion in 2000 to US$ 1.18 trillion, has boosted Asias overall imports from developing countries.

Important outcomes of past endeavors of the Asian EXIM Banks Forum include the following:

Signing of the Memorandum of Understanding

Multilateral Letter of Credit Confirmation Facility Agreement

Bilateral Letter of Credit Confirmation Facility Agreements

Feasibility of a framework for establishment of a Regional Export Credit Agency for Asia for trade refinance/reinsurance facilities

Web Portal of Asian EXIM Banks Forum www.asianeximbanks.org

Creation of a Pan-Asian EXIM Bond that would utilise the regional capital markets to raise capital by bundling Asian bonds (under discussion)

Training Committee

EXIM banks around the world

EXIM banks around the world are a creation of the developed world and are gaining considerable significance in developing countries. While DFIs are losing relevance in developed countries, EXIM Banks are gaining increasing significance in current environment.Some facts:

The EXIM bank in USA first came up for small business enterprises

The one in Japan now has a broader role through its merger with OECF (Overseas Economic Cooperation Fund)

The Korean EXIM bank is now supporting Chaebols (trading houses) & overseas investment

Moreover, in all these countries the EXIM Banks exist as specialized focused institutions beyond commercial Banks, have a key role to play in national development and are operating in a competitive global environment.The EXIM bank of India is in fact one of the first EXIM Banks for a developing country. Others who have since set up EXIM Banks include Nigeria, Malaysia, Turkey, and China. These EXIM banks operate as commercially viable & profitable organizations.10. Exim Banks Buyers Credit under NEIA Programme

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 Indias 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 andservices 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 globalisationefforts 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 Indias international trade and investment. The Bank is committed to go beyond traditional financing and facilitate exports of a varietyof products and services which have the potential to go overseas, by creating a niche for them in the international market.

This brochure is on one of the principal lending programmes of Exim Bank viz. BuyersCredit under NEIA, and is for dissemination of information to various Indian projectexporters, as also prospective overseas borrowers viz. Foreign Governments or theirnominated government-owned entities.

Buyers Credit under NEIA is a unique financing mechanism that provides a safe mode ofnon-recourse financing option to Indian exporters and serves as an effective market entrytool to traditional as well as new markets in developing countries, which need deferredcredit on medium or long term basis.

Recently, the honorable Minister for Commerce, Industry and Textiles, Mr. Anand Sharmahas announced the introduction of a pilot scheme of 2% Interest Subvention for ProjectExports through Exim Bank for countries of the SAARC region, Africa and Myanmar.Mr. Sharma mentioned that the scheme will be operational immediately for a combinedworth of US$ 500 million to begin with. The interest subvention would be linked to theBuyers Credit Scheme which was introduced in the last financial year being implementedthrough Exim Bank, ECGC and the National Export Insurance Account