Export-Import Bank of India (EXIM): Full form , Schemes & Working

What is EXIM Bank?

The Export-Import Bank of India, commonly known as EXIM Bank, is a specialised financial institution established by the Government of India in 1982. Its primary objective is to facilitate international trade and investment by providing financial assistance and various support services to Indian exporters and importers. EXIM Bank plays a crucial role in boosting India’s exports and economic growth by offering a range of financial and promotional programs.

Schemes of Financial Assistance by EXIM Bank

The Export-Import Bank of India (EXIM Bank) offers various schemes of financial assistance to support Indian businesses engaged in international trade and investment. These schemes are designed to promote exports, facilitate imports, and encourage overseas investments. Here are some of the key schemes of financial assistance provided by EXIM Bank:

1. Export Credit: EXIM Bank provides export credit to Indian companies for financing their export activities. Export credit is offered in various forms, including pre-shipment credit (to finance the production of export goods) and post-shipment credit (to finance the working capital needs after shipment). These credit facilities help exporters fulfil their export orders and manage cash flow.

2. Buyer’s Credit: EXIM Bank offers buyer’s credit to overseas buyers of Indian goods and services. This credit is extended to foreign importers, enabling them to purchase Indian products and services on credit terms. It encourages international buyers to source from Indian exporters.

3. Lines of Credit (LOCs): EXIM Bank provides lines of credit to foreign governments, financial institutions, and other entities to support projects that involve the import of Indian goods and services. LOCs promote bilateral trade and economic cooperation between India and other countries. They are typically used for infrastructure development projects, such as construction, power generation, and transportation.

4. Export Finance: EXIM Bank offers various export finance schemes to meet the specific needs of exporters. These schemes may include export bill discounting, export credit insurance, and export production finance. Export finance helps exporters manage their cash flow and mitigate risks associated with international trade.

5. Overseas Investment Finance: EXIM Bank supports Indian companies looking to invest in overseas ventures through its overseas investment finance schemes. It provides financial assistance for setting up subsidiaries, joint ventures, or acquisitions abroad. This helps Indian businesses expand their global footprint and access new markets.

6. Export Marketing Services: EXIM Bank offers export marketing services to assist Indian exporters in identifying export opportunities, market research, and market entry strategies. These services help exporters make informed decisions and succeed in international markets.

7. Technology and Innovation Promotion: EXIM Bank provides financial support to Indian companies for technology upgradation, innovation, and Research and Development (R&D) activities. This helps businesses enhance their competitiveness in global markets.

8. Export Development Fund: The Export Development Fund (EDF) is a financial assistance scheme that supports export promotion activities, trade-related research, and capacity-building initiatives. The EDF aims to strengthen the export ecosystem in India.

9. Project Finance: EXIM Bank offers project finance to Indian companies involved in export-oriented projects, including those in sectors like manufacturing, infrastructure, and renewable energy. This financial support aids in the development and execution of such projects.

10. Credit Lines to Banks and Financial Institutions: EXIM Bank extends credit lines to Indian banks and financial institutions to facilitate trade financing. These credit lines enable domestic banks to offer competitive financing options to exporters and importers.

11. Promotional Activities: EXIM Bank engages in promotional activities to create awareness among Indian businesses about the available financial assistance schemes and to promote export opportunities. These activities include seminars, workshops, and trade fairs.

It’s important to note that the specific terms, conditions, and eligibility criteria for these schemes may vary over time and depend on the nature of the project or trade activity. Indian businesses interested in availing of EXIM Bank’s financial assistance should consult the bank’s official website or contact the bank directly for the most up-to-date information and guidance on the application process.

Working of EXIM Bank

EXIM Bank operates under the guidance and support of the Government of India and plays a crucial role in facilitating the growth of Indian businesses in the global market. Here is an overview of how the EXIM Bank works:

1. Objective and Mission: The primary objective of EXIM Bank is to enhance and support India’s international trade and economic relations. Its mission includes promoting exports, facilitating imports, encouraging overseas investments, and assisting Indian companies in expanding their global presence.

2. Financial Services: EXIM Bank provides a range of financial services to Indian businesses, including exporters, importers, and investors. These services are designed to mitigate risks, provide financing, and offer strategic guidance to help businesses succeed in the international market.

3. Export Credit: One of the core functions of EXIM Bank is to offer financial assistance to Indian exporters. This assistance comes in the form of export credit, which includes pre-shipment credit (for financing the production of export goods) and post-shipment credit (for working capital needs after shipment). These credit facilities help exporters fulfil their export orders and manage cash flow.

4. Import Financing: EXIM Bank also extends its support to importers by offering import financing solutions. This helps businesses access the necessary funds to procure goods and services from foreign markets.

5. Investment Promotion: EXIM Bank encourages Indian companies to invest in overseas ventures by providing financial support for setting up subsidiaries, joint ventures, or acquiring companies abroad. This helps Indian businesses expand their global footprint and diversify their operations.

6. Advisory Services: The bank offers advisory and consultancy services to Indian businesses to help them identify export opportunities, conduct market research, and develop market entry strategies. These services assist businesses in making informed decisions about expanding into international markets.

7. Promotional Activities: EXIM Bank engages in promotional activities to create awareness among Indian businesses about its financial assistance schemes and to promote export opportunities. These activities include organising seminars, workshops, and participating in trade fairs.

8. Research and Publications: EXIM Bank conducts research and publishes reports on various aspects of international trade and investment. These reports provide valuable insights and information to businesses and policymakers.

9. Collaborations: EXIM Bank collaborates with other financial institutions, trade associations, and government bodies to promote trade and investment. These partnerships help create a supportive ecosystem for Indian businesses engaged in international activities.

10. Government Support: As a government-backed institution, EXIM Bank receives support from the Government of India in the form of capital infusion and policy guidance. This support enables the bank to offer favourable terms and conditions to businesses.

In summary, the Export-Import Bank of India plays a vital role in the growth and development of Indian businesses in the global arena. It offers a wide range of financial services, risk mitigation tools, and advisory support to facilitate international trade and investments, contributing to the overall economic growth of India.

Offshore Banking by EXIM Bank

EXIM Bank may engage in offshore banking activities, typically in the form of setting up branches or subsidiaries in offshore financial centres. Offshore banking allows the bank to provide financial services to its clients in foreign jurisdictions. Some key features of offshore banking by EXIM Bank may include:

1. Tax Planning: Offshore accounts can be used to reduce tax liabilities legally. Some jurisdictions offer favourable tax rates or exemptions on certain types of income or investments.

2. Asset Protection: Offshore accounts can provide a level of asset protection and confidentiality. This can be important for individuals and businesses looking to safeguard their assets from legal claims or other risks.

3. Diversification: Offshore banks may offer a range of investment options and currencies, allowing individuals and businesses to diversify their holdings.

4. Privacy: Some offshore jurisdictions have strict banking secrecy laws that protect the privacy of account holders.

5. International Business: Companies engaged in international trade often use offshore banks to facilitate cross-border transactions and manage foreign currencies.

6. Estate Planning: Offshore trusts and accounts can be used for estate planning purposes, such as passing on wealth to heirs.

Overall, EXIM Bank’s offshore banking activities contribute to the facilitation of international trade and economic cooperation, furthering India’s economic interests on a global scale.