Role of EXIM Bank of India in Foreign Investment
This article focuses on the Role of EXIM Bank of India in Foreign Investment. EXIM Bank is a fully owned bank by the Government of India and is governed by the Board of Directors and gets tax return from the government, various financial institutions, banks and business communities.
An Overview of EXIM Bank-The main objective of Export-Import Bank (EXIM Bank) is to provide financial assistance to promote the export production in India. The financial assistance provided by the EXIM Bank widely includes the following:
- Direct financial assistance
- Foreign investment finance
- Term loaning options for export production and export development
- Pre-shipping credit
- Buyer's credit
- Lines of credit
- Reloaning facility
- Export bills rediscounting
- Refinance to commercial banks
Various Stages of Exports Covered by EXIM Bank-
- Development of export makers
- Expansion of export production capacity
- Production for exports
- Financing post-shipment activities
- Export of manufactured goods
- Export of projects
- Export of technology and softwares
Forms of Financial Assistance Provided by EXIM Bank to Indian Companies-
- Delayed Payment Exports- Term loans are provided to those exporters who deal with exporting of goods and services and this enables them to offer delayed credit to the foreign buyers. This system of deferred credit covers Indian consultancies, technology, and other services. Commercial banks take part in this program either directly or under risk syndication arrangements.
- Pre-shipment credit-Indian companies which are highly involved in the execution of export activities beyond the cycle time of six months are funded by EXIM Bank. The construction or turnkey project exporters enjoy the provision of rupee mobilization.
- Term loans for export production- EXIM Bank offers term loans to the 100 percent export oriented units, units involved in free trade zones, and exporters of various softwares in India. EXIM bank also works in association with International Finance Corporation, Washington, to provide financial assistance to the small scale and medium industrial units in terms of ameliorating the export production capacity of these units in India. EXIM Bank also provides funded and non- funded facilities to deemed exports from India.
- Foreign Investment Finance- EXIM bank provides financial assistance for equity contribution to the Indian companies who form Joint Venture with the foreign companies.
- Financing export marketing-It helps the exporters carry out their export market development plan in Indian market.
Financial Assistance Provided by EXIM Bank to Overseas Companies-
- Foreign Buyer's Credit- the foreign players are entitled to a sum of financial assistance in order to import goods and services on deferred payments.
- Lines of Credit- EXIM bank also offers financial assistance to the overseas financial institutions and various government agencies for import of goods and services from India.
- Reloaning Options to Foreign Banks- The foreign banks are entrusted with funding from EXIM bank in order to provide the same to the their clients across the globe for importing of goods from India.