As a result of economic liberalisation and globalisation, the import-export business quickly expanded to become a significant part of our economy’s overall output. India still ranks high among the world’s leading exporters of farm products.
Consequently, the government established the Exim Bank to provide a helping hand to the import/export sector. In 1982, the Export and Import Bank of India, or Exim Bank, was established. It is India’s primary international trade financing institution. Formerly a division of the IDBI, it was spun off as its own organisation to accommodate the expanding international trade market.
Exim Banks in India: Objectives
The primary objective of Export and Import Bank of India is to support the country’s importers and exporters financially and otherwise. To top it all off, it monitors and organises the activities of other organisations involved in the import-export business. The end goal is to increase exports from the nation.
Exim Bank provides LOCs to foreign financial institutions, regional development banks, sovereign governments, and other entities so that those entities can make credit-deferred purchases of goods and services from India for use in infrastructure development and improvement projects in other countries. The Buyer’s Credit-National Export Insurance Account (BC-NEIA) initiative expands financing choices for export projects, an area of focus for EXIM Bank.
Exim Banks in India: Functions
- Known as a “buyer’s credit” programme, it is a loan facility that is offered to Indian exporters so that they may expand their business into new international markets. It also helps small and medium-sized enterprises (SMEs) export by providing loans to foreign customers that want to purchase from India.
- Finance options for businesses include corporate banking services that help Indian businesses become more export-competitive.
- Credit lines – it provides an open line of credit to Indian exporters so they may enter new markets abroad.
- Provides term loans to Indian businesses so they may make equity investments in their foreign joint ventures or wholly-owned subsidiaries.
- Export of completed projects from India; promotes foreign business for Indian firms.
- Help Indian businesses expand internationally by connecting them with distributors abroad, joint venture partners, and other marketing professionals via marketing advisory services. Also helpful for finding international locations for plant construction or company acquisition.
- Studying and analysing data in the areas of international commerce and investment, country profiles for risk assessment, etc.
The bank has a loan program set up specifically to fund the R&D efforts of export-focused businesses in India in an effort to increase the country’s competitiveness in the global hi-tech market. The Bank has established an Export Marketing Services (EMS) Programme to aid Indian businesses in locating potential commercial partners, easing the process of placing final orders, and spotting prospects for establishing factories, launching projects, or acquiring foreign businesses.
However, without the proper knowledge and direction, the import/export industry is fraught with dangers. In the meanwhile, the banking system has evolved into what we know today. It’s becoming the preferred method of payment between exporters and importers. Commercial banks play a significant role in the import-export industry because they facilitate the smooth processing of payments and other matters relating to foreign branch banking, which in turn increases the value of the trade for both the exporter and the importer.
FAQs
How many Exim banks does India have?
Cities like Ahmedabad, Bangalore, Mumbai, Chennai, Chandigarh, Guwahati, Hyderabad, New Delhi, Kolkata and Pune have Exim banks.
What does Exim stand for?
EXIM stands for exports and imports.