Objectives & Functions of EXIM Bank

The Export and Import Bank of India, popularly known as the EXIM Bank was set up in 1982. It is the principal financial institution in India for foreign and international trade. It was previously a branch of the IDBI, but as the foreign trade sector grew, it was made into an independent body.

The main function of the Export and Import Bank of India is to provide financial and other assistance to importers and exporters of the country. And it oversees and coordinates the working of other institutions that work in the import-export sector. The ultimate aim is to promote foreign trade activities in the country.

The management of the EXIM bank is done by a board, headed by the Managing Director. There are 17 other Directors on the board. The whole paid-up capital of the bank (100 crores currently) is subscribed by the Central Government exclusively.

Objectives of EXIM Bank

1. To ensure and integrated and co-ordinated approach in solving the allied problems encountered by exporters in India.
2. To pay specific attention to the exports of capital goods
3. Export projection
4. To facilitate and encourage joint ventures and export of technical services and international and merchant banking
5. To extend buyers’ credit and lines of credit;
6. To tap domestic and foreign markets for resources for undertaking development and financial activities in the export sector.

Functions of the EXIM Bank

1. Finances import and export of goods and services from India
2. It also finances the import and export of goods and services from countries other than India.
3. It finances the import or export of machines and machinery on lease or hires purchase basis as well.
4. Provides refinancing services to banks and other financial institutes for their financing of foreign trade
5. EXIM bank will also provide financial assistance to businesses joining a joint venture in a foreign country.
6. The bank also provides technical and other assistance to importers and exporters. Depending on the country of origin there are a lot of processes and procedures involved in the import-export of goods. The EXIM bank will provide guidance and assistance in administrative matters as well.
7. Undertakes functions of a merchant bank for the importer or exporter in transactions of foreign trade.
8. Will also underwrite shares/debentures/stocks/bonds of companies engaged in foreign trade.
9. Will offer short-term loans or lines of credit to foreign banks and governments.
10. EXIM bank can also provide business advisory services and expert knowledge to Indian exporters in respect of multi-funded projects in foreign countries.

The Exim Bank has a 17-member Board of Directors, with Chairman and Managing Director as the chief executive and full-time director. The Board of Directors consists of the representative of the Government of India, RBI, IDBI, ECGC, commercial banks and the exporting community.

The authorised capital of Exim Bank is Rs. 200 crores, of which Rs. 75 crores is paid up. The banks have secured a long-term loan of Rs. 20 crores from the Government of India. It can also borrow from the RBI. It is empowered to raise resources in domestic and international markets.

The Bank began its lending operations from March, 1982. Till June, 1982, it has extended assistance up to Rs. 133 crores to the export sector in various ways.

The establishment of Exim Bank may be regarded as a right step in the export promotion policy and programmme of the Government.

During 1984, the Exim Bank sanctioned various programmes of funded assistance of Rs. 430 crores. It also launched a new programme to provide term finance for export-oriented units, under which assistance was provided through a consortium for establishing a 100 per cent export unit in the ceramics industry.

The Exim Bank also extended its financial assistance to Indian exports through letters of credit, re-lending facility, export bills rediscounting, overseas investment finance, facilities for deemed exports and assistance to hundred per cent export units and units in free trade zone.

At the end of December 1984, the Exim Bank’s outstanding underfunded and non-funded assistance amounted to Rs. 415 crores and Rs. 510 crores, respectively.

In 1984, the Exim Bank signed a loan agreement to borrow one billion yen from the Japanese commercial yen market.

In June 1986, the Exim Bank introduced a new programme called the Export Marketing Fund (EMF), under which finance is made available to Indian companies for undertaking export marketing activities. The programme also covers activities like desk research, minor product adaptation, overseas operations and travel to India by buyers overseas. During 1986, Rs. 78 lakhs were sanctioned, while Rs. 3.4 lakhs have been utilised under the EMF.

On whole, the Exim Bank concluded an agency credit line of US $ 15 million with the International Finance Corporation (IFC).

During 1994-95, Exim Bank sanctioned Rs. 2,466 crore and disbursed Rs. 2,130 crore of financial assistance under various lending project.