Exim Bank to begin new lines of biz in export finance

Source : BL:MUMBAI, APRIL 28:2011

In a strategic move, the Export-Import Bank of India (Exim Bank) has decided to gradually get out of businesses where it is in direct competition with commercial banks.

Towards this end, Exim Bank, according to its Chairman & Managing Director, Mr T.C.A. Ranganathan, is whittling down its portfolio of short-term loans and exiting the packing credit business.

Instead of competing with commercial banks, Exim Bank will concentrate on its core competencies in the field of export finance.

While lines of credit and project exports will continue to be its bread and butter businesses, the development financial institution (DFI) will also focus on new lines of business such as Buyers' Credit (non-recourse lending) and R&D financing.

“We want to play the role of a catalyst. As a development financial institution, we will seed new lines of business in the export finance area so that commercial banks can enter the same,” said Mr Rangathan.

Buyers' Credit has been launched by Exim Bank in association with the Export Credit Guarantee Corporation of India under the Government's National Export Insurance Account to boost exports.

To support R&D by export-oriented units in fields such as pharmaceuticals, engineering and hi-technology, the DFI will offer term loans or a hybrid facility to the extent of 80 per cent of the R&D cost.

On new initiatives, the Exim Bank chief said the bank has started giving loans that are benchmarked to the government security, with one-year residual maturity, to companies with active treasury operations.

The DFI has moved the government to increase its authorised capital to Rs 10,000 crore so that it can support exporters in a big way. Currently, its paid-up capital is at Rs 2,000, the same as its authorised capital.

Meanwhile, Exim Bank has reported a 12 per cent increase in profit after tax at Rs 868 crore in the financial year ended March 31, 2011, against Rs 772 crore in the corresponding period last year.

Loan assets increased by 17 per cent in FY2011 to Rs 46,041 crore from Rs 39,371 crore as of March-end 2010.