Transcript Exim Bank Credit lines - Parliament of Zimbabwe

Exim Bank’s
Lines of Credit and
Buyer’s Credit under NEIA
Harare, Zimbabwe
March 12, 2014
Exim Bank of India
 SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981
 WHOLLY OWNED BY GOVERNMENT OF INDIA
 COMMENCED OPERATIONS IN MARCH 1982
 APEX FINANCIAL INSTITUTION
 OBJECTIVES:
“… for providing financial assistance to exporters and importers, and for
functioning as the principal financial institution for coordinating the working of
institutions engaged in financing export and import of goods and services with
a view to promoting the country’s international trade…”
“… shall act on business principles with due regard to public interest”
(Export-Import Bank of India Act, 1981)
Evolving Vision
Product Centric
Approach
Export
Credits
1982-85
Export Capability
Creation
“To develop commercially viable
relationships with a target set of
externally oriented companies by
offering them a comprehensive range of
products and services, aimed at
enhancing their internationalisation
efforts”
1986-94
Comprehensive Range of
Customer Centric
Products And Services
Approach
– All Stages of the Export Business Cycle –
Exim Bank TODAY
Leadership and Expertise in India’s Export Finance
Management
Board of Directors (16)*
OFFICES
Domestic Offices: 10
Overseas Offices:8
 Ahmedabad
 Addis Ababa
 Bangalore
 Dakar
 3 Directors: Scheduled Banks
 Chandigarh
 Dubai
 2 Directors : Professionals/Experts
 Chennai
 Johannesburg
 Guwahati
 London
 Hyderabad
 Singapore
 Kolkata
 Washington D.C.
 New Delhi
 Yangon
 Chairman and Managing Director
 5 Directors: Government of India
 1 Director nominated by RBI
 1 Director nominated by IDBI
 1 Director nominated by ECGC
Appointed
by
Govt. of India
* As per Exim Bank Act
 Mumbai
 Pune
Operational Philosophy
International Trade
Financing
Promoting
Facilitating
Through
Variety of Financing
Programmes
Value Added Business
Advisory Services
Research and
Analysis
Catalyst for Financing
Projects
Products
Services
Range of Products & Services
At All Stages of Export Business Cycle
Export
Export
Marketing
Marketing
PreShipment
Export
Production
Advisory
Services
PostShipment
Export
Product
Development
Value Based Services to Exporters
Knowledge
Building
Investment
Abroad
INFORMATION
Import
Finance
Advisory
Services
SUPPLEMENTS FINANCING PROGRAMMES
FINANCING, FACILITATING INDIA’S TWO WAY TRADE & INVESTMENT
Financing Programmes
Financing Program (Various Currencies)
Export Credit
Medium / Long Term
Lines of
Credit
Buyer’s
Credit
Short Term
Pre / Post
Shipment
Credit
Import Credit
Import Loan for
capital goods
Bulk Import Loan
for Raw Materials
Loans for Exporting Units
Term Loans for expansion/
diversification / new projects/
export product development/
export marketing / research &
development
Term Loans for overseas equity
investment
Supplier’s
Credit
Direct equity stake in Indian/
Overseas ventures of exporting
companies
Lines of Credit
Lines of Credit Programme
Lines of Credit (LOCs)
Exim’s own LOCs to economically
strong developing countries and
regional development banks
At behest of GOI, concessional LOCs to
developing countries in Asia/ Africa/ Latin
America/ CIS and Oceania with a longterm perspective. While Exim raises the
resources and funds disbursement, GOI
guarantee
and
provide
interest
equalisation
support
under
Indian
Development and Economic Assistance
Scheme (IDEAS)
Status of LOCs
No. of LOCs operative
:
187
No. of countries covered
:
75
Total amount of LOCs sanctioned
:
US$ 10.21 billion
Lines of Credit Programme
A Catalyst for Trade Promotion
 Enables import of Indian equipment and technology on deferred credit
terms
 Direct exposure on overseas borrowers
 No recourse to Indian exporters
 Exporters get payment on shipment
 Particularly relevant for small and medium (SME) sector
 Eligible items – all items permissible under Exim Policy

Project related Supplies & Services

Industrial Products & Consumer Durables

Commodities
GOI-LOCs routed through Exim Bank
Broad Terms
 Credit offered
:
100% of FOB/CFR/CIF /CIP value
 Credit Period
:
8-20 years (inclusive of moratorium
of 2-5 years)
 Availability period :
48 months from the scheduled
completion date for project exports
72 months from the execution of the
Credit Agreement for supply
contracts
Origination of LOC Proposal –
GOI LOCs
1. The partner country discusses development
priorities with the Indian Mission and a feasible
project is identified / developed.
PARTNER COUNTRY
MINISTRY OF FOREIGN
AFFAIRS
2. The partner country requests for an LOC
accompanied with a pre-feasibility or a detailed
project report, which would include, amongst
others, the basis of estimated costs and
justification of the project.
3. Such a report may be developed in
coordination with the Indian Mission, if
required.
Govt. of India
(Ministry of Finance)
– Department of Economic Affairs -
Conveys offer
Forwards proposal with their
recommendations / comments
Govt. of India
(Ministry of External Affairs)
1. Makes technical consultations with the
partner country, if required, through the
Indian Mission
2. Recommends the proposal
Examines; if acceptable from
finance/budget angle, conveys approval
Govt. of India
(Ministry of External Affairs)
INDIAN MISSION
ACCREDITED TO
PARTNER COUNTRY
Export-Import Bank of India
(Exim Bank)
Conveys terms (interest rate &
credit period) & sends draft LOC
Agreement
INDIAN MISSION
ACCREDITED TO PARTNER COUNTRY
Conveys offer of LOC
Forwards terms & draft LOC Agreement
LOC RECIPIENT COUNTRY
MINISTRY OF FOREIGN AFFAIRS
Lines of Credit–
Signing
EXPORT-IMPORT BANK OF INDIA
(EXIM BANK)
1.
2.
Sends draft LOC Agreement
Exim Bank Resident Representative could visit
LOC-recipient country to familiarize the organisation
with operational aspects
LOC-RECIPIENT
Conveys
acceptance
Comments /
Suggestions
EXPORT-IMPORT BANK OF INDIA
(EXIM BANK)
Agreement finalised
Consultation
Concurs
AGREEMENT IS SIGNED
LOC RECIPIENT
Lines of Credit–
Making LOC Agreement effective
LOC-RECIPIENT
Forwards
1. Legal opinion from legal counsel of LOCrecipient
2. List of Authorized Signatories
EXPORT-IMPORT BANK OF INDIA
(EXIM BANK)
Examines the documents and if found in order
LOC AGREEMENT MADE
EFFECTIVE
BY EXIM BANK
Conveys effectiveness
LOC RECIPIENT
Guidelines for Bidding and Procurement
Procedures
 The Borrower shall adopt a transparent procedure based on competitive
bidding for awarding the Eligible Contract to Indian Seller.
 The Borrower may conduct competitive bidding procedures in accordance
with prevailing procurement laws, rules and regulations of the Borrower’s
country to ensure that the award of the Eligible Contract to the Seller is made
in a fair and transparent manner; the rules and regulations of the borrowing
country relating to competitive bidding should be clearly defined and details
of which should be provided to Exim Bank in advance.
 The Borrower shall award the Eligible Contract to the Seller based on
competitive bidding process. The bidding shall be restricted to Indian
companies registered in India and/or incorporated/established under any law
in force in India.
Guidelines for Bidding and Procurement
Procedures
 The Borrower shall express the bid price only in Dollar (US$)
 The Borrower shall widely publicise the tender inviting bids for the Eligible
Contract through Websites or any other suitable media in Borrower’s country
and India, including websites of the Exim Bank and Industry associations in
India.
Lines of Credit–
Contract Approval
LOC-RECIPIENT
1. Competitive bidding
process is mandatory.
2. Government of LOCrecipient country is
expected to conduct
fair and transparent
selection with wide
participation of Indian
companies.
Selects the contract to be covered under the LOC after requisite
scrutiny and forwards the contract for coverage under LOC
accompanied with a summary sheet on the contract signed by the
authorised signatory
Export-Import Bank of India
(Exim Bank)
1. Examines the proposals
2. Seeks information/clarification from the LOC-recipient
/Indian Supplier/Contractor
3. Examines the projects in the light of provisions of the
LOC
4. If found OK, conveys approval of specific contracts
LOC Recipient
Indian Supplier /
Contractor
OPENING OF A LETTER OF CREDIT
(L/C)
 Relationship Management Application [RMA] needs to be
established between L/C Issuing Bank in Borrower’s country
with Exim Bank (SWIFT: EIBIINBB).
 Pursuant to establishment of RMA, at the instance of the
Borrower Government a Letter of Credit [L/C] covering the
contract may be opened in favour of the Indian exporter
stipulating Exim Bank as the advising and negotiating bank.
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OPENING OF A LETTER OF CREDIT
(L/C)
 L/C will be issued by a Bank in Borrower’s Country in favour of Indian
Supplier/Exporter, filling up relevant fields of the L/C as per the terms of
Contract and LOC Agreement .
 For speedy implementation of the contract, LC needs to be settled mutually
between the Importer and the Indian exporter in consultation with Exim Bank,
prior to the issuance of the LC.
 Exim Bank will act as Negotiating Bank. Indian Supplier/Exporter will submit
negotiable documents to Exim Bank, either directly or through its banker.
 Exim Bank makes disbursements to Indian Supplier/Exporter, once the credit
compliant documents are negotiated, and debits the LOC account of the
Borrower Government.
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Lines of Credit–
Disbursements and Repayments
Disbursements are linked to the progress of execution of the contract.
INDIAN EXPORTER /
CONTRACTOR EXECUTES
CONTRACTS
Opens Letter of Credit (LC)
in favour of
BUYER / EXECUTING AGENCY
1. Supplies equipment/goods
2. Provides services
BUYER / EXECUTING AGENCY
Claims disbursements from
1. Payment against conforming documents
including Bill of Lading for supplies.
2. Payment against Payment Authorization
Certificate from LOC recipient in respect of
services rendered
EXIM BANK
EXIM BANK
EXIM BANK
1. Advises Disbursement
2. Advises Repayment schedule as per
the provision of the Agreement
1.
2.
Repayment of Principal Installments
Payment of Interest/Commitment
Fee/Management Fee
INDIAN EXPORTER /
CONTRACTOR
LOC-RECIPIENT
LOC-RECIPIENT
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Wide Range of Projects Financed: Examples
PROJECTS/SECTORS FINANCED
Agricultural Projects
Construction Projects
Irrigation
Power Generation
Power Transmission &
Distribution, Rural
Electrification
Railway Rehabilitation
Road Transportation
LOC RECIPIENT COUNTRIES
: Burkina Faso, Cameroon, Chad, Cote d’Ivoire,
Gambia, Ghana, Madagascar, Mali, Senegal,
Sierra Leone, Sudan, Tanzania
: Gabon, Gambia, Ghana
: Lesotho, Malawi, Mozambique, Senegal
: D.R. Congo, Equatorial Guinea, Ethiopia, Mali,
Mozambique, Niger, Sudan
: Burkina Faso, Ghana, Mali, Mozambique,
Senegal
: Angola, Benin, Ghana, Mali, Senegal
: Central African Republic, Cote d’Ivoire, Ghana,
Niger, Senegal
Technology (Parks & Training) : Cote d’Ivoire, D.R. Congo, Mozambique, Senegal
Sugar Industry Rehabilitation : Ethiopia, Sudan
Buyer’s Credit under NEIA
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Buyer’s Credit under NEIA

Exim Bank has, in conjunction with ECGC, introduced a new
product viz. Buyer’s Credit under Government of India’s National
Export Insurance Account (NEIA).

The NEIA is a Trust, set up by Ministry of Commerce and Industry,
Government of India, for providing export credit insurance cover
and is administered by ECGC.

Under the Buyer’s Credit, the Bank finances project exports from
India
by
extending
credit
facility
to
overseas
sovereign
governments and government owned entities on deferred credit
terms, without recourse to the Indian exporter.
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Buyer’s Credit under NEIA: Broad Terms
Eligible Buyer
Sovereign governments and government owned entities overseas
Eligible exporters
Exporters with satisfactory past track record and sound financials are eligible for
financing under the programme.
Eligible Goods
Project exports from India
Quantum of Credit
Generally, not more than 85% of the contract value
Rate of Interest
The current rates are as follows:
(i) LIBOR + 2.25% p.a. for tenor < 8 years.
(ii) LIBOR + 2.50% p.a. for tenor of 9 to 12 years
(iii) LIBOR + 3.00% p.a. for tenor of 13 to 15 years
Premium on NEIA
Comprehensive Risk Cover Policy, indicative premium (payable upfront) at approx.
cover
6% (lump sum) for the principal component and at 1% p.a. (6% lump sum - if paid
upfront) for the interest component, to be borne by seller / buyer, as may be agreed.
Repayment
Credit period would normally be 8 to 15 years. Longer credit period could be
considered in deserving cases
Security
 Sovereign guarantee from Ministry of Finance of the Borrowing Country
Any other security, on case-to-case basis.
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Buyer’s Credit under NEIA: Approval Process
(8) Signing of Commercial Contract
& Buyer’s Credit Agreement
Overseas Project
Authority
Indian Exporter
(1) Approaches for
Buyer’s Credit and Terms
(6) For proposals
exceeding USD 20 mn,
approval is sought
Working Group:
Exim Bank, RBI,
ECGC, Sponsoring
Bank
EXIM BANK
(2) Due
Diligence
(3) Seeks In-principle approval
for cover and premium rates
(5) On receipt of LoI/award of
contract, internal approval by Exim
Obtained.
(7) Approval accorded for BC-NEIA
ECGC - NEIA
(4) Conveys In-principle approval and
premium
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Buyer’s Credit under NEIA: Approval Process
Indian Exporter
(4) Funds
Transfer
(2) Submits
shipping
documents and
Claims
disbursement
under payment
authorization /LC
(1) Supplies goods / provides services
Overseas Project
Authority
(3) Exim Bank will negotiate
documents under Letter of Credit
or payment will be made to
exporter
against
Payment
Authorisations
EXIM BANK
(5) Advises Project Authority about disbursement and debit his Buyer’s Credit a/c with
Exim Bank
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ECGC’s Positive List of Countries under NEIA
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9
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Country
Afghanistan
Algeria
Bangladesh
Barbados
Belarus
Bhutan
Botswana
Djibouti
Egypt
Ethiopia
Gabon
Ghana
Guinea
Indonesia
Iran
Kazakhstan
SN
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Country
Kenya
Kuwait
Latvia
Liberia
Libya
Malawi
Maldives
Mauritius
Moldova
Mongolia
Morocco
Mozambique
Myanmar
Namibia
Nepal
SN
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Country
Nigeria
Republic of Congo
Romania
Russia
Rwanda
Senegal
Sri Lanka
Syria
Tanzania
Togo
Uganda
Uzbekistan
Vietnam
Zambia
Zimbabwe
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Website
www.eximbankindia.in