Short note on EXIM Bank: Full Form, Meaning, Roles and Functions (2024)

The EXIM Bank (Export-Import Bank of India) is the country’s largest and leading export finance-based institution engaged in integrating the foreign trade and investments with the national economic growth.

Founded by the government of India in 1982, the EXIM Bank is considered a wholly-owned subsidiary of the Indian government. It has its headquarters in Bombay, Maharashtra and the current Managing Director of the EXIM Bank is David Rasquinha. The subsidiaries of EXIM Bank include the Export-Import Bank of India, Asset Management Arm, and Export-Import Bank of India London Branch.

For candidates who are aspiring to take up a job in banking or finance, it is very important to know about the importance and functions of the EXIM Bank. Hence, the following finance study notes on EXIM Bank have been devised keeping in mind the best interests of competitive exam preparation. Check the below section to know more about the EXIM Bank of India, its roles, functions, importance, structure, and more.

Latest Updates:

• • In order to encourage the emergence of new initiatives, the government of India has decided to infuse a capital of INR 1500 crore into the state-owned Export-Import Bank of India.
  • For the current fiscal year, the amount is INR 200 crore higher than the provisions made by the government. A total of INR 1300 crore capital infusion had been benchmarked for the bank.
  • The cabinet also sanctioned an increase in the authorized capital of EXIM Bank to INR 20,000 crore from INR 10,000 crore.
  • EXIM bank extends an LoC of USD 400 million dollars to the government of Republic of Maldives

These and many more such information shall help the candidates prepare for the upcoming UPSC and other banking exams.

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EXIM Bank – Overview

The EXIM Bank of India is considered as a rare case of a banking institution wherein both the concept and the need for such an institution had been questioned for more than 20 years before it was finally established in the year 1982. In a rapidly shifting paradigm of finance, the EXIM Bank acts as a key player in the promotion of cross border trade and investment.

Established in: September 1981
Headquarters: Bombay, Maharashtra
Authorized Capital: INR 10,000 crore
Managing Director: David Rasquinha

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Objectives

The objective of the EXIM Bank had been to import technology and export marketing and product development, export production, pre-shipment and post-shipment, and overseas investment. Given below are some more objectives of the EXIM Bank of India:

• • Providing financial assistance to importers and exporters, and functioning as the financial institution for coordinating the work of institutions engaged in financing import and export of goods and services with a view to promote India’s international trade.
  • The EXIM Bank of India is encrusted to act on business principles in the best regards of the public interest.
  • The EXIM bank’s vision has transformed from being product-centric with Export Capability Creation and Export Credits, to a more customer-centric approach by providing a wide array of products and services to empower businesses at all stages of a company’s business operations.
  • The bank aims to develop commercially cordial relationships with a target set of externally oriented companies by way of a wide array of products and services that are aimed at improving their internationalization efforts.
  • It aims to utilize the leadership and expertise in Export Finance to strike a lasting difference to India-based companies with global aspirations. The bank also aims to facilitate globalization of the Indian businesses.

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Importance

The EXIM Bank of India is primarily responsible for providing financial assistance to the exporters and importers of the country. It also supervises and coordinates the working of the other bodies that work in the import-export sector in India.

Besides, the EXIM Bank also strives to promote the foreign trade sector in India. In the early 1990s, the Bank had introduced the Clusters of Excellence in the country. Its aim was to enhance the quality standards of the imports as well as exports. For that, the EXIM Bank also has a tie-up with the European Bank for Reconstruction and Development.

In order to promote the exports, the EXIM Bank has also devised schemes such as production equipment finance program, vendor development finance, export marketing finance, and so on.

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EXIM Bank – Financial Products

The EXIM Bank functions take place through its various financial products. Let us have a quick look at the EXIM Bank’s financial products in brief as below:

• • Buyer’s Credit: With this credit facility, the overseas buyer can open a “letter of credit” in favour of the Indian exporter and can import goods and services from India on the terms of deferred payment.
  • Corporate Banking: Under this one, the EXIM Bank offers a myriad of financing programs to enhance the exports competitiveness of the Indian companies. It also caters to their working capital and supervises the investment requirements.
  • Lines of Credit: Through the Lines of Credit (LOC) the Indian exporters are able to enter new geographies or expand their business in the existing markets without any risk of payment from the overseas importers.
  • Overseas Investment Finance: The EXIM Bank extends term loans to Indian companies for the purpose of equity investments in their foregin joint ventures with a view to enhance export opportunities.

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• • Project Exports: It enables project exports from India in a bid to help the Indian companies acquire overseas contracts in engineering, procurement, and construction (civil, electrical, mechanical, etc.)
  • Marketing Advisory Service: This group of the EXIM bank plays a key role in creating and enhancing export capabilities and international competitiveness of the Indian exporters.
  • Export Advisory Service: This arm offers a wide range of advisory support and information services to the exporters enabling them to exploit export opportunities, improve competitiveness, and evaluate international risks.
  • Research & Analysis: Through the Research & Analysis Group (RAG) the EXIM bank monitors trends in the domestic as well as international economies to analyse their impact on the Indian economy.

Functions of the EXIM Bank

Now that we are aware of the meaning, importance, objectives, and financial products concerning the EXIM bank, one of the prime Regulators of Banks and Financial Institutions, let us also take a look at some of its prime functions. The major functions of the EXIM Bank include:

• • Financing exports and imports of goods and services from India
  • Financing the import and export of goods and services other countries as well
  • Underwriting shares/ stocks/ debentures/ bonds of companies that carry out foreign trade
  • Financing the import and/ or export of machinery and equipments on lease or hire-purchase basis
  • Undertaking functions of a merchant bank for the importer or exporter in transactions of foreign trade
  • Providing refinancing services to banks and other financial institutions for their capital requirements of foreign trade
  • Offering short-term loans or lines of credit to foreign banks and governments

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As we have seen, the EXIM Bank plays a key role in assisting the Indian companies to carry out businesses abroad and earn foreign exchange. Hence, it is a prominent part of the Indian economy as well as of the UPSC syllabus as regards to the General Studies. Candidates preparing for UPSC or bank exams must be thorough with the finance study notes as the one above. For more such information, check out the Testbook App regularly.