Exim Bank’s Lines of Credit and

Buyer’s Credit under NEIA

Harare, ZimbabweMarch 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

Leadership and Expertise in India’s Export Finance

Comprehensive Range of Products And Services

– All Stages of the Export Business Cycle – Exim Bank TODAY

Export Capability Creation1986-94

ExportCredits

1982-85

Customer Centric Approach

“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”

Management

Board of Directors (16)* OFFICES

Chairman and Managing Director

5 Directors: Government of India

3 Directors: Scheduled Banks

2 Directors : Professionals/Experts

1 Director nominated by RBI

1 Director nominated by IDBI

1 Director nominated by ECGCAppointed

by Govt. of India

* As per Exim Bank Act

Domestic Offices: 10

Ahmedabad

Bangalore

Chandigarh

Chennai

Guwahati

Hyderabad

Kolkata

New Delhi

Mumbai

Pune

Overseas Offices:8

Addis Ababa

Dakar

Dubai

Johannesburg

London

Singapore

Washington D.C.

Yangon

Operational Philosophy

International Trade

Financing Promoting Facilitating

Through

Research and Analysis

Value Added Business Advisory Services

Variety of Financing Programmes

Catalyst for Financing

ServicesProductsProjects

Range of Products & Services

At All Stages of Export Business Cycle Value Based Services to Exporters

Export Marketing

Export Production

Export Product

Development

Import Finance

Advisory Services

Investment Abroad

Post-Shipment

Export Marketing

Pre-Shipment

INFORMATION

Advisory Services

Knowledge Building

SUPPLEMENTS FINANCING PROGRAMMES

FINANCING, FACILITATING INDIA’S TWO WAY TRADE & INVESTMENT

Financing Programmes

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 long-term 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 & ServicesIndustrial Products & Consumer DurablesCommodities

GOI-LOCs routed through Exim BankBroad 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

PARTNER COUNTRYMINISTRY OF FOREIGN

AFFAIRS

1. The partner country discusses development priorities with the Indian Mission and a feasible project is identified / developed.

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. Forwards proposal with their

recommendations / comments

INDIAN MISSION ACCREDITED TO

PARTNER COUNTRY

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

Govt. of India (Ministry of Finance)

–Department of Economic Affairs -

Examines; if acceptable from finance/budget angle, conveys approval

Govt. of India (Ministry of External Affairs)

Export-Import Bank of India (Exim Bank)

Conveys offerConveys terms (interest rate &

credit period) & sends draft LOC AgreementINDIAN MISSION

ACCREDITED TO PARTNER COUNTRY

LOC RECIPIENT COUNTRYMINISTRY OF FOREIGN AFFAIRS

Conveys offer of LOC Forwards terms & draft LOC Agreement

Lines of Credit– Signing

1. Sends draft LOC Agreement2. Exim Bank Resident Representative could visit

LOC-recipient country to familiarize the organisationwith operational aspects

Conveys acceptance

Comments / Suggestions

LOC RECIPIENTAgreement finalised

AGREEMENT IS SIGNED

Consultation

LOC-RECIPIENT

Concurs

EXPORT-IMPORT BANK OF INDIA (EXIM BANK)

EXPORT-IMPORT BANK OF INDIA (EXIM BANK)

Lines of Credit– Making LOC Agreement effective

Forwards 1. Legal opinion from legal counsel of LOC-

recipient 2. List of Authorized Signatories

Examines the documents and if found in order

Conveys effectiveness

LOC RECIPIENT

EXPORT-IMPORT BANK OF INDIA (EXIM BANK)

LOC-RECIPIENT

LOC AGREEMENT MADE EFFECTIVE

BY EXIM BANK

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.

Guidelines for Bidding and Procurement Procedures

Lines of Credit– Contract Approval

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

LOC Recipient

1. Examines the proposals2. Seeks information/clarification from the LOC-recipient

/Indian Supplier/Contractor3. Examines the projects in the light of provisions of the

LOC4. If found OK, conveys approval of specific contracts

Export-Import Bank of India (Exim Bank)

Indian Supplier / Contractor

LOC-RECIPIENT

1. Competitive bidding process is mandatory.

2. Government of LOC-recipient country is expected to conduct fair and transparent selection with wide participation of Indian companies.

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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.

OPENING OF A LETTER OF CREDIT (L/C)

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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.

OPENING OF A LETTER OF CREDIT (L/C)

Lines of Credit– Disbursements and Repayments

INDIAN EXPORTER / CONTRACTOR EXECUTES

CONTRACTS

EXIM BANK

BUYER / EXECUTING AGENCY

Claims disbursements from

BUYER / EXECUTING AGENCY

LOC-RECIPIENT

INDIAN EXPORTER / CONTRACTOR

Opens Letter of Credit (LC) in favour of

1. Supplies equipment/goods2. Provides services

1. Advises Disbursement2. Advises Repayment schedule as per

the provision of the Agreement

EXIM BANK

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

1. Repayment of Principal Installments2. Payment of Interest/Commitment

Fee/Management FeeLOC-RECIPIENT

Disbursements are linked to the progress of execution of the contract.Disbursements are linked to the progress of execution of the contract.Disbursements are linked to the progress of execution of the contract.Disbursements are linked to the progress of execution of the contract.

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PROJECTS/SECTORS FINANCED

  LOC RECIPIENT COUNTRIES

Agricultural Projects : Burkina Faso, Cameroon, Chad, Cote d’Ivoire, Gambia, Ghana, Madagascar, Mali, Senegal, Sierra Leone, Sudan, Tanzania

Construction Projects : Gabon, Gambia, GhanaIrrigation : Lesotho, Malawi, Mozambique, Senegal Power Generation : D.R. Congo, Equatorial Guinea, Ethiopia, Mali,

Mozambique, Niger, Sudan Power Transmission & Distribution, Rural Electrification

: Burkina Faso, Ghana, Mali, Mozambique, Senegal

Railway Rehabilitation : Angola, Benin, Ghana, Mali, SenegalRoad Transportation : Central African Republic, Cote d’Ivoire, Ghana,

Niger, SenegalTechnology (Parks & Training) : Cote d’Ivoire, D.R. Congo, Mozambique, Senegal Sugar Industry Rehabilitation : Ethiopia, Sudan

Wide Range of Projects Financed: Examples

Buyer’s Credit under NEIA

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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.

Buyer’s Credit under NEIA

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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

cover

Comprehensive Risk Cover Policy, indicative premium (payable upfront) at approx.

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 CountryAny other security, on case-to-case basis.

Buyer’s Credit under NEIA: Broad Terms

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EXIM BANK

Indian ExporterOverseas Project

Authority

Working Group:Exim Bank, RBI, ECGC, Sponsoring Bank

ECGC - NEIA

(5) On receipt of LoI/award of contract, internal approval by Exim Obtained.

(7) Approval accorded for BC-NEIA

(4) Conveys In-principle approval and premium

(3) Seeks In-principle approval for cover and premium rates

(2) Due Diligence

(6) For proposals exceeding USD 20 mn, approval is sought

(1) Approaches for Buyer’s Credit and Terms

(8) Signing of Commercial Contract & Buyer’s Credit Agreement

Buyer’s Credit under NEIA: Approval Process

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Indian Exporter

EXIM BANK

Overseas Project Authority

(4) Funds Transfer

(1) Supplies goods / provides services

(2) Submits shipping documents and Claims disbursement under payment authorization /LC

(5) Advises Project Authority about disbursement and debit his Buyer’s Credit a/c with Exim Bank

(3) Exim Bank will negotiate documents under Letter of Credit or payment will be made to exporter against Payment Authorisations

Buyer’s Credit under NEIA: Approval Process

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ECGC’s Positive List of Countries under NEIA

SN Country SN Country SN Country 1 Afghanistan 17 Kenya 32 Nigeria 2 Algeria 18 Kuwait 33 Republic of Congo3 Bangladesh 19 Latvia 34 Romania 4 Barbados 20 Liberia 35 Russia 5 Belarus 21 Libya 36 Rwanda 6 Bhutan 22 Malawi 37 Senegal 7 Botswana 23 Maldives 38 Sri Lanka 8 Djibouti 24 Mauritius 39 Syria 9 Egypt 25 Moldova 40 Tanzania

10 Ethiopia 26 Mongolia 41 Togo 11 Gabon 27 Morocco 42 Uganda 12 Ghana 28 Mozambique 43 Uzbekistan 13 Guinea 29 Myanmar 44 Vietnam 14 Indonesia 30 Namibia 45 Zambia 15 Iran 31 Nepal 46 Zimbabwe 16 Kazakhstan

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WebsiteWebsite

www.eximbankindia.in www.eximbankindia.in