Hello students, today we will discuss Exim Bank in this video. So here we will take an overview of Exim Bank and also understand its role and objective. So let's start.
The full name of Exim Bank is Export-Import Bank. And it is clear from the name that it is a bank which is established for the purpose of export and import. Right? That means all the functions of normal bank will be there.
But here... objective which will be specific will be only for export import purpose right so this bank was established in 1982 and that too was established through the Indian act so its act was your export import bank of India act 1981 so after properly passing the act this bank was established and it has started its working right so this bank is basically set up for long term finance and it has been set up for export as well as import So, for the exporters and importers who want to export from India, looking at their financial needs, if they want to trade internationally, when they go abroad from the national geographical boundaries, when they trade in other countries, then the establishment of Exim Bank was made to assist them in providing long-term finance to those who have financial needs. So Indian government owns Exim Bank.
That means all their management and everything will be through your Indian government. Which is the central government. So the board of directors of Exim Bank.
Whose representatives will they be? They are representatives of Government of India, RBIO and Financial Institutions. They are the members of their board of directors.
That means all the people in BOD are representatives of them. And these board of directors are managing the entire Exim Bank. So here it is clear that Exim Bank was established through the Government of India Act was passed in the proper Parliament The establishment is done inside the Act Central Government manages their Board of Directors And representatives of different places are members of the Board of Directors And they handle the entire working And what will they do? They will provide all the banking services Whatever you have studied in the banking services, whatever the commercial bank provides They will provide all the banking services And they will provide all the banking services Who will be given this importance?
Not just a normal public, here the focus will be on exporter and importer. Those who export or import things from abroad, so these things are established for our businessmen. Now businessmen in the sense is not that export and import the product. If we are exporting or importing our agricultural sector and agricultural products, then all the facilities of financing are provided to them through Exim Bank. Now we will talk about the What are the roles and objectives of Exim Bank?
So, the objectives or roles they talk about are clear. The main objective is to improve and increase the export and import projections. Means, to enhance and improve the export and import properly. This is their main objective.
As we have our balance of trade, balance of trade. payment, BOP as we say, is maintained and how will balance of payment be? on the basis of export and import, things happen, maximum things. So to encourage and facilitate the export of international technical merchant banking services as well as their joint ventures.
So all our exporters who are exporting internationally then if they need technical assistance or banking facilities, merchant banking facilities or foreign joint ventures through which they are getting engaged then means they are getting their work done together, so to encourage all of them and to provide them with any facilities, this also comes in their objective list. To lend in the LOCs and Credit of Buyers, so to extend the line of credit and credit of buyers, whose work will be done? Exim Bank will be done.
So here, see, line of credit and credit of buyers are two different terms, and their importance is very much in your Exim Bank, and for export import now what exactly happens is in line of credit there are government initiatives so here the government of your country first this line of credit was provided in your country now it has been extended line of credit overseas means in foreign countries the financial institutions or the regional development banks or the sovereign governments they have extended these overseas entities, these credit facilities. So, what basically happens here is, that the goods of our country, if the overseas buyers want to purchase, then overseas buyers can easily purchase our goods. Means to increase the export of our country, to increase the export of our country, to help our overseas buyers, how will we help them?
Through the government there. So basically what happens is that the entire agreement, means what Exim Bank does, and government makes agreement with all partners, overseas partners, developing countries, through which there is proper agreement and sanctioning is done. The whole project is well evaluated and on that basis, exports are promoted, our country's exports are promoted, that the payment there, which people are ordering our goods, people outside are ordering our goods, they can order it easily, they should not face any problem. So when the government and some financial institutions will support them, then it will be easy for them to get goods from our country. So line of credit, line of control, LOC, this is our power.
So when we go ahead and help them that you get goods from us, so they get goods from us, to help them, then this line of credit comes to you. So what happens is that the Indian exporters, they have a lot of encouragement, it is very easy for them. So there are a lot of people who are willing to help.
entry in new market, so all the developing nations with whom we have partnership, so what they will do, they will help you in all these things, means all the buyers of those developing nations, who will be ordering our stuff, they will not face any problem, it becomes easy for them, so basically this line of credit is that government initiative, by doing IDI, Indian Development Initiative, through that it was done, which is now known as IDEAS, now its name is by doing IDEAS, IDEAS, EAS Ideas And it's called Indian Development And Economic Assistance Scheme So ideas is what it's called So basically In these ideas It happened that LOC should be extended Overseas Means line of credit Now see If you understand The exact meaning of line of credit Then the simple meaning Of line of credit is That you have to take a loan We will permit you to take a loan You borrow And we will make a limit specific Now till that limit Tak you can easily borrow. The more you borrow, the more interest you will get. It will not be on the whole. If I give you a limit of 5 crores, then 5 crores will be your maximum borrowing limit. If you need 1 crore, then borrow 1 crore.
If you need 2 crores, then borrow 2 crores. This is called a simple term line of credit. Now we are taking these things with overseas. And we are giving them this facility that you can purchase from our country.
But all the agreements, all the projects, all the things that you can borrow from us, properly evaluate and extend this LOC. So basically it has only one benefit I mean it has many benefits but the important benefit of LOC is that exports of our country goods and services regarding new projects will increase because we are providing facilities to those who are asking us and all the bilateral trade relations through developing nation will improve more because through government because through international our government will interact with other government and maintain a proper trade relation and with that financial institutions of government will promote to get our goods from here that they will get loan easily, they will not face any problem, so they will get all these facilities and what will happen here, our exporter will not face any problem that the importer who is sending the goods will he pay them or not, the risk of payment is eliminated but obviously the thing is that I am exporting the goods from here and the person importing from the other country will pay us later when my stuff goes, he will pay us or after some advance he will pay us so somewhere we have a risk that our importer didn't pay us so when this kind of LOC is through the government then this payment risk is completely eliminated so this is a very good LOC method which is done through Exim Bank And you can easily read this LOC on many sites of Exim Bank. I mean, you can go to Exim Mitra or Exim Bank's official sites, only on Exim ORG, you can go there and read it easily, what are the things in this line of credit, how is its process, its proper process is given, right?
Now, when we talk about the credit of buyers, when we talk about buyer credit, then these things will not be kept in mind there too. It is also saying that the buyer who will purchase your stuff, we will lend it to him, correct? So, what is the work of Exim Bank? Credit of buyers, i.e. loan is provided to purchasers properly, loan is provided to our importers, the line of credit is extended, so who does all these works?
Exim Bank does it. So, next is to provide timely and relevant information to exporters of India. about their opportunities in various export fields and areas.
So, exporters, who are India's exporters, Exim Bank can provide them with time-to-time, all the relevant information, all the opportunities related to export fields, where they can export from, all those things, proper knowledge and proper information can be provided through Exim Bank. Apart from this, all the currency-related issues, so, again, that the manufacturers and producers resolve the currency related issues. Like if you are exporting your goods and you will get the payment after exporting it, then the conversion will be done and it will come in your currency.
If your cost will be effective, then it will be more profitable for you. If the cost will not be effective, then there will be a little problem in profitability. If the conversion rate of the other side currency is running, then your profit will be less.
impact on the market, whether it is less or more. So, the work of managing the currency-related issues properly is also done by your Ex-Bank. Basically, this is what they come to the objective of how to manage it effectively. To look into Indian finance problems and give resolution policies for it.
So, time to time, whatever policy, whatever problems are related to export, import or financial issues, whatever problems come, to resolve them, they also have an objective to frame new policies. Give out them. to enhance and promote the trade of foreigners in our country.
Basically, to promote and motivate foreign countries, to promote them, to motivate them to export from our country, to trade from our country, to make our trade relations stronger, and to purchase from our country. And maybe this is the reason why they are promoting LOC or Buyer's Credit. provide in your knowledge or in your bias of credit. Just regarding that it is easy for foreigners to get things from us. Suppose you want to get something from USA and if USA government provides you with many facilities that if you get things from us then you will get loan easily or we provide you with loan so you get things from us.
So in such situation you will think that we can order from here, we can change the interest rate too so obviously you will be more motivated to order from there so this is what your government is doing through LOCs, credit of buyers etc that foreigners order from here, they export from here so the main objective of enhancing these things is of your Exim Bank now we will talk about functions of Exim Bank so if we talk about the first function then what is it? buyers credit now what does buyers credit mean whatever we were telling you so here credit facility or program that encourage Indian exporter to explore new reasons across the globe it also facilitates exports for SMEs by offering credit to overseas buyers to import goods from India so basically buyers credit is such a program or facility provided by Exim Bank or such a work of Exim Bank where they do what India's exporters are being given a new zone. How are they giving it? They provide you a new geographical location that you can export your goods here.
How do they provide such goods? Because they particularly provide the buyers, the citizens or the businessmen there this facility that we will provide you a loan. So basically, in buyer's credit, this short-term working capital works like a trade credit.
where the overseas importers are provided with loans. Now, how do they get loans? They get loans through the importers'bank, through their lender, your Ex-Im Bank.
So, they get loans for them and they can easily get your stuff. It becomes easy for them to get your stuff because they get loans easily. So, somewhere, there is a way of buyer's credit through which you can get overseas buyers and... credit. Byers ko credit dey reyna, jo khareedni wala usko udhar dey na.
To hum export kar rahe hain, hum saman bhej rahe hain, seller ho gaya aur jo khareedni wala hai na, hum usko credit provide karege. Right? To ye apka buyers credit. Aur dekhe hamare yaan jo buyers credit hai na, ye jo Eximbank karti hai, jo apki facilities provide karey hai, function jo iska hai wo basically NIA ke through control kya jata nahi ya, matlab National Export Insurance Account.
To ye jo National Export Insurance Account hai, basically ek trust hai, jisko Ministry of Commerce ke through and set up and ECGC is the one who administers it. Export Credit Guarantee Corporation. ECGC administers it and through certain Ministry of Commerce, NIA. NIA is National Export Insurance Account. NIA works on the buyers of credit.
Exim Bank manages the entire buyers of credit through NIA. So, for our exporters, it has become easy that the one who has to buy, the one whom we export, the loan is being provided by our country and it is being done easily. So, next is corporate banking.
So, corporate banking means what? It offers a variety of financing programs to augment the export competitiveness of Indian companies. So, all the Indian companies, they have a lot of banks, commercial banks, by refinancing them. Bills will be given permission to be discounted and all the bill receipts will be given to the Indian companies. Corporate regarding all the things that they need, all the functions, all the financing services are provided by Eximbay.
Next is lines of credit which I was saying about LOC. So it offers extended line of credit in Indian exporters to help them expand new geographies and uses a line of credit as an effective market entry tool. So basically LOC is a good entry tool.
Through this, exporters can take entry in a new country. Why? Because here it happens that your Indian government, other governments, the governments of developing nations, they do trade relations with them, do trade partnership.
And because of which, what happens? Properly, your export-import work is done well. So, there, Exim Bank will properly approve and sanction all the projects in those countries. And on the basis of that, after evaluating the project, on the basis of that, they will get the finance easily. So, through LOC, your export work becomes very easy.
So, Exim Bank also provides LOC. Apart from this, Overseas Investment Finances. So, Overseas Investment Finance means, that if any of our Indian companies want to do any equity investment or joint venture or if they want to establish their business units in foreign countries Eximbank will help you in all these things Eximbank provides all the assistance for them It happens that you want to open your export unit or overseas unit or you can say like this or you are doing joint ventures in foreign countries and connecting with foreign people and starting business with them so in such places where you are interested in investing in overseas, so regarding that Eximbank is also helping you right, so apart from this you have project export so project export in the sense that to finance the project, so all the exporters in India and all the Indian companies who are bringing new projects new projects, new contracts on their basis they can promote export export so they can be financed by Exim Bank project financing so they do it properly like textile jute industry, software industry in this way they properly finance different industries and all your export overseas units your project that you want to put new unit, new branch somewhere outside or you want to modernize it, bring new assets or you want to expand your units then for that also 100% refinancing facilities provided through commercial banks will finance you. So, so that your project, your thing can work out well.
So, in this way, by doing project financing through project financing Eximbank completes its work. Means, whatever export related work is there, through which your work completes, export-import is increased, basically export is focused because import is easy, And the demand for foreign currency will increase. People will ask for more home currency. So this will increase your value. If the demand is more, then the value will increase.
So for this, export is very much promoted. For this, pre-shipment credit etc. Consultancy services are provided. Eximbank provides you with many such things.
So these are some financing services that you need. Exim Bank provides Apart from this, they also provide you services This is a product Till now we have talked about Goods and services, everything is provided by Exim Bank So what was all this? It was a product, goods were provided by Exim Bank That you are Buyer's credit, through that You gave loan to the buyer, corporate Line of credit, these are their products Through which they are providing you finance And you easily complete your Export-export business Through pre-shipment Etc. Now they also provide some services. Services in the sense that you are being given marketing advisory service.
So all the Indian exporters and their overseas distributors or partners assist them to identify the opportunities, where you can put your projects, where you can put your projects. How to acquire such companies or how to plant such projects? In this way, marketing related means where to market your export, how to make it more attractive, where to suit the location for you, which country is suitable for your product, in this way, all the advisory services are provided to you related to marketing.
Thank you for watching this video. So, international economics or trade and investment or country profile or risk to identify will always be researched and suggested through research. So basically, if you want to launch your product in a country or export your product, then how suitable is that country, how feasible is it, what kind of risk can you face there, are the economic conditions there regarding your trade or product feasible or not.
time to time research and analysis is done by Exim Bank and those reports are provided to you. Export Advisory Services, so here your Exim Bank gives you full support, will provide you full information, will give you full advice to the exporters that they can evaluate properly that at what international level they have to face risk, or what are the opportunities, how can they grab it, and how can they get it done. If he is globalizing and launching his product or exporting his products, then what kind of competitive market can he face?
For that, how to improve him? Or how to exploit this kind of risk? Regarding all this, basically, regarding your exports, that if you want to export, then all the problems related to it, regarding all that, Eximbank provides you advice. So, if you see, If you want to understand their functions, then understand that they give you proper export credit.
You have to export, they will give you pre-shipment credit for export. That means you are manufacturing, you are making things, at that time you will get loan provide without it. Or you are launching projects, you will get credit in that.
Your supplier will give credit to the supplier, they will provide you guarantee, letter of credit will be issued. So, they will provide you all the credit facilities related to exports, all the loans, all the financial institutions, commercial banks, they provide you properly. So, see, if you want to write this in summary, then you will write in their function, see, if there is a bank, then what will be the function?
Financing will be the basic function that if you need, they will provide you a loan, right? And exporters need a loan according to them. So regarding that, they will give you the entire loan of export, whether it is of pre-shipment, you have to give credit to the suppliers or you have to give consultancy, they will provide you all the facilities related to the whole export.
Through commercial banks, they will provide you with the facilities of rediscounting, bill discounting, etc. They will properly finance your project, they will finance all the projects that you are launching, if you want to purchase equipment, then they will also do the work of financing that equipment. you have requirement of working capital, you want to export your project, for that you will need short term things, short term loan for 1-2 years so they will provide you working capital and finance loan, by which you can proper your overseas units they will work on your research and development, that you can do research properly, that where your product will be from, for that they will give you finance regarding all your services where we will provide you services so it will be easy for you we will provide you financing in that way underwriting services we will provide you SMEs etc. which are small and medium enterprises we will finance them too so basically overall if we see we will provide you all the financial facilities so that the export can increase right, we will provide you all those things so I hope you got clear about how Eximbank works, wish you all the best thank you so much