Here is a compilation of essays on ‘EXIM Bank’ for class 11 and 12. Find paragraphs, long and short essays on ‘EXIM Bank’ especially written for school and banking students.
Essay on EXIM Bank
Essay Contents:
- Essay on the Introduction to EXIM Bank
- Essay on the Financing Programmes of EXIM Bank
- Essay on Deferred Payment Exports/Project Exports
- Essay on the Assistance for Project Exports/Turnkey Projects/Construction Projects
- Essay on the Other Services and Programmes of EXIM Bank
- Essay on the EXIM Bank Line of Credit Programme for Other Countries
1. Essay on the Introduction to EXIM Bank:
The Exim Bank of India was established in 1981, under the Export Import Bank of India Act 1981, an Act of Parliament, as a principal financial institution for providing financial assistance and services and for coordinating the functions of institutions engaged in financing of export import trade in the country, specially on a long-term basis. It arranges lines of credit to other Governments, for promoting exports of goods made in India.
The functions and operations of Exim Bank evolve around following philosophy:
1. To make exports internationally competitive, by offering finance at competitive rates and conditions.
2. To develop alternate financing solutions.
3. To provide data, information and advice for new export opportunities to Indian exporters.
4. To provide selective production, marketing and financing for Indian products to make them internationally competitive.
5. To respond to export problems of Indian Exporters and pursue policy resolutions.
2. Essay on the Financing Programmes of EXIM Bank:
EXIM Bank’s lending activities to the trade, banks and other institutions, can be listed as under:
A. For Exporters and Importers:
(i) Suppliers’ Credit:
Export credits extended to Indian exporters to enable them to offer deferred credit to overseas buyers.
(ii) Consultancy and Technology Services:
Financial assistance to exporters for offering deferred credit to overseas buyers of Indian Consultancy, technology and other services.
(iii) Pre-Shipment Credit:
Finance for executing contracts involving manufacturing cycle of over six months.
(iv) Project Finance to Export Oriented Unit:
Term loans for setting up of export oriented units in export processing zones as also Domestic Tariff Area (DTA) Units exporting minimum 25% of annual sales.
(v) Import Finance:
Financing of imports which are export related, i.e., imports by export-oriented units, imports of computer systems for development and export of software, import of plant and machinery, technology up gradation, expansion of production capacity for export markets.
(vi) Overseas Investment Finance:
Finance to Indian companies towards their equity participation in joint ventures abroad.
Exim Bank has also been permitted by RBI to facilitate financing of medium-term long term export bills through Forfaiting.
Exim Bank also allows finance in foreign currency, at internationally competitive interest rates to Indian exporters for their regular pre-shipment credit requirements. The export bills are handled by the commercial bankers of the company, with an undertaking that the payment of the export bill, upon receipt, shall be passed on to EXIM Bank for liquidation of the finance allowed by them against the goods/bill.
B. For Commercial Banks:
(i) Export Bills Re-Discounting:
Commercial banks in India, authorised to deal in Foreign Exchange, are given refinance facility for their export bills portfolio, and thus can rediscount their short- term export bills with an usance period not exceeding 180 days.
(ii) Small Scale Industry (SSI) Export Bills Rediscounting:
For rediscounting of export bills, by banks, drawn by SSI units.
(iii) Refinance of Export Credit:
This scheme covers refinance of deferred payment loans allowed by authorised dealers in foreign exchange, extended for export of Indian goods.
(iv) Refinance of Term Loans:
Under this scheme, banks can get refinance up to 100% of the term loans allowed to eligible export oriented units, computer software exporters, for procuring capital goods.
(v) Guarantees:
EXIM Bank also participates with Commercial banks in India in issue of guarantees such as advance payment, performance, retention money and guarantees for borrowing abroad for execution of export contracts.
C. For Foreign Governments, Foreign Importers and other Financial Institutions:
(i) Overseas Buyer’s Credit:
Exim Bank offers credit to foreign importers directly, for import of eligible Indian goods and related services, helping them to get credit on goods purchased from India.
(ii) Lines of Credit:
Exim Bank sanctions Lines of Credit to foreign governments for allowing term finance for import of eligible Indian goods and related services by them or financial institutions, specified by them. The Indian exporter of goods and services gets payment on submission of shipment documents or proof of completion of service/job, while the foreign Government pays at a later date as per tenor of line of credit.
(iii) Relending Facility to Banks Overseas:
Exim Bank allows Relending facility to International Banks to provide term finance to their clients overseas for import of eligible Indian goods.
3. Essay on Deferred Payment Exports/Project Exports:
Under the existing Exchange Control Regulations exporters are required to realise full export proceeds within a period of six months from the date of shipment, except for certain specified type of exporters, like status holders, etc.
Such exports are determined to be on cash basis. Whenever export proceeds are proposed to be received fully or partly beyond the statutory time limit of six months, these are treated as deferred payment exports.
The goods eligible for deferred payment export are segregated into two categories, viz., Group A comprising exports of capital and production goods, and Group B, comprising consumer durables and industrial manufacture.
For availing finance against exports on deferred payment basis, the exporter is required to approach the sponsoring bank, the main banker or the lead bank of the exporter, which can approve such projects valued up to Rs 25.00 crores, subject to conformity with guidelines. Proposals of value not exceeding Rs 100 crores are to be referred by the sponsoring bank to EXIM Bank, for in principle clearance at bid stage itself, along with copies thereof to RBI and ECGC.
For contracts valued more than Rs 100 crores, an inter institutional working group which meets at EXIM Bank and acts as a focal point has to consider the proposal at pre-bid stage. The working group members comprise of officials from EXIM Bank, ECGC, RBI-FED and sponsoring banks.
4. Essay on Assistance for Project Exports/Turnkey Projects/Construction Projects:
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as Project Exports. Project Export contracts are generally of high value and exporters undertaking them are required to offer competitive credit terms to be able to secure orders from foreign buyers in the face of stiff international competition.
Turnkey Project:
Turnkey projects are those which involve supply of equipment along with related services like design, detailed engineering, civil constructions, erection and commissioning of plant. Typical projects include supply, erection and commissioning of boilers or plants for manufacture of cement, sugar, textiles, and chemicals.
Construction Projects:
It involves civil works, structural works as well as associated supply of construction materials and equipment. While the element of equipment is smaller in construction projects as compared to turnkey projects the line of demarcation could be very thin.
Construction projects include civil works for roads, railway lines, airports, irrigation canals and dams, buildings, technical and consultancy service contracts involving provision of personnel furnishing of know-how, skills, operation and maintenance services and management contracts are covered under the banks financing programme.
EXIM Bank extends funded and non-funded facilities for industrial turnkey projects, civil construction contracts as well as technical and consultancy service contracts. The non-funded facilities would include, Bid Bond, Advance Payment Guarantee, Performance Guarantee, Guarantee for Raising/Borrowing Overseas, Other Guarantees for customs duty exemption, security deposits, etc.
Funded Facilities:
Funded facilities granted by Exim Bank could include Pre-shipment Rupee Credit for procuring material against rupee payment from local suppliers, pre-shipment credit in foreign currencies to finance cost of imported inputs for manufacture and export products to be supplied under the projects. Post-Shipment Rupee Credit on deferred payment terms covering eligible Indian Capital and engineering goods and related services.
EXIM Bank also considers Foreign Currency Loans at competitive rates to finance purchase of third country materials, equipments and constructions machinery.
These facilities are extended by EXIM Bank individually or in participation with Commercial Banks.
5. Essay on the Other Services and Programmes of EXIM Bank:
(i) Consultancy and Technology Services:
Consultancy and technology services, wherein Indian consultants are assisted by way of long- term financial assistance, manpower and expert recruitment, preparation of project reports, plans, transfer of technology, etc.
(ii) Overseas Investment Finance:
Overseas investment finance, wherein corporates interested in joint ventures abroad, are provided equity finance by Exim Bank. The equity participation can be by way of export of plant and machinery, for which long-term export finance is considered by Exim Bank.
(iii) Import Loans:
Import loans for financing imports from third countries for projects to be executed in foreign countries.
(iv) International Merchant Banking Services:
International merchant banking services include foreign currency financing and advisory services for raising low cost finance for projects abroad to be executed by Indian companies.
(v) Export Marketing Fund (EMF):
Exim Bank is the nodal agency, designated by the Government of India (GOI), to manage the Export Marketing Fund (EMF) to accelerate the export growth of target products with industrialized markets.
EMF-1 was a component of World Bank loan to India of USD 250 million for Industrial Export (Engineering products) project, while EMF-2, amounting to USD 37 million is a component of a World Bank loan to India for export development. EXIM Bank has also launched Export Marketing Finance EMF-3 from its own resources.
Private Sector Companies and joint sector companies, who have the overall resources, capability potential, top management commitment and on export strategy to penetrate and retain presence particularly in developed country markets, are eligible for use of EMF support. The funds are to support any manufactured export and in addition, computer software.
The activities which are eligible for EMF support include:
i. Desk research
ii. Overseas field market research
iii. Minor product adaptation
iv. Overseas travel
v. Product inspection services
vi. Training.
Establishing overseas operations:
i. Travel to India by overseas buyers
ii. Front-end promotional expenditure
iii. Research and development
iv. Equipment for plant modernisation/capacity enhancement
v. Tooling, jigs and fixtures
vi. Testing/quality control equipment.
(vi) Product Liability Insurance (PLI):
In developed countries product liability consciousness of the public is very high, resulting in a large number of litigation and high awards. This forces exporters to indemnify themselves against risk of incidence of product liability through product liability insurance offered by insurance companies.
As the cost of PLI premium is high, which acts as a deterrent to market entry efforts of Indian exporters adversely, due to its effect on price competitiveness, EXIM bank’s PLI programme enables the exporters’ market entry efforts by sharing the initial costs of PLI premium.
Registered Indian exporters endeavouring to export to OECD (Organization for Economic Cooperation and Development) countries are eligible for support under the programme.
(vii) Export Vendor Development Lending Programme (EVDLP):
Manufacturer, exporters and trading export houses source goods from vendors for export on a regular basis. Such indirect exports constitute a significant component of the country’s exports. The EVDLP enables exporters to support vendor development.
Exporters are granted Rupee loans for implementing strategic vendor development plans, for increased supply of exportable goods, through creation strengthening of backward linkages with vendors.
Such activities include:
i. Acquisition of production machinery
ii. Purchase of tooling, moulds, jogs, dyes and ancillary equipment
iii. Core working capital assistance extended by exporters to vendors
iv. Soft expenditure on vendors development such as vendor training, technical assistance to vendors.
EVDLP is exporter specific and aimed at capacity enhancing schemes to export large volumes through outsourcing products from vendors. (Sub-suppliers). Products purchased from vendors may be finished or semi-finished or intermediate products with the exporter adding value to the product in the form of further processing or marketing them.
Thus EXIM Bank, as a specific institution for development of exports, has been undertaking various activities, besides financing to support all efforts of the Indian exporting community. This includes commodity exports as also exports of projects, consultancy, software, etc.
6. Essay on the EXIM Bank Line of Credit Programme for Other Countries:
Under this route, EXIM Bank grants line of credit to governments of other countries, for supporting their development plans, which allows the Indian exporter to get instant credit from EXIM Bank, upon exporting the goods/services and submission of export documents through their regular bankers. The beneficiary government gets a long tenor of say 3-5 years to pay for the products and services, thus allowing them deferred payment credit.
The exporters get orders from the operating agency in the buyer’s country, which is issued under the line negotiated with EXIM Bank. The EXIM Bank also issues a letter to the exporters about availability of lines for the order received by them.
The exporter then, based on the order and letter of lines received from EXIM bank proceeds to get pre-shipment finance for procurement/manufacturing of goods. Once shipment is made, documents are to be submitted as per the order/LC, and reimbursement claimed from EXIM Bank, under the line available with them.
Over the past few years, EXIM Bank has been quite aggressively expanding its financing programmes and has been continuously looking out for fresh borrowers, even by taking over financing from traditional bankers.
The Bank has been helpful to Indian companies for their international ventures, take-over of overseas projects, imports of large projects and machinery involving foreign currency funding, as also domestic imports and exporters for their imports and exports financing requirements.