International Finance Corporation (IFC) is planning to invest around Rs 345 crore in Export-Import Bank of India (EXIM). The loan on IFC’s own account and around around Rs 1,035 crore parallel loans to be mobilised from international commercial banks, according to the corporation, which is part of the World Bank.
The proposed investment involves a long term loan on IFC’s own account and mobilisation by IFC of parallel loans from international commercial banks to Exim Bank, said IFC. The proposed investment is up to $75 million of loan on IFC’s own account and around $ 225 million parallel loans to be mobilised from international commercial banks. “The proceeds of the IFC loan will be used to finance exports from India to other South Asian countries from private sector exporters, mainly middle market companies,” according to the corporation.
The development impact of the project is expected to be supporting international trade between India and other South Asian countries, will provide access to finance to the underserved medium enterprise sector as they would be able to secure financing to execute export orders in the current weak market conditions and helping boost confidence in the Indian economy amongst other market participants and facilitate improvement in international credit flows to India, said the Corporation.
The Corporation will also help the bank to mobilise finance to meet its term financing needs. IFC, in collaboration with Exim Bank, will explore providing skill development and export capacity upgradation programmes with a focus on south-south trade. This project involves IFC support for the business of Trade Finance and has been categorised as category FI project according to IFC environmental and social review procedure.
Exim Bank, formed in 1981 under the Export-Import Bank of India Act, and is a financial institution whose capital has been wholly subscribed by the Government of India.
The Bank provides financial assistance to exporters and importers and also aims to develop relationships with export-oriented companies by assisting them in various capacities such as identifying overseas markets, providing loans and guarantees and export credit. Its non-institutional clients include mainly private sector entities.