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Exim Bank works out scheme for importers

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BS Reporter Kolkata

Exim Bank is looking to develop an alternative finance instrument for importers. The bank is working on a partially structured buyers'credit scheme, which will offer credit at competitive rate to importers, said T C A Ranganathan, Chairman and Managing Director, Exim Bank.

The reduced interest cost would have to be borne by the exporter community.

"We are working towards putting in place a partially structured buyer's credit where exporters will bear the subsidy. ECGC will grant the political risk," said Ranganathan At present,funding from multilateral agencies or government-subsidised schemes are other options for importers of the the foreign country.

In the new scheme, instead of the government, the interest differential will be borne by the exporter. This would help increase exports, and gain competitive edge for other exporting countries, he said. An announcement in this regard is likely to be made in six to eight weeks.

 

In the case of the government line of credit, the interest cost differential is generally borne by the government.

Ranganathan said that such partially structured buyer's credit was being already used by the Chinese Exim Bank. The bank expects 20 per cent rise in exports this year.

Recently, Exim Bank opened a $1 billion line of credit for Bangladesh. The bank is also looking to provide $700-800 million for exports primarily to Sri Lanka. Ranganathan said that Exim Bank was now working on providing similar lines of credit for Myanmar.

The bank is also looking at providing finance to R&D initiatives of private firms, depending upon the performance. Exim Bank was also having a European Investment Bank (EIB) line of credit for promoting clean energy.

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First Published: Jul 17 2010 | 12:23 AM IST

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