Ongoing sovereign debt crisis in some of the European economies has not adversely impacted the business of Exim Bank as of now, though volatility of the Euro remains a matter of concern for the lender.
Small European economies like Greece and Spain, which are facing debt crises, has sent waves of panic around the globe with severe volatility being seen in the Euro in recent times.
“So far, there has been no impact of the Greek debt crisis on our business. Market rates have gone up slightly for all players. But we are still waiting for the second order of impact,” T C A Ranganathan, CMD of Exim Bank, said.
However, the public lender with a sound degree of exposure to European market, is facing the heat due to the volatility in exchange rates of the Euro against the Dollar.
“In the multiple currency rate regime, every Exim bank has to deal with such volatility. We have devised our ways to deal with it but the picture will be clear in the near future,” he told Business Standard.
European and Commonwealth of Independent States accounted for 32.9 per cent of the 1,201 contracts secured by the bank during last fiscal. In value terms, the contract size was pegged at 4.8 per cent of the total Rs 18,370 crore during this period.
However, the bank that borrows both in Indian and foreign currency has no plans to reduce its exposure to the Euro in the recent times.
“Our borrowing depends on the exporters’ preference of currency. If he requires Euro, we will provide it,” Ranganathan added.
Earlier, Exim bank had estimated to borrow Rs 24,000 crore this fiscal, a 20 per cent jump over the last fiscal.
“Our borrowing comprises of short-term, medium-term, and long-term funding from various institutions and there is no revised estimate on our borrowing plan as of now,” he said.
India, along with other developing nations had witnessed a drastic drop in their exports during recession. However, things are looking up with revival of demand owing to tangible improvement in the economy.
Indian exports, alone , had posted a 36 per cent jump to $16.9 billion in April, 2010.
“With signs of recovery, India should be able to achieve the export target of $200 billion this fiscal,” Ranganathan said.
He also said that the bank was actively funding Indian investment abroad through its overseas investment programme.
Exim Bank posted a net profit of Rs 513 crore in FY10, a 7.5 per cent rise over the corresponding period last year. However, revenue of the bank dropped by 13 per cent to Rs 2988 crore during this period.
The bank witnessed a 16 per cent rise in loan approvals to Rs 38,840 crore and loan disbursements rose 15 per cent to Rs 33,250 crore in FY10.
