Export-Import Bank of India (EXIM Bank)

The Export-Import Bank of India (EXIM Bank) is India’s apex financial institution for financing, facilitating, and promoting the country’s foreign trade. It was established on 1 January 1982 under the Export-Import Bank of India Act, 1981, and began operations in March 1982. The bank is headquartered in Mumbai and is wholly owned by the Government of India.
EXIM Bank functions as India’s export credit agency (ECA). Its core purpose is to provide financial support to exporters and importers and to coordinate long-term and strategic financing for India’s international trade. The bank was created at a time when strengthening exports was critical for improving India’s balance of payments and earning foreign exchange.

Rationale

International trade involves risks and financing requirements that differ from domestic business. Exporters often need funds before shipment to produce goods, after shipment while awaiting payment, and sometimes to offer credit to overseas buyers. Importers may need finance to purchase raw materials, machinery, or technology from abroad. While commercial banks provide trade finance, EXIM Bank was set up as a specialized institution to address gaps that normal banking arrangements could not easily fill.

Role

EXIM Bank plays several key roles:

• It provides medium- and long-term trade finance beyond the typical scope of commercial banks.
• It helps Indian exporters enter new markets by extending credit to foreign buyers and governments.
• It supports export-oriented firms through developmental finance, including technology and capacity expansion.
• It acts as a policy interface between the government and exporters, implementing trade-related initiatives.
• It offers advisory and research support on export markets and global trade trends.

Key Functions of EXIM Bank

Export Credit

EXIM Bank provides credit to exporters at various stages of the export cycle.

• Pre-shipment finance (packing credit) is extended to exporters to meet working capital needs for procurement of raw materials, processing, manufacturing, and packaging before shipment. This credit may be provided directly or through refinance to commercial banks.
• Post-shipment finance supports exporters after goods have been shipped, when payment from the overseas buyer is pending. EXIM Bank discounts export bills, negotiates bills under letters of credit, or provides advances against export receivables. This ensures liquidity and continuity of operations.

Lines of Credit (LOCs)

One of EXIM Bank’s most important tools is the extension of Lines of Credit (LOCs) to foreign governments, banks, and financial institutions, particularly in developing countries. These LOCs are usually extended at concessional or competitive terms and are tied to the purchase of Indian goods and services.
Through LOCs, EXIM Bank helps Indian exporters access new markets in Africa, Asia, Latin America, and CIS countries. LOCs have financed exports such as power equipment, railway coaches, agricultural machinery, and infrastructure services. Many of these credits are extended under the government-backed Indian Development and Economic Assistance Scheme (IDEAS).

Buyer’s Credit and Supplier’s Credit

EXIM Bank facilitates Buyer’s Credit, under which loans are provided directly to foreign buyers or their banks to finance imports of Indian capital goods and services. This allows Indian exporters to offer deferred payment terms, making their products more competitive.
Under Supplier’s Credit, EXIM Bank finances Indian exporters so that they can extend credit to overseas buyers. The exporter receives payment upfront, while EXIM Bank recovers the amount later from the buyer.

Overseas Investment Finance

EXIM Bank supports Indian companies investing abroad by financing equity participation, joint ventures, acquisitions, and subsidiaries overseas. This helps Indian firms globalize, build international supply chains, and often leads to higher exports from India through overseas linkages.

Import Finance

Although export promotion is the priority, EXIM Bank also finances imports, particularly of technology, capital goods, and critical inputs. Such imports are supported when they enhance domestic production capacity, support re-exports, or improve India’s export competitiveness.

Project and Infrastructure Finance

EXIM Bank plays a major role in financing project exports, where Indian companies execute large overseas contracts such as power plants, railways, construction, and engineering projects. It provides loans, guarantees, and structured finance to support these projects.
Domestically, EXIM Bank also finances export-oriented infrastructure, including ports, logistics facilities, and special economic zones that strengthen India’s trade ecosystem.

Guarantees and Risk Mitigation

EXIM Bank issues various guarantees on behalf of Indian exporters, including bid bonds and advance payment guarantees, especially in project exports. It works closely with the Export Credit Guarantee Corporation (ECGC), which provides insurance cover against political and commercial risks, while EXIM Bank provides the financing component.

Advisory and Capability-Building Role

EXIM Bank also provides advisory and consulting services to Indian firms. It conducts country and sector studies, market research, and export potential assessments. It supports exporters in upgrading quality standards, certifications, packaging, and research and development.
Special focus is given to small and medium exporters, export-oriented units (EOUs), and enterprises in rural and traditional sectors. Programs such as Grassroots Business Initiatives aim to integrate crafts, artisans, and rural industries into global value chains.

International Cooperation

EXIM Bank partners with international institutions such as the African Development Bank, BRICS New Development Bank, and other export credit agencies for co-financing and trade promotion. It is a member of global export credit forums, including the Berne Union, and follows international norms for trade finance.
The bank maintains overseas offices and representatives in major global centers and developing regions, enabling better project monitoring, market intelligence, and exporter support.

Notable Initiatives

• Buyer’s Credit under NEIA: Provides credit for project exports, with risk cover under the National Export Insurance Account managed by ECGC.
• Ubharte Sitaare Fund (2021): A joint initiative with SIDBI to support high-potential Indian exporters through equity and debt financing.
• Venture and Innovation Support: Through its venture capital arm, EXIM supports export-focused start-ups and innovative firms.
• Creative Economy Finance: Supports exports in films, media, tourism, and cultural industries with export potential.
• Research and Capacity Building: EXIM promotes research through awards and scholarships in international economics and trade.

Impact on the Economy

EXIM Bank has contributed to India’s export growth, especially in engineering goods, capital goods, and project exports. By enabling competitive credit terms, it has helped Indian firms win global contracts.
Its LOCs and buyer’s credit programs have strengthened strategic trade relationships, particularly with developing countries. By sharing trade risks, EXIM Bank has enabled even smaller exporters to participate in global markets. It also plays a counter-cyclical role, stepping up trade finance during global downturns when private lenders become risk-averse.

Relationship with Other Institutions

EXIM Bank works closely with the Government of India, RBI, ECGC, and commercial banks. While banks handle routine trade transactions, EXIM focuses on large, complex, and long-term trade finance. It often co-lends or refinances banks for major export contracts and acts as a key instrument of India’s trade and development diplomacy.