Buyer’s Credit under NEIA Exim Bank’s Lines of Credit and Buyer’s Credit under NEIA Harare, Zimbabwe March 12, 2014

Exim Bank of India SET UP BY AN ACT OF PARLIAMENT IN SEPTEMBER 1981 WHOLLY OWNED BY GOVERNMENT OF INDIA COMMENCED OPERATIONS IN MARCH 1982 APEX FINANCIAL INSTITUTION OBJECTIVES: “… for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country’s international trade…” “… shall act on business principles with due regard to public interest” (Export-Import Bank of India Act, 1981)

Evolving Vision Comprehensive Range of Products And Services Product Centric Approach “To develop commercially viable relationships with a target set of externally oriented companies by offering them a comprehensive range of products and services, aimed at enhancing their internationalisation efforts” Export Credits 1982-85 Export Capability Creation 1986-94 Comprehensive Range of Products And Services – All Stages of the Export Business Cycle – Customer Centric Approach Exim Bank TODAY Leadership and Expertise in India’s Export Finance

Management Board of Directors (16)* OFFICES Appointed by Domestic Offices: 10 Ahmedabad Bangalore Chandigarh Chennai Guwahati Hyderabad Kolkata New Delhi Mumbai Pune Chairman and Managing Director 5 Directors: Government of India 3 Directors: Scheduled Banks 2 Directors : Professionals/Experts 1 Director nominated by RBI 1 Director nominated by IDBI 1 Director nominated by ECGC Overseas Offices:8 Addis Ababa Dakar Dubai Johannesburg London Singapore Washington D.C. Yangon Appointed by Govt. of India * As per Exim Bank Act

Operational Philosophy International Trade Financing Promoting Facilitating Through Variety of Financing Programmes Value Added Business Advisory Services Research and Analysis Catalyst for Financing Projects Products Services

Range of Products & Services At All Stages of Export Business Cycle Value Based Services to Exporters INFORMATION Advisory Services Knowledge Building SUPPLEMENTS FINANCING PROGRAMMES Export Marketing Export Marketing Pre- Shipment Export Production Post- Shipment Export Product Development Investment Abroad Import Finance Advisory Services FINANCING, FACILITATING INDIA’S TWO WAY TRADE & INVESTMENT

Financing Programmes Financing Program (Various Currencies) Export Credit Medium / Long Term Lines of Credit Buyer’s Credit Supplier’s Credit Short Term Pre / Post Shipment Credit Import Credit Import Loan for capital goods Bulk Import Loan for Raw Materials Loans for Exporting Units Term Loans for expansion/ diversification / new projects/ export product development/ export marketing / research & development Term Loans for overseas equity investment Direct equity stake in Indian/ Overseas ventures of exporting companies

Lines of Credit

Lines of Credit Programme Lines of Credit (LOCs) Exim’s own LOCs to economically strong developing countries and regional development banks At behest of GOI, concessional LOCs to developing countries in Asia/ Africa/ Latin America/ CIS and Oceania with a long-term perspective. While Exim raises the resources and funds disbursement, GOI guarantee and provide interest equalisation support under Indian Development and Economic Assistance Scheme (IDEAS) Status of LOCs No. of LOCs operative : 187 No. of countries covered : 75 Total amount of LOCs sanctioned : US$ 10.21 billion

Lines of Credit Programme A Catalyst for Trade Promotion Enables import of Indian equipment and technology on deferred credit terms Direct exposure on overseas borrowers No recourse to Indian exporters Exporters get payment on shipment Particularly relevant for small and medium (SME) sector Eligible items – all items permissible under Exim Policy Project related Supplies & Services Industrial Products & Consumer Durables Commodities

Exim Bank’s LOCs Broad Terms Advance Payment : 10% of FOB/CFR/CIF value Credit offered : 90% of FOB/CFR/CIF value Credit Period : 5 years for capital and engineering goods 2 years for industrial manufactures and consumer durables 1 year for commodities Availability period : 36 months for opening L/c 42 months for disbursement

GOI-LOCs routed through Exim Bank Broad Terms Credit offered : 100% of FOB/CFR/CIF /CIP value Credit Period : 8-20 years (inclusive of moratorium of 2-5 years) Availability period : 48 months from the scheduled completion date for project exports 72 months from the execution of the Credit Agreement for supply contracts

Origination of LOC Proposal – GOI LOCs

Origination of LOC Proposal – Exim LOCs

Lines of Credit– Signing

Lines of Credit– Making LOC Agreement effective

Guidelines for Bidding and Procurement Procedures The Borrower shall adopt a transparent procedure based on competitive bidding for awarding the Eligible Contract to Indian Seller. The Borrower may conduct competitive bidding procedures in accordance with prevailing procurement laws, rules and regulations of the Borrower’s country to ensure that the award of the Eligible Contract to the Seller is made in a fair and transparent manner; the rules and regulations of the borrowing country relating to competitive bidding should be clearly defined and details of which should be provided to Exim Bank in advance. The Borrower shall award the Eligible Contract to the Seller based on competitive bidding process. The bidding shall be restricted to Indian companies registered in India and/or incorporated/established under any law in force in India.

Guidelines for Bidding and Procurement Procedures The Borrower shall express the bid price only in Dollar (US$) The Borrower shall widely publicise the tender inviting bids for the Eligible Contract through Websites or any other suitable media in Borrower’s country and India, including websites of the Exim Bank and Industry associations in India.

Lines of Credit– Contract Approval Competitive bidding process is mandatory. Government of LOC-recipient country is expected to conduct fair and transparent selection with wide participation of Indian companies.

OPENING OF A LETTER OF CREDIT (L/C) Relationship Management Application [RMA] needs to be established between L/C Issuing Bank in Borrower’s country with Exim Bank (SWIFT: EIBIINBB). Pursuant to establishment of RMA, at the instance of the Borrower Government a Letter of Credit [L/C] covering the contract may be opened in favour of the Indian exporter stipulating Exim Bank as the advising and negotiating bank.

OPENING OF A LETTER OF CREDIT (L/C) L/C will be issued by a Bank in Borrower’s Country in favour of Indian Supplier/Exporter, filling up relevant fields of the L/C as per the terms of Contract and LOC Agreement . For speedy implementation of the contract, LC needs to be settled mutually between the Importer and the Indian exporter in consultation with Exim Bank, prior to the issuance of the LC. Exim Bank will act as Negotiating Bank. Indian Supplier/Exporter will submit negotiable documents to Exim Bank, either directly or through its banker. Exim Bank makes disbursements to Indian Supplier/Exporter, once the credit compliant documents are negotiated, and debits the LOC account of the Borrower Government.

Lines of Credit– Disbursements and Repayments Disbursements are linked to the progress of execution of the contract.

Wide Range of Projects Financed: Examples PROJECTS/SECTORS FINANCED   LOC RECIPIENT COUNTRIES Agricultural Projects : Burkina Faso, Cameroon, Chad, Cote d’Ivoire, Gambia, Ghana, Madagascar, Mali, Senegal, Sierra Leone, Sudan, Tanzania Construction Projects Gabon, Gambia, Ghana Irrigation Lesotho, Malawi, Mozambique, Senegal Power Generation D.R. Congo, Equatorial Guinea, Ethiopia, Mali, Mozambique, Niger, Sudan Power Transmission & Distribution, Rural Electrification Burkina Faso, Ghana, Mali, Mozambique, Senegal Railway Rehabilitation Angola, Benin, Ghana, Mali, Senegal Road Transportation Central African Republic, Cote d’Ivoire, Ghana, Niger, Senegal Technology (Parks & Training) Cote d’Ivoire, D.R. Congo, Mozambique, Senegal Sugar Industry Rehabilitation Ethiopia, Sudan 23 23

Buyer’s Credit under NEIA

Buyer’s Credit under NEIA Exim Bank has, in conjunction with ECGC, introduced a new product viz. Buyer’s Credit under Government of India’s National Export Insurance Account (NEIA). The NEIA is a Trust, set up by Ministry of Commerce and Industry, Government of India, for providing export credit insurance cover and is administered by ECGC. Under the Buyer’s Credit, the Bank finances project exports from India by extending credit facility to overseas sovereign governments and government owned entities on deferred credit terms, without recourse to the Indian exporter.

Buyer’s Credit under NEIA: Broad Terms Eligible Buyer Sovereign governments and government owned entities overseas Eligible exporters Exporters with satisfactory past track record and sound financials are eligible for financing under the programme. Eligible Goods Project exports from India Quantum of Credit Generally, not more than 85% of the contract value Rate of Interest The current rates are as follows: (i) LIBOR + 2.25% p.a. for tenor < 8 years. (ii) LIBOR + 2.50% p.a. for tenor of 9 to 12 years (iii) LIBOR + 3.00% p.a. for tenor of 13 to 15 years Premium on NEIA cover Comprehensive Risk Cover Policy, indicative premium (payable upfront) at approx. 6% (lump sum) for the principal component and at 1% p.a. (6% lump sum - if paid upfront) for the interest component, to be borne by seller / buyer, as may be agreed. Repayment Credit period would normally be 8 to 15 years. Longer credit period could be considered in deserving cases Security Sovereign guarantee from Ministry of Finance of the Borrowing Country Any other security, on case-to-case basis.

Buyer’s Credit under NEIA: Approval Process Overseas Project Authority (8) Signing of Commercial Contract & Buyer’s Credit Agreement Overseas Project Authority Indian Exporter EXIM BANK (1) Approaches for Buyer’s Credit and Terms (2) Due Diligence (3) Seeks In-principle approval for cover and premium rates (6) For proposals exceeding USD 20 mn, approval is sought (5) On receipt of LoI/award of contract, internal approval by Exim Obtained. (7) Approval accorded for BC-NEIA (4) Conveys In-principle approval and premium Working Group: Exim Bank, RBI, ECGC, Sponsoring Bank ECGC - NEIA

Buyer’s Credit under NEIA: Approval Process (1) Supplies goods / provides services Indian Exporter Overseas Project Authority (2) Submits shipping documents and Claims disbursement under payment authorization /LC (4) Funds Transfer (3) Exim Bank will negotiate documents under Letter of Credit or payment will be made to exporter against Payment Authorisations EXIM BANK (5) Advises Project Authority about disbursement and debit his Buyer’s Credit a/c with Exim Bank

ECGC’s Positive List of Countries under NEIA SN Country 1 Afghanistan 17 Kenya 32 Nigeria 2 Algeria 18 Kuwait 33 Republic of Congo 3 Bangladesh 19 Latvia 34 Romania 4 Barbados 20 Liberia 35 Russia 5 Belarus 21 Libya 36 Rwanda 6 Bhutan 22 Malawi 37 Senegal 7 Botswana 23 Maldives 38 Sri Lanka 8 Djibouti 24 Mauritius 39 Syria 9 Egypt 25 Moldova 40 Tanzania 10 Ethiopia 26 Mongolia 41 Togo 11 Gabon 27 Morocco 42 Uganda 12 Ghana 28 Mozambique 43 Uzbekistan 13 Guinea 29 Myanmar 44 Vietnam 14 Indonesia 30 Namibia 45 Zambia 15 Iran 31 Nepal 46 Zimbabwe 16 Kazakhstan 29

Before concluding, let me briefly highlight how Exim Bank helps Indian companies in their globalisation efforts though enhancing their competitiveness. For upgrading the technological competence, we offer finance towards import of technology, finance for product development and also for undertaking research and development. We also provide advisory services for location of joint venture partners as also structuring and facilitation of Joint Ventures The Bank offers a wide range of lending and service programmes to assist Indian companies at all stages of the business cycle. Through import of technology, capital, goods and raw materials, the Bank facilitates the upgradation of technology and capabilities of Indian companies to enable them to enhance their competitiveness. The broad array of support programmes offered by the Bank for product development, production marketing, as also preshipment and post-shipment finance, enable Indian companies to add value resulting in exports of products, capital goods, services. The Bank has also been instrumental in promoting ventures overseas in the fields of manufacturing, assembly, marketing and trading. 30

THANK YOU Website www.eximbankindia.in