Providing capital funds to Export-Import Bank of India during 2013-14 .

The Union Cabinet today approved the proposal to provide capital funds to Export-Import Bank of India (Exim Bank) during 2013-14 to the tune of Rs.700 crore as per provision made in the Demand for Grants of 2013-14, to support the future growth of the Bank and to delegate the authority for release of capital funds in Exim Bank in future to the Finance Minister in line with the budgetary provisions approved by the Parliament.

The infusion of capital funds in Exim Bank will ensure compliance to the regulatory norms on capital adequacy, cater to the credit needs of productive sectors of economy as well as to withstand impact of stress in the economy. This will also boost the confidence of exporters.

The infusion of Rs. 700 crore in the equity capital of Export Import Bank of India would enable the Bank to raise higher amount of borrowings and thereby support Indian exporters to secure large overseas projects through on-lending.

It will also help the Bank to grow its loans & advances portfolio @ of 14% which will be below the targeted rate of 19% as per the Medium Term Business Strategy (MTBS) of the Bank.

Background

The Exim Bank was set up as a Corporation in 1982 under the Export Import Bank of India Act, 1981 for providing financial assistance to exporters and importers and for functioning as 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 and matters connected therewith or incidental thereto. The Bank`s aggregate resource raising by means of borrowings is subject to RBI prescribed ceiling of 10 times of the Bank`s net-owned funds (NOF viz. capital and free reserves). As a result, the Bank`s ability to extend financial support to Indian exporters for securing and executing large-sized projects overseas is constrained.

Source : investinindia.com