Exim Bank set to raise Rs 12K crore

Written by Banking Bureau | Kolkata, Jul 30 | Updated: Jul 31 2007, 04:50am hrs
The Export Import (Exim) Bank of India has firmed up plans to raise Rs 12,000 crore from the market globally in 2007-08 against Rs 10,621 crore it raised last fiscal. The additional funding will help the bank extend its line-of-credit (LoCs) portfolio to 15 more countries involving Rs 4,000 crore, and also double its investment in projects. TC Venkat Subramanian, chairman & managing director, said Exim Bank has so far extended 76 lines of credit covering 83 countries with a total sanction of $2.3 billion.

Exim Bank extends LoCs to foreign financial institutions, regional development banks, sovereign governments and other overseas entities, to enable buyers in those countries to import goods and services from India on deferred credit terms. Subramanian said Exim Bank at present is more inclined to give LOCs to regional banks in various parts of the world as these banks have started giving better returns.

For investment in projects overseas, the bank might raise its total sanction to $500 million in 2007-08 against $250 million in 2006-07.

Subramanian said Exim Bank can take a stake of up to 25% joint venture projects and up to 49% in a project that is a 100% Indian subsidiary. The bank is looking at projects the acquisition

of which would not cost more than $100-150 million. We are talking to 10 companies in pharmaceutical, engineering and oil sector to take up equity, Subramanian said.

Of the Rs 12,000 crore to be raised, the bank plans to raise Rs 7,200 crore from the Indian market and $1.2 billion from the overseas market. Of the $1.2 billion, $1bn (around Rs 4000 crore) would be raised through European medium term notes (EMTN), which are issued directly to the market with a maturity period of less than five years and are offered continuously rather than all at a time like a bond.

The bank plans to raise the rest from the Japanese market and has tied up with Japan Bank for International Co-operation (JBIC) and the Asian Development Bank (ADB) for soft loans.

Exim Bank tapped the European market for the first time in 2006-07 as part of its target to raise a US$800 million loan that reaped maximum benefit from cross-currency management.