Exim Bank, Commercial Bank and Ecgc Functions Essay

The Bank’s functions are segmented into several operating groups including: * Corporate Banking Group which handles a variety of financing programmes for Export Oriented Units (EOUs), Importers, and overseas investment by Indian companies. * Project Finance / Trade Finance Group handles the entire range of export credit services such as supplier’s credit, pre-shipment credit, buyer’s credit, finance for export of projects & consultancy services, guarantees, forfeiting etc. * Lines of Credit Group Lines of Credit (LOC) is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs, and serves as an effective market entry tool. * Agri Business Group, to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing. * Small and Medium Enterprises Group to the specific financing requirements of export oriented SMEs. The group handles credit proposals from SMEs under various lending programmes of the Bank. * Export Services Group offers variety of advisory and value-added information services aimed at investment promotion * Fee based Export Marketing Services Bank offers assistance to Indian companies, to enable them establish their products in overseas markets. * Besides these, the Support Services groups, which include: Research & Planning, Corporate Finance, Loan Recovery, Internal Audit, Management Information Services, Information Technology, Legal, Human Resources Management and Corporate Affairs The objectives and functions of the Exim Bank include the following: 1.Grant of loans and advances in India solely or jointly with commercial banks to persons exporting or intending to export India goods which may include the export of turnkey projects and civil consultancy services. 2.Grant of lines credit to Governments, financial institutions and other suitable organizations in foreign countries to enable person outside India to import from India, goods including turnkey projects, civil construction contracts and other services including consultancy services. 3.Handling transaction where a mix of government credit and commercial credit for exports is involved. 4.Purchasing, discounting and negotiating export bills. 5.Selling or discounting export bills in international markets. 6.Discounting of export bills negotiated or purchased by a scheduled bank or financial institution notified by government, or granting loans and advances against such bills. 7.Providing refinance facilities to specified financial institutions against credits extended by them for specified exports or imports. 8.Granting loans and advances or issuing guarantees solely or jointly with a commercial bank for the import of goods and services from abroad. 9.Issuing confirmation/endorsing letters of credit on behalf of exporters in India, negotiating, collecting bills under letters of credit, opening letters of credit on behalf of importers of goods is services and negotiating documents received there under. 10.Buying and selling foreign exchange and performing such other functions of an authorized dealer as may necessary for the functions of an export- import bank. 11.Undertaking and financing research, surveys and techno-economic studies bearing on the promotion and development of international trade. 12.Providing technical, administrative and financial assistance to any exporter in India or any other person who intends to export goods from India for the promotion, management or expansion of any industry with a view to developing international trade. * Functions of commercial banks in foreign trade: 1. Letters of Credit Issued If you are the buyer (importer) of goods from abroad, the seller (exporter) will want to be assured of payment, and you will want to be assured that all terms and conditions of the purchase agreement are kept. The most common instrument used for payment and shipment control is a letter of credit issued by the bank of the buyer in favor of the seller. 2. Advising Bank After the bank of the buyer approves the issuance of the letter of credit, the issued letter of credit is sent to the advising bank who establishes the authenticity of the instrument and informs the beneficiary of receipt. 3. Confirmed letter of credit The advising bank may confirm the letter of credit after checking the terms and conditions for payment by adding its own guarantee to that of the issuer. 4. Final Payment After all of the terms and conditions for shipment and quality standards have been checked via the presentation of proper documentation, the issuing bank pays the seller for the goods.