The Hindu Business Line : Exim Bank to hike stake in Global Trade Finance

Mr S. Sridhar (right), Executive Director, Exim Bank, in conversation with Mr S.K. Jain, Chairman, Federation of Indian Export Organisations (Eastern Region), during an interactive session in Kolkata on Saturday. — Parth Sanyal

Kolkata, June 26

EXPORT-Import Bank of India (Exim Bank) has planned to upscale the operations of its nearly three-year-old export factoring joint venture Global Trade Finance Private Ltd (GTF). GTF, a non-recourse forfaiting and export factoring outfit, is promoted by Exim Bank (holding 35 per cent) with WestLB, Germany (40 per cent), and IFC, Washington (25 per cent). GTF offers, for the first time in India, non-recourse structured foreign trade financing products such as forfaiting and factoring.

Talking to presspersons here on Saturday at the sidelines of an interactive session organised by Federation of Indian Export Organisations (FIEO), Eastern Region, Mr S. Sridhar, Executive Director, Exim Bank, said as a first step, the plan was to raise the bank's stake in GTF to 40 per cent. On the proposed new holding pattern of GTF, he said Exim Bank will keep 40 per cent, the Malta-based First Investment Merchant Bank 38.5 per cent, IFC, Washington 12.5 per cent and Bank of Maharashtra 9 per cent. In other words, WestLB is divesting its entire stake of 40 per cent and exiting. Mr Sridhar put GTF's paid-up capital at Rs 45 crore. He said the bank, now comfortably placed with a capital adequacy ratio of 23.5 per cent, also intends to extend factoring to the domestic market players through GTF.

Exim Bank has also promoted Global Procurement Consultants Ltd (GPCL), in partnership with a leading consultancy firm in India, for providing procurement related services to multilateral agencies such as World Bank, Asian Development Bank and African Development Bank. Mr Sridhar said besides two new lines of credit for Myanmar ($25 million) and Sudan ($50 million), the bank was also considering financing of an Indian engineering project at Budapest, Hungary.

Earlier, addressing exporters of the region, Mr Sridhar said among the bank's fresh initiatives was a new division for providing Export Marketing Services, mainly for developing new markets. He said finance will be provided for export marketing to Indian companies to implement strategic export marketing plans and invest in supply side upgradation, desk/field research, minor product adaptation, international training, product launch and trade fair participation.

Under an Asian Countries Investment Partners Programme, Exim Bank provides finance at various stages of a joint venture cycle, such as sector study, project identification, feasibility study, prototype development, and technical and managerial assistance. The bank also offers loans to Indian companies, both for equity investment in their ventures overseas as well as for lending purposes. Besides, Exim Bank also takes direct equity stake in joint ventures abroad (ceiling of $10 million), to enable Indian companies to supplement their equity stake.

Commenting on the new thrust on agri exports, following the Bank's tripartite agreement with APEDA and Nabard, Mr Sridhar said the bank was looking forward to working closely with the Agri Export Zones (AEZs) in the north-eastern region.

He also stressed on a capacity building programme to create export capabilities for better assisting exporters of the region, as suggested by the Regional Chairman of FIEO, Mr S.K. Jain.

Pointing out that the activities of Exim Bank have to be stepped up in eastern India, Mr Jain said the bank can play a significant role in the overhauling of machineries at tea gardens, where preference was now being given to orthodox and green tea rather than CTC tea.

He said the tea industry in eastern India needs to switch to organic tea plantation, and this warrants a total change in manufacturing process, requiring huge funds.

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