Role of EXIM Bank in Trade Finance
ECGC insures, EXIM Bank lends. Here's what India's lending export credit agency does and where a commercial bank meets it.
EXIM Bank (Export-Import Bank of India) is India's specialised export credit agency for lending. It was created by the Export-Import Bank of India Act, passed in September 1981, and began operations in March 1982. Its issued capital is wholly subscribed by the Central Government (section 4(2)), and the Act makes it the principal financial institution for coordinating the institutions that finance exports and imports (section 10(1)).
FTP 2023 para 2.55 sets out the division of labour among India's two export credit agencies: ECGC insures and guarantees, while EXIM Bank lends for medium and long-term exports and fronts the government's lines of credit. A commercial bank's trade desk meets EXIM Bank as a co-lender, a refinancer, a guarantor and, on large project exports, the lead institution.
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What EXIM Bank Does
Direct lending for export and import
What it means in practice
Loans in or outside India, alone or with other banks, including pre-shipment and post-shipment credit for project exporters
Basis
Act s.10(1); EXIM project exports page
Refinance
What it means in practice
Refinance to scheduled banks and notified institutions for their export or import loans
Basis
Act s.10(2)(a)
Guarantees and LCs
What it means in practice
Bid bonds and guarantees in or outside India; opening, confirming and negotiating LCs
Basis
Act s.10(2)(c), (e)
Government of India Lines of Credit
What it means in practice
Concessional credit to partner countries under IDEAS, administered with MEA; at least 75% of contract value sourced from India, with up to 10% relaxation case by case
Basis
EXIM Lines of Credit page
Buyer's Credit and BC-NEIA
What it means in practice
Credit to overseas buyers to import Indian goods and services on deferred terms; under NEIA (a trust set up by the Commerce Ministry and administered by ECGC) to overseas governments and their entities
Basis
EXIM Buyer's Credit page
Trade Assistance Programme
What it means in practice
Credit enhancement for trade instruments of banks in hard markets: standby LCs, irrevocable reimbursement undertakings, fronting of guarantees, risk participation, credit lines; tenor up to 365 days
Basis
EXIM TAP page
Export factoring from GIFT City
What it means in practice
Through its wholly owned subsidiary India Exim Finserve IFSC, regulated by IFSCA
Basis
EXIM Subsidiaries page
| Function | What it means in practice | Basis |
|---|---|---|
| Direct lending for export and import | Loans in or outside India, alone or with other banks, including pre-shipment and post-shipment credit for project exporters | Act s.10(1); EXIM project exports page |
| Refinance | Refinance to scheduled banks and notified institutions for their export or import loans | Act s.10(2)(a) |
| Guarantees and LCs | Bid bonds and guarantees in or outside India; opening, confirming and negotiating LCs | Act s.10(2)(c), (e) |
| Government of India Lines of Credit | Concessional credit to partner countries under IDEAS, administered with MEA; at least 75% of contract value sourced from India, with up to 10% relaxation case by case | EXIM Lines of Credit page |
| Buyer's Credit and BC-NEIA | Credit to overseas buyers to import Indian goods and services on deferred terms; under NEIA (a trust set up by the Commerce Ministry and administered by ECGC) to overseas governments and their entities | EXIM Buyer's Credit page |
| Trade Assistance Programme | Credit enhancement for trade instruments of banks in hard markets: standby LCs, irrevocable reimbursement undertakings, fronting of guarantees, risk participation, credit lines; tenor up to 365 days | EXIM TAP page |
| Export factoring from GIFT City | Through its wholly owned subsidiary India Exim Finserve IFSC, regulated by IFSCA | EXIM Subsidiaries page |
Project Exports: What Changed on 1 October 2026
Project exports (deferred-payment engineering supplies, turnkey projects and civil construction abroad) used to run under RBI's Memorandum of Instructions on Project and Service Exports. Under the superseded Master Direction (para A.14), exporters had to obtain post-award approval from an AD bank or EXIM Bank before executing the contract, and the approving institution monitored the project.
From 1 October 2026, Regulation 15 of RBI's Export and Import Regulations 2026 lets an AD bank permit receipts and payments for project exports under the contract after satisfying itself of the project's genuineness. The project export circulars are listed as superseded. EXIM Bank's financing role is unchanged, but the RBI regulation no longer names it as an approving authority. The 2025 courseware describes the PEM regime.
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Case: A Road Project in East Africa
An Indian EPC contractor wins a road contract in an African country financed by a Government of India Line of Credit routed through EXIM Bank. The contractor needs a performance guarantee, mobilisation funds and assurance of payment.
The LOC is extended to the partner country, and EXIM Bank describes LOCs as letting Indian exporters work in new markets without payment risk from the importer. The contractor's main compliance concern becomes the Indian content rule: at least 75% of contract value sourced from India. The contractor's own bank issues the performance guarantee, possibly with EXIM Bank participating, and funds mobilisation as pre-shipment credit. The bank handles the project's receipts and payments under Regulation 15 and its internal policy.
How the IIBF Exam Tests This
Expect "which institution" questions: who extends Government of India Lines of Credit (EXIM Bank), who administers NEIA (ECGC), who insures export receivables (ECGC). The trap is the overlap: both are export credit agencies and both appear in project exports, but EXIM Bank lends while ECGC covers risk.
FAQs
What is the difference between EXIM Bank and ECGC?expand_more
Both are export credit agencies. EXIM Bank lends, refinances and guarantees; ECGC provides credit insurance against buyer and country risk and administers NEIA.
Who owns EXIM Bank?expand_more
The Government of India. Section 4(2) of the Export-Import Bank of India Act 1981 requires its issued capital to be wholly subscribed by the Central Government.
What is a Government of India Line of Credit?expand_more
Concessional credit extended to a partner country under the IDEAS scheme and routed through EXIM Bank, so the country can import goods, services and projects from India. At least 75% of contract value must be sourced from India.
Does EXIM Bank still approve project exports?expand_more
Under the superseded Master Direction it could give post-award approvals alongside AD banks. From 1 October 2026, Regulation 15 of the RBI's 2026 Regulations places that judgement with the AD bank and does not name EXIM Bank.
Next steps
- ECGC Explainedarrow_forward
- What Is FEDAIarrow_forward
- Buyers' Creditarrow_forward
- Syllabusarrow_forward
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