Seminar on Business Opportunities in Bank’s Lines of Credit Programme

MUMBAI:
With a view to promoting India’s trade and economic relations with developing countries in particular, the Government of India launched the Indian Development and Economic Assistance Scheme (IDEAS) which governs the Lines of Credit facility extended by Exim Bank to overseas Government at the behest and with the support of the Government of India.

The LOCs enable buyers in developing countries to import developmental and infrastructure projects, equipment, goods and services from India, on deferred credit terms. The LOCs extended by Exim Bank have catalysed exports of various projects in diverse sectors such as agriculture, construction, roads, railways and transportation, irrigation, energy generation and transmission and rural electrification, technology (parks and training centres), sugar industry rehabilitation, etc. The Indian companies benefit from the program as a minimum 75% of the value of goods and services covered under the LOC programme are typically sourced from India, and Exim Bank assumes the credit and political risks of the overseas buyers.

As of December 31, 2019, Exim Bank has signed 257 LOCs covering 61 countries in 5 continents with credit commitments aggregating USD 25.15 billion. Beside these, 41 LOCs amounting to USD 5.50 billion are in the pipeline. The total commitment will then rise to 298 LOCs of USD 30.62 billion to 64 countries over the world.

Over the last ten years, LOC Portfolio has grown exponentially. The total outstanding loan balance under the LOCs as on December 31, 2019, stood at USD 5.63 billion. The scope and profile of LOCs have also expanded considerably. LOCs are not just being used to finance a localized civil project (like construction of a building, etc.) but increasingly being used to finance projects with an enhanced focus on capability creation, and contribute to sustainable development, thereby demonstrating India’s project execution capabilities.

Currently, around 52% and 41% of the total LOC commitments are to Asia and Africa Regions, respectively. In terms of total number of LOCs extended, Africa is the largest recipient Region. Value-wise it is the Asia Region that is leading because of a few high-value LOCs to our neighbouring countries.

The Lines of Credit programme has enabled India to demonstrate project execution capabilities in emerging markets, especially in the developing countries of Africa, Asia, Latin America and the CIS. Spread over more than 60 countries, Lines of Credit not only help strengthen bilateral cooperation with the comity of nations but also lead to downstream linkages for further exports. Greater visibility and creation of long-term economic interests for India in the emerging markets has been made possible due to Lines of Credit extended by Exim Bank, with the Government of India support.