Exim Bank: India’s Exim Bank could restructure its $1.3 billion exposure to Sri Lanka

Export finance institution India Exim Bank is considering restructuring its $1.3 billion exposure in crisis-hit Sri Lanka. However, it has no exposure to Ukraine or direct exposure to Russia. It will also offer services to provide MSME exporters with easier risk protection and will introduce factoring and other trade finance products to encourage exports from the sector.

“There is an impending restructuring of exposure to Sri Lanka,” said Harsha Bangari, MD India Exim Bank. “We will wait for the government’s signal for a restructuring.” The country is facing the worst currency crisis of all time. Exim’s exposure across channels is approximately $1.3 billion. While there are currently no overdue charges, senior Exim officials said terms of the reorganization could take the form of a deferred repayment

Exim is also expected to expand its operations as it soon returns to factoring – a type of comfort letter for exporter financing that makes export financing easy and less risky. She is in the process of setting up a factoring business. The focus will be on financing from abroad, Bangari clarified. “We have received board approvals. But we have yet to decide whether the deal will be done through a bank or through a subsidiary or a separate entity,” Bangari said.

Exim has also initiated the Trade Assistance Program (TAP) to support the MSME sector. Under this program, trade lines will be extended to participating foreign banks/institutions in emerging markets and credit enhancements to participating commercial banks in India to cover payment obligations to identified banks.

TAP would help banks in India gain solace under this India Exim Bank program, providing guarantees/comforts and thus extending export finance to relatively unknown banks abroad, among many others. TAP will cover 54 economies in Asia, Africa and Latin America in the initial phase of its work.

Exim reported 13 percent growth in loans in 2021-22 and intends to raise up to $3 billion in foreign currency and is aiming for even higher business growth this year. “He has to service $2.3 billion this year,” Bangari said.

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