Established in 1982 under the Export-Import Bank of India Act, 1981, ExIm Bank of India is a fully state owned Financial Institution, with stated objective of ‘providing financial assistance to exporters and importers’ and facilitate globalisation of Indian business. It has, as of September 2020 266 Lines of Credit, covering 62 countries in Africa, Asia, Latin America and the CIS, with credit commitments of around USD 26.40 billion. With multiple lending programmes like Buyer’s Credit under NEIA, Corporate Banking, Overseas Investment Finance, Project Finance, Line of Credit (LoC) and agreements with other development banks, it has rapidly shifting from a borrower to a lender. The bank has successfully expanded its area of influence, its range of products and its investment. What is yet to be understood is how far the bank has come to be financially responsible and if their investments take into account the social and environmental impacts?
The Bank’s annual report notes Rs. 402.55 billion loans approved FY 2019-20 and loan disbursement for the same year at Rs. 337.35 Billion. A study of LoC by CFA noted that Africa and Asia are significant in the strategy of Indian external financing. The study found that out of 236 (June 2019) LoC 162 were signed with the African countries. 14 LoCs were signed with Mozambique alone. However, even though India has signed 69% of LoCs with Africa, the continent received only 39% of total value of LoCs. But Asia had only 17.8% of LoCs, but received approximately 57% of the total value of LoC between 2002 and 19, which amounted to nearly USD 14 billion.
Despite the magnitude of credits and its influence, EXIM bank has largely managed to stay out of public scrutiny. Even when the NPA crisis of banks made headlines, EXIM bank managed to stay out of the limelight. But it was not immune from the problem. EXIM bank has been wrought with the bad loan crisis, so much so that India was ranked first among countries with NPAs. ExIm Bank’s NPAs in India were approximately 8.6 times of the second highest in Singapore. As of March 2020 the bank’s gross NPA is at 93.62 billion rupees (8.75 percent) of its total loans.
EXIM bank was infused with Rs. 60 billion – Rs 45 billion in 2018-19 and Rs 15 billion in 2019- 2020. The government further decided to double the Bank’s authorised capital from 100 billion to Rs. 200 Billion, with the aim of cleaning up the books. This came after the Bank reported losses for the year 2017-18 due to the NPA crisis. Similar to the sufferings of PSBs, the government and RBI directed EXIM bank to increase provision, sell bad loans and reach NCLT. Out of the Rs 11,678 crore NPAs in 2018-19, more than Rs 9,200 crore are either within the IBC process or have been referred and pending for admission at the NCLT. Though the bank reported a profit of Rs 124 crore in financial year ended March 31, 2020, we are yet to fully assess the impact of global pandemic on the investments of the bank.
While the bank
seems to be trailing into a path of crisis financially and escape
accountability, some of their investments have been strongly criticised. Bank Track categorised EXIM bank’s
Rampal Coal Power plant as ‘dodgy deal’ after international backlash on the
environmental
destruction to one of the most sensitive ecosystems. The Indian investments in Africa, including that of the ExIm bank have been seen as a neo-colonial project.
As we fight the similar issues due to investments of other multilateral development banks in India, it is important that we do not be a part of reproducing the cycle of violence and brutality on other countries in the name of ‘developmental loans’. We need to look more closely at the investments of ExIm bank and ensure that the bank is held accountable and adopt better safeguard policies.
CFA proposes to for a discussion on the need and ways to hold EXIM bank accountable. The meeting will be held virtually on the 20th November between 3 and 5 pm, with the intention to bring to the attention of the public the investments of Indian ExIm bank, connect with people in different countries where the bank invests, learn from them the social, environmental and economic costs of the investments, and explore possibilities of networking between CSOs of different countries to enhance the demands for transparency and accountability in ExIm’s investments.
We hope you can join the meeting.