India’s Exim Bank raises $100 million from ADB

Microfinance Focus, Sept. 30, 2009: India’s state-run Export-Import Bank (Exim Bank) has raised $100 million loan from the Asian Development Bank (ADB) to boost the export potential of small and medium enterprises (SMEs) in poor and disadvantaged regions.

The loan will be used medium- and long-term loans to export–oriented SMEs. As per the terms of the loan, Exim Bank will target increased trade and competitiveness amongst small exporters in selected states such as Assam, Madhya Pradesh, Orissa and Uttar Pradesh.

“The loan facility can be expected to generate employment for 50,000 or more people in strengthened SME export clusters, with an incremental trade volume of $1 billion or more over 10 years,” said Cheolsu Kim, Principal Financial Sector Specialist, with ADB’s South Asia Department.

Exim Bank, which established a division in 2004 dedicated to developing export-oriented SMEs, is an ideal vehicle to support the sector given its broad range of services including advisory services and long track record of business with exporters in various countries, said a statement from the ADB.

The unsecured loan from ADB’s Ordinary Capital Resources has a tenor of up to seven years, with a grace period of three years. ADB’s risk exposure is partly mitigated by a credit guarantee of up to $50 million by German development bank, KfW Bankengruppe.

ADB is also extending a technical assistance grant of $1.55 million equivalent from its concessional Technical Assistance Special Fund to help Exim Bank draft a five-year trade development strategy. Exim Bank will provide additional support of $1 million equivalent.

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