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EXPORT IMPORT BANK OF INDIA ACT, 1981

EXPORT IMPORT BANK OF INDIA ACT, 1981

28 of 1981

11th September, 1981

The Bill seeks to provide for the establishment of Corporation.to be known as the Export-

Import Bank of India to strengthen and broad-base the existing institutional arrangements to meet the requirements of international trade which is expected to grow further as the country's economy makes further progress. 2. The salient features of the Bill are - (i) the

Export-Import Bank will function as the principal financial institution for financing India's international trade and for coordinating the working of similar institutions and will also undertake limited development and merchant banking functions in relation to export oriented industries; (ii) the Export-Import Bank of India will be a statutory corporation fully owned by Central Government: and (iii) its resources will mainly comprise of contributions from Government in the form of grants and loans, market borrowings, deposits of longterm duration from the public and short-term and long-term funds of the Reserve Bank of India. 3. The Bill seeks to achieve the above objects. Notes on clauses appended to the Bill explain in detail the various provisions of the Bill. - S. O.'R. Gaz. of Ind., 8-5-81, Pt. II, S. 2, Ext" p. 415. An Act to establish a corporation to be known as the Export-Import Bank of India for providing financial assistance to exporters and importers, and for functioning as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country's international trade and for matters connected therewith or incidental thereto. Be it enacted by Parliament in the Thirty-second Year of the Republic of India as follows:-

SECTION 01: SHORT TITLE, EXTENT AND COMMENCEMENT

(1) This Act may be called the Export-Import Bank of India Act, 1981.

(2) It extends to the whole of India.

(3) It shall come into force on such date1as the Central Government may, by notification in the Office of this Act in the Official Gazette, appoint, and different dates may be appointed for different provisions

SECTION 02: DEFINITIONS.

In this Act, unless the context otherwise requires,-

(a) "Board" means the Board of Directors of Exim Bank referred to in S. 6;

(b) "Development Bank" means the Industrial Development Bank of India established under the Industrial Development Bank of India Act, 1964-

(d) "export" and "import" mean, respectively, export from or import into India or any other country of goods or services, or both;

(e) "goods" includes all materials, commodities and articles in a solid, liquid or gaseous state and all forms of energy;

(f) "notification" means a notification published in the Official Gazette;

(g) "prescribed" means prescribed by regulations made under this Act;

(h) "Reserve Bank" means the Reserve Bank of India constituted under theReserve Bank of India Act, 1934-;

(i) "scheduled bank" means a bank, for the time being, included in the Second Schedule to the Reserve Bank of India Act, 1934-;

(j) "services" includes,-

(I) providing personnel (including skilled or unskilled workmen and persons for rendering technical or other services) for the purposes of any work or project (by whatever name called) or any activity;

(II) transferring of technology, including transferring, or securing the transfer of rights, know how, expertises or other skill with respect to any patent, invention, model, design, secret formula or process or similar property;

(III) furnishing any information, blueprints, plans, or advice with respect to any matter; and

(IV) making available any other resources.

Clause 2- This clause seeks to define certain expressions in the Bill. Special mention may be made about the definition of the expressions "export" and "import". The said expressions have been defined in a comprehensive manner so as to cover all types of export and import of goods of all description, turnkey projects and construction contracts as well as kinds of services, including consultancy services. Further, these expressions would also cover the activities of export or import not only from and into India but also the third countries in connection with the project exports,- S. 0. R. Oaz. of Ind., 8-5-81, Pt. II, S. 2, Ext., p. 416.

SECTION 03: ESTABLISHMENT AND INCORPORATION OF EXPORT-IMPORT BANK OF INDIA

(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established for the purposes of this Act a corporation to be known as the Export- Import Bank of India.

(2) The Exim Bank shall be a body corporate with the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property and to contract, and may, by that name, sue or be sued.

(3) The head office of the Exim Bank shall be at Bombay or at such other place as the Central Government may, by notification, specify.

(4) The Exim Bank may establish offices, branches or agencies at such places in or outside India as it may consider necessary. Clause 3.- This clause seeks to provide for the establishment of the Export-Import Bank of India with headquarters at Bombay and also for the establishment of its offices and branches in or outside India.- S. 0. R., Gaz. of Ind., 8-5-81, Pt. II, S. 2, Ext., p. 416.

SECTION 04: AUTHORISED CAPITAL

1(1) The authorised capital of the Exim Bank shall be one thousand crores of rupees: Provided that the Central Government may, by notification, increase the said capital up to two thousand crores of rupees.

(2) The issued capital of the Exim Bank shall be wholly subscribed by the Central Government.

OBJECTS AND REASONS Clause 4.- This clause deals with the share capital and the ownership of the Export-Import Bank. It provides for an authorised capital of two hundred crores of rupees which may be increased by the Central Government to five hundred crores. Further, the issued capital shall be wholly subscribed by the Central Government.- S. 0. R, Gaz. of Ind., 8-5-81, Pt. II, S. 2, p. 416.

SECTION 05: MANAGEMENT

(1) The general superintendence, direction and management of the affairs and business of the Exim Bank shall vest in the Board, which may exercise all powers and do all acts and things which may be exercised or done by the Exim Bank.

(2) Save as otherwise provided in the regulations made under this Act -

(a) the chairman, if he is a whole-time director or if he is holding offices both as the chairman and the managing director, or

(b) the managing director, if the chairman is not a whole-time director, or, if the chairman being a whole time director, is absent, shall also have powers of general superintendence, direction and management of the affairs and business of the Exim Bank and may also exercise all powers and do all acts and things which may be exercised or done by the Exim Bank.

(3) Subject to the provisions of this Act, the Board in discharging its functions shall act on business principles with due regard to public interest.

(4) In the discharge of its functions under this Act, the Exim Bank shall be guided by such directions in matters of policy involving public interest as the Central Government may give to it in writing.

OBJECTS AND REASONS (See under S. 6)

SECTION 06: CONSTITUTION OF BOARD

(1) The Board of Directors of the Exim Bank shall consist of the following, namely :-

(a) a chairman and a managing director appointed by the Central Government : Provided that the same person may be appointed to function both as chairman and as managing director;

(b) one director nominated by the Reserve Bank;

(d) one director nominated by the Export Credit and Guarantee Corporation Limited, being a Government Company within the meaning of section 617 of the Companies Act, 1956-;

(e) not more than twelve directors nominated by the Central Government of whom -

(i) five directors shall be officials of the Central Government;

(ii) not more than three directors shall be from the scheduled banks;

(iii) not more than four directors shall be persons who have special knowledge of, or professional experience in, export or import or financing thereof.

(2) The chairman and the managing director shall hold office for such term, not exceeding 2[five years], as the Central Government may specify in this behalf and any person so appointed shall be eligible for re-appointment.

(3) Notwithstanding anything contained in sub-section (1), the Central Government shall have the right to terminate the term of office of the chairman or the managing director, as the case may be, at any time before the expiry of the term specified under sub-section (2), by giving him notice of not less than three months in writing or three months' salary and allowances in lieu thereof, and the chairman or the managing director, as the case may

be, shall also have the right to relinquish his office at any time before the expiry of the term specified under subsection (2) by giving to the Central Government notice of not less than three months in writing or three months' salary and allowances in lieu thereof.

(4) The chairman and the managing director shall receive such salary and allowances as may be determined by the Central Government.

(5) The Central Government may, at any time, remove the chairman or the managing director, as the case may be, from office: Provided that no person shall be removed from his office under this sub-section unless he has been given an opportunity of showing cause against his removal.

3[(6) Subject to the provisions contained in sub-section (7), any director nominated under clause (b) or clause (c) or clause (d) or clause (e) of sub-section (1) and not being an official of Government or not being a whole time director or official of the Reserve Bank or the Development Bank or the said Export Credit and Guarantee Corporation Limited or a scheduled bank, shall hold office for such term, not exceeding three years, as the Central Government or, as the case may be, the authority nominating him, may specify in this behalf and thereafter until his successor enters upon his office, and shall be eligible for re-nomination. Provided that no such director shall hold office continuously for a period exceeding six years.]

(7) Any4[* * *] director nominated under this section shall hold office during the pleasure of the authority nominating him.

(8) The Board shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

(9) The chairman or, if for any reason he is unable to attend a meeting of the Board, the managing director or, in the event of both the chairman and the managing director being unable to attend a meeting, any other director nominated by the chairman in this behalf and in the absence of such nomination any director elected by the directors present from among themselves, shall preside at the meeting.

(10) All questions which come up before any meeting of the Board shall be decided by a majority of votes of the directors present and voting, and in the event of an equality of votes, the chairman, or in his absence, the managing director, or in the absence of both the chairman and the managing director, the person presiding, shall have and exercise a second or casting vote.

(11) Save as otherwise provided in sub-section (10), every director of the Board shall have one vote.

OBJECTS AND REASONS Clauses 5 and 6(Ss. 5& 6).- These two clauses inter alia provide for the management of the Export-Import Bank and for the vesting of the affairs and business of that Bank in a Board of Directors whose strength has been fixed at the maximum of sixteen or seventeen, depending on the circumstances as to whether the same person is appointed to function both as Chairman and Managing Director or two persons are to be appointed separately in respect of the two aforesaid posts. It may also be mentioned that provision has been made for the representation of the exporting community on the Board. - S. 0. R., Gaz. of Ind., 8-5-81, Pt, II, S. 2, Ext., p. 416

SECTION 07: COMMITTEES

(1) The Board may constitute such Committees whether consisting wholly of directors or wholly of other persons or partly of directors and partly of other persons for such purpose or purposes as it may think fit.

(2) Any Committee constituted under sub-section (1) shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meeting as may be prescribed.

OBJECTS AND REASONS Clause 7.- This clause empowers the Board to constitute committees for such purposes as it may think fit. -S. 0. R. Gaz. of Ind., 8-5-81, Pt. II, S. 2, Ext., p. 416

SECTION 08: FEES AND ALLOWANCES OF DIRECTORS AND MEMBERS OF COMMITTEES

The directors and the members of a Committee shall be paid such fees and allowances as may be prescribed for attending the meetings of the Board or of any Committee constituted in pursuance of this Act and for attending to any other work of the Exim Bank : Provided that no fees shall be payable to the chairman, if he is appointed as a whole-time chairman, or to the managing director or to any other director or member who is an official of the Government, the Reserve Bank or the Development Bank OBJECTS AND REASONS Clauses 8 and 9.- While clause 8 seeks to provide for the payment of fees and allowances to directors and members of the committee, clause 9 provides for the disqualifications of a director.- S. 0. R., Gaz. of Ind., 8-5-81, Pt. ll,S.2,Ext. p. 416

SECTION 09: DISQUALIFICATIONS

No person shall be a director of the Board constituted under this Act, who -

(a) is, or at any time has been, adjudged insolvent, or

(b) is of unsound mind and has been so declared by a competent court, or

(c) is, or has been, convicted of an offence which, in the opinion of the Central Government, involves moral turpitude, or

(d) has, in the opinion of the Central Government, so abused his position as a director, as to render his continuance on the Board detrimental to the interests of the general public, or

(e) has been, for any reason, removed from the Board

SECTION 10: BUSINESS OF EXIM BANK

(1) The Exim Bank may grant in or outside India loans and advances by itself or in

participation with any banker financial institution whether in or outside India for the purposes of export or import and shall also function as the principal financial institution for coordinating the working of institutions engaged in financing of the export and import in such manner as it may deem appropriate.

(2) The Exim Bank may also carry on and transact all or any of the following kinds of

businesses, namely:-

(a) granting loans and advances to a scheduled bank or any other bank or financial institution notified in the Official Gazette by the Central Government in this behalf by way of refinance of loans and advances granted by it for purposes of export or import;

(b) underwriting the issue of stocks, bonds or debentures of any company engaged in export or import;

(c) issuing bid bonds or guarantees in or outside India by itself or in participation with any government, bank or financial institution in or outside India;

(d) accepting, collecting, discounting, rediscounting, purchasing, selling or negotiating in or outside India, bills of exchange or promissory notes arising out of transactions relating to export or import and granting of loans and advances in or outside India against such bills or promissory notes;

(e) granting, opening, issuing, confirming or endorsing letters of credit and negotiating or; collecting bills and other documents drawn thereunder.

(f) undertaking any transaction involving a combination of government to government and commercial credit for purposes of export or import;

(g) granting lines of credit to the government of any foreign State or any financial institution or person outside India for purposes of export or import;

(h) granting loans and advances outside India for any Indian joint venture;

(i) granting loans and advances to any person in India in connection with his equity contribution in any joint venture in any country outside India;

(j) financing exporter import of machinery and equipment on lease basis;

(k) subscribing to, or investing in, or purchasing of stocks, shares, bonds or debentures of any development bank or Export-Import Bank of any country outside India;

Business of Exim Bank (1) buying or selling of, or entering into such other dealings in, foreign exchange, as may be necessary for the discharge of its functions;

(m) opening of any account in any bank in or outside India or the making of any agency arrangement with, or acting as an agent or correspondent of, any bank or other institution in or outside India;

(n) transferring, for consideration, any instrument relating to loans and advances granted by it;

(o) issuing participation certificates; .

(p) subscribing to, or investing in, or purchasing of stocks, shares, bonds or debentures to the extent necessary for the enforcement of a lien, pledge or other contractual right;

(q) undertaking and financing of research, surveys, techno-economic or any other study in connection with the promotion and development of international trade;

(r) providing technical, administrative and financial assistance of any kind for export or import;

(s) planning, promoting, developing and financing export-oriented concerns;

(t) forming or conducting subsidiaries for carrying out its functions;

(u) acting as agent of the Central Government, any State Government, the Reserve Bank, the Development Bank or any other person as the Central Government may authorise;

(v) collecting, compiling and disseminating market and credit information in respect of international trade;

(w) doing any other kind of business which the Central Government may authorise;

(x) generally doing such other acts and things as may be incidental to, or consequential upon, the exercise of its powers or the discharge of its duties under this Act or any other law for the time being in force, including sale or transfer of any of its assets.

(3) The Exim Bank may receive in consideration of any of the services mentioned in subsections (1) and (2) such commission, brokerage, interest, remuneration or fees as may be agreed upon.

(4) The Exim Bank shall not grant any loan or advance or other financial accommodation on the security of its own bonds or debentures.

OBJECTS AND REASONS Clause 10.- This clause gives details of the functions which can be undertaken by the Export-Import Bank of India. Apart from the normal banking functions connected with the export and import of goods, such as grant of loans and advances, issue of guarantees and participation certificates etc., a number of other functions are proposed to be entrusted lo the Export- Import Bank, in keeping with the dynamic role it has to play in the field of export financing. Such Business of Exim Bank functions include - (a) Financing of exports from and imports into not only India, but also third countries of goods and services. (b) Financing of joint ventures in foreign countries: (c) Financing of export and import of machinery and equipment on lease basis: and (d) Providing loans to an Indian party so as to enable that party lo contribute in the share capital of a joint venture in a foreign country. The Export-Import Bank will also undertake limited merchant-banking functions such as under-writing old stocks, shares, bonds or debentures of companies, engaged in the export or import and providing technical administrative and financial assistance to parties in connection with export or import. The Export-Import Bank can also undertake the developing and financing of export oriented industries. It is also proposed to entrust the Export- Import Bank with the task of undertaking transactions involving a combination of Government-to-Government and commercial credit for the purposes of export or import. The Bank will also give lines of credit to Foreign Governments and foreign financial institutions. The Export-Import Bank is also being permitted to collaborate with similar institutions in developing countries by enabling it to participate in the share capital of such institutions. In the role of the principal financial institution in the field of financing exports, it will give refinance to commercial banks and financial institutions in respect of the loans and advances granted by them for the purpose of export and import. S.O.R..Ga/, of Ind..8-5-81. Pt.

U.S. 2. Ext.,p.416.

SECTION 11: LOANS BY CENTRAL GOVERNMENT

The Central Government may after due appropriation made by Parliament by law in this behalf advance lo the Exim Bank

(a) a loan of twenty crores of rupees at a rate of interest of five and a quarter per cent, per annum repayable in fifteen equal annual installments, commencing on the expiry of a period of fifteen years from the date of receipt of the loan; and

(b) such further sums of money by way of loan on such terms and conditions as may be agreed upon: Provided that the Central Government may. on a request being made to it by the Exim Bank increase the number of installments or alter the amount of any installment or vary the date on which any installment is payable under clause (a).

OBJECTS AND REASONS Claustsll and 12.- Clauses 11 and 12 respectively seek lo provide for loans by the Central Government and borrowing and acceptance of deposits by the Export-Import Bank. The Central Government is being authorised lo grant a soft-loan of twenty crores of rupees to the Bank which will be repayable in fifteen annual installments after a moratorium of fifteen years, the rate of interest being five and a quarter per cent. It is expected that the issued capital and the soft term loan placed at the disposal of the Export-Import Bank would give it funds adequate enough to carry on its activities till such time as it is able to earn sufficient income for the purpose. Like other financial institutions, the Export-Import Bank would also be able to borrow from the open market through the issue of bonds and debentures. Besides, it will also enjoy the requisite accommodation from the Reserve Bank against trustee securities and lodgement of bills and promissory notes arising from bona fide commercial and other transaction. In addition to the above, funds from the National Industries Credit (Long-term Operations) Fund set up by the Reserve Bank of India at the time of the establishment of the Industrial Development Bank of India would also be available to the Export- Import Bank for the purpose of its business.-S. 0. R" Gaz, of Ind., 8-5-81, Pt. U.S. 2, Ext. p.417.

SECTION 12: BORROWINGS AND ACCEPTANCE OF DEPOSITS BY EXIM BANK.

(1) The Exim Bank may, for the purposes of carrying out its functions under this Act,-

(a) issue and sell bonds and debentures with or without the guarantee of the Central Government;

(b) borrow money from the Reserve Bank-

(i) repayable on demand or on the expiry of fixed periods not exceeding ninety days from the date on which the money is so borrowed against the security of stocks, funds and securities (other than immovable property) in which a trustee is authorised to invest trust money by any law for the time being in force in India;

(ii) against bills of exchange or promissory notes arising out ' of bona fide commercial or trade transactions and bearing two or more good Signatures and maturing within five years from the date of the borrowing;

(iii) out of the National Industrial Credit (Long Term Operations) Fund established under section 46C of the Reserve Bank of India Act, 1934-for any of the purposes specified in that section;

(c) borrow money from such other authority, organisation or institution in India as may generally or specially be approved by the Central Government;

(d) accept deposits repayable after the expiry of a period which shall not be less than twelve months from the date of the making of the deposit on such terms as may generally or specially be approved by the Reserve Bank.

(2) The Central Government may, on a request being made to it by the Exim Bank, guarantee the bonds and debentures issued by that Bank as to the repayment of principal and the payment of interest at such rate as may be fixed by that Government.

OBJECTS AND REASONS (See under S. 11.)

SECTION 13: LOANS IN FOREIGN CURRENCY

Notwithstanding anything contained in the Foreign Exchange Regulation Act, 1973or in any other law for the time being in force relating to foreign exchange, the Exim Bank may, for the purpose of granting loans and advances under this Act, borrow, with the previous consent of the Central Government, foreign currency from any foreign State or from any bank or financial institution in any foreign country or otherwise OBJECTS AND REASONS Clauses 13 and 14.- While clause 13 enables the Export-Import Bank to borrow foreign currency in or outside India for the purposes of its operations, clause 14 enables it to raise resources by acceptance of gifts, grants, etc either from Government or any other sources. - S. 0. R., Gaz. of Ind., 8-5-81, Pt. II, S. 2, Ext., p. 418

SECTION 14: GRANTS, DONATIONS, ETC., TO EXIM BANK

The Exim Bank may receive gifts, grants, donations or benefactions from Government or any other source in or outside India OBJECTS AND REASONS (See under S.P 13)

SECTION 15: EXPORT DEVELOPMENT FUND

With effect from such date as the Central Government may, by notification, appoint, the Exim Bank shall establish a special fund to be called the Export Development Fund OBJECTS ANDREASONS Clauses 15 to 20.- These clauses inter alia deal with the establishment of a special fund to be called the Export Development Fund which would be utilised mainly for the purposes of research, training, survey, market intelligence etc., in connection with the country's international trade as well as for financing proposals which are unlikely to be supported by banks and other financial institutions. This is on the lines of the Development Assistance Fund established by the Industrial Development Bank of India. The accounts of the Export Development Fund would be maintained separately and would also be audited by statutory auditors and an annual report on its operations would be submitted to the Central Government. - S. 0. R., Gaz, of Ind., 8-5-81, Pt. II, S. 2, Ext., p. 418.

SECTION 16: CREDITS TO EXPORT DEVELOPMENT FUND

To the Export Development Fund shall be credited -

(a) all amounts received for the purposes of that Fund by way of loans, gifts, grants, donations or benefactions from Government or any other source in or outside India;

(b) repayments or recoveries in respect of loans, advances or other facilities granted from the Fund;

(d) income accruing or arising to the Fund by way of interest or otherwise, on account of the application of the Fund in accordance with the provisions of section 17-.

OBJECTS AND REASONS (See under S. 15)

SECTION 17: UTILISATION OF EXPORT DEVELOPMENT FUND

(1) Where the Exim Bank considers it necessary or desirable so to do, it may, subject to the provisions of sub-sections (2) and (3), disburse or spend from the Export Development Fund any amount an account or in consequence of the grant of any loan or advance, or on account or in consequence of entering into any arranagement under sub-section (1)or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause (s) or clause (w) or clause (x) of sub-s.(2) of section 10-: Provided that before granting any such loan or advance or entering into any such arrangement, the Exim Bank shall obtain the prior approval of the Central Government

(2) Before seeking the approval of the Central Government under sub-section (1), the Exim Bank shall satisfy itself that banking or other financial institutions or other agencies are not likely to grant such loan or advance, or to enter into any such arrangement in the ordinary course of business.

(3) The Central Government shall, before giving its approval, satisfy itself that such loan, advance or arrangement is necessary as a matter of priority in the interests of the international trade of the country.

(4) For the removal of doubts, it is hereby declared that nothing contained in this section shall be deemed to preclude the Exim Bank from granting any loan or advance or from entering into any arrangement under sub-s. (1) or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or cl. (s) or clause (w) or clause (x) of sub-section (2) of section 10-without the approval of the Central Government, if no amount in respect thereof is to be disbursed or spent from the Export Development Fund.

OBJECTS AND REASONS (See under S. 15)

SECTION 18: DEBITS TO EXPORT DEVELOPMENT FUND

(1) To the Export Development Fund shall be debited -

(a) such amounts as may from time to time be disbursed or spent under sub-section (1) of section 17-;

(b) such amounts as may be required for discharging the liabilities in respect of loans received for the purposes of that Fund;

(d) such expenditure arising out of, or in connection with, the administration and application of the Fund as may be determined by the Board.

(2) No amount shall be debited to the Export Development Fund except as provided for in subsection (1). OBJECTS AND REASONS (See under S. 15)

SECTION 19: ACCOUNTS AND AUDIT OF EXPORT DEVELOPMENT FUND

(1) The balance-sheet and accounts of the Export Development Fund shall be prepared in such form and manner as may be prescribed

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