US Exim Bank opens $2.2 bn line of credit with banks, FIs

New Delhi, May 14 : The US Export-Import Bank has opened eight lines of credit with various domestic banks and financial institutions (FIs) to fund infrastructure projects in India. The line of credit — Indian Infrastructure Facility — amounts to $2.2 billion and is only towards projects that use exports of US origin. The clutch of banks/ FIs include State Bank of India ($250 million), Punjab National Bank ($250 million), Power Finance Corporation ($800 million), IL&FS ($100 million), IDBI ($250 million), IDFC ($250 million), Indian Renewable Energy Development Agency ($50 million) and India Infrastructure Finance Company Ltd ($250 million).

Against the conventional method of directly lending to companies executing such projects, the US Exim Bank’s move to open a line of credit with domestic banks/ FIs is meant to cut down on the time taken to get loans approved for projects. Speaking to reporters today, US Exim Bank chairman and president James Lambright said that while the bank could extend vendor credit directly, this route would “shorten the time” process to sanction loans for projects.

He added that apart from lending to projects in sectors such as power, renewable energy and Oil & gas development, the US Exim Bank would focus on lending to airport development projects.

He added, however, that that the bottomline for sanctioning a loan would be that the export must originate from the US. This may range from power equipment (for a power project) to even parts that go in for luggage handling facilities in airports under the airport upgradation plan. Lambright said that “there is a rising demand for US goods and services in India because of their high quality and competitive prices”.

At present, the bank’s exposure to India is around $3.5 billion. This, Lambright said, is expected to touch $6 billion in the coming years making India its biggest market after Mexico. At present, Mexico has got around $7 billion from the US Exim Bank. That country, however, also has a free trade agreement with the US.

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