According to a Bill currently before the Lok Sabha, the Exim Bank needed adequate capital base in order to support its future business growth and maintain its credit worthiness with international lenders.

It has been argued that the Exim Bank needed to be strengthened to enable it to raise external commercial borrowings at competitive rates in order to support financing needs of Indian exporters as also to retain adequate resource flows.

The government is credited with the view that Exim Bank's performance over the ten-year period (1987-1997) has been satisfactory. During this period, its loan assets had grown at an annual average of 18 per cent with cumulative sanctions at Rs 13,743 crore. Loan outstanding as on March 31, 1997, was Rs 3,451 crore.

The bank's operations had been profitable since the first year of itsinception and it had also been paying dividend to the government every year. In 1996-97, sanctions and disbursements amounted to Rs 1,242 crore and Rs 1,257 crore, respectively. Net profit for the financial year 1996-97 was Rs 152 crore and dividend paid to the government by the Exim Bank was Rs 31 crore.

According to the financial projections submitted by the Exim Bank for the period 1998-2002, the paid-up capital is projected to increase to Rs 1,000 crore and the loans and advances are projected to increase to Rs 7,428 crore by the year 2002.

Financial parameters such as capital adequacy, debt-equity ratio, net profit on assets are projected at 21 per cent, 3:1 and three per cent respectively, in the year 2002.

According to the Export Import Bank of India Act, 1981, "the authorised capital of the Exim Bank shall be Rs 200 crore provided that the central government may, by notification, increase the said capital up to Rs 500 crore".

The paid-up capital of the Exim Bank had been regularly augmentedevery year out of the budgetary allocations. In the year 1995-96, Rs 59.66 crore was released to the bank, increasing the paid-up capital to approximately Rs 500 crore.

Government sources were confident that with the strengthening of the bank, Indian exporters would stand to benefit immensely. The bank's charter is to provide medium and long term export credit to exporters, ie project exporters as well as exporters of capital goods and other manufactured goods on deferred payment terms.

It also provides lines of credit to banks and foreign government agencies to finance imports of eligible goods and services from the country.

Additionally, the Exim Bank provides term loans to export oriented units in the country and equity finance to Indian companies setting up joint ventures and wholly owned subsidiaries abroad.