"We recently made a presentation before the government, listing a few changes required to the Exim bank Act (1981). This includes flexibility in raising both foreign currency and short-term rupee deposits," Exim Bank's managing director, YB Desai, told The Financial Express.

Exim Bank hopes a positive response in this regard will enable it to reduce its cost of funds drastically and venture aggressively into meeting short-term capital needs of its clients.

At present, the Exim bank cannot raise funds through deposits from the public below one-year maturity.

"All we can now raise are rupee deposits beyond a maturity of one-year," Desai said. He added that even after amending regulations, Exim bank will maintain its image as a trade financing institution and will not be subject to reserve requirements for the simple reason that it is not a commercial bank.

The existing regulations restricts the institution's ability to disburse working capital and other short-term credit to its clients, who basically comprise exporters, importers, corporates and project contracters bidding for projects abroad. As a result, Exim bank is facing serious competition from commercial banks, who are able to access forex funds through foreign currency non-resident (FCNR) deposits. Due to the given constraints, the bank has to rely on lines of credit extended by Exim Banks of other countries for providing financial assistance to clients. It also raises funds through syndicated loans and bond issues. For short-term fund requirements, the bank utilizes liquid funds for disbursal under a tight asset liability management framework.

Exim bank has decided to activate its treasury operations for dealing in forex and money markets on behalf of its trade customers. The bank holds an authorised dealer license to function in these markets. "We are putting the necessary infrastructure in place for commencing treasury operations.

`` The software will soon be installed. The staff are also undergoing training for the purpose," Desai said. Exim bank plans major tie-ups for with leading corporates for providing ready financial assistance under mutually agreed lines of credit.

The institution on Wednesday signed a memorandum of co-operation with the Tatas for financing of overseas projects bidded by Tata Projects. The bank entered into a similar arrangement with engineering major L&T in February. Exim bank is holding talks with several other corporates.

Its regional offices have been approached by several large corporates and project firms wishing to avail financial assistance for bidding for contracts abroad.