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ADB, Exim Bank Sign Loan to Boost Trade, Jobs in Eight Poorer States in India
MANILA, PHILIPPINES – A $100 million loan from the Asian Development Bank (ADB) to the Export-Import Bank of India (Exim Bank) will channel critical export finance to smaller firms in some of the poorer Indian states, creating thousands of jobs through increased trade.
“Providing longer-term finance to small and mid-sized exporters in Assam, Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, and Uttarakhand should increase trade by $1 billion or more over 10 years and create jobs for at least 50,000 people,” said Peter Marro, Principal Financial Sector Specialist of ADB’s South Asia Department.
Juan Miranda, Director General of ADB’s South Asia Department signed the loan with Ms. Meghana Joglekar, Resident Representative, Exim Bank on Wednesday, 9 May 2012.
The government-owned Exim Bank set up in 1981 to promote India’s foreign trade will channel the funds to Small and Mid-sized Enterprises (SMEs) or SME clusters – groups of SMEs working together in close proximity and in similar products – to finance goods and services to and from ADB member countries.
SMEs in poorer, often rural, parts of India have more trouble than larger firms and those located in more prosperous parts of the country in getting the long-term export finance for company specific or shared SME cluster facilities, and for import of machinery and technology. Failure to access export finance holds back trade and the economic development and income growth that go along with it.
ADB also signed on 9 May 2012 an agreement with Germany’s KfW Bankengruppe under which KfW will assume the risk on half of ADB’s loan to Exim Bank. The agreement with KfW allows ADB to employ its capital more efficiently, thereby reinforcing the project’s developmental impact. That agreement was signed by Philip Erquiaga, Director General of ADB’s Private Sector Operations Department and Uwe Ohls, Director General Europe and Asia.
ADB is also providing a $1.55 million technical assistance grant over three years to help Exim Bank boost its ability to assess SME import and export needs and provide the tailored financial products.ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members -- 48 from the region. In 2011, ADB approvals including cofinancing totaled $21.7 billion.