Exporters in India often need substantial working capital to fulfil large orders, expand production capacity, and boost sales.
However, most overseas buyers either pay weeks or months after delivery, or give you just 20–30% upfront. That’s nowhere near enough to cover raw materials, labour, shipping, and all the other costs that pile up.
That’s exactly why India set up institutions like the Export-Import Bank of India (Exim Bank).
However, in recent years, the “Exim Bank” name has been stained due to its link to scams and compliance violations.
In this blog, we’ll:
• Highlight major controversies linked to Euro Exim Bank.
• Assess whether these issues pose a real risk to Indian exporters.
• Explore safe alternatives for export finance.
What is an Exim Bank?
An Exim Bank (Export-Import Bank) is a specialised financial institution that promotes and supports a country’s international trade.
EXIM Bank’s net loan portfolio has nearly doubled in just five years, rising from ₹99,400 crore in FY 2019–20 to ₹1,85,600 crore in FY 2024–25. It’s a clear sign of how much bigger its role has become in funding exports and boosting India’s trade with the world.
It helps domestic companies export goods/services and import capital goods, raw materials, or technology. To receive export finance from Exim Bank, you’ll need to provide your personal details along with export documents to verify the shipment, ensure compliance, and process the funding.
Exim Bank Offers:
• Export credit (loans to exporters or foreign buyers)
• Trade finance (letters of credit, bank guarantees)
• Non-payment insurance
• Lines of credit to foreign entities
Think of it as the “trade booster bank” for a nation’s exporters and importers.
Why Are Exim Banks in the News?
In recent years, Euro Exim Bank, an overseas private entity, has been linked to high-profile financial controversies in India—raising red flags about unregulated players in trade finance.
Exim Bank Scams.
BJP Alleges Ponguleti’s Company in Euro Exim Bank Scam (Telangana Today, July 2024)
BJP Legislative Party leader A. Maheshwar Reddy accused Revenue Minister Ponguleti Srinivas Reddy’s company, Raghava Constructions, of bypassing RBI rules to obtain a ₹400 crore bank guarantee from Euro Exim Bank—an institution not recognised in India. Allegations include falsified documents to secure bank loans. The BJP has demanded a CBI investigation into the matter.
Government Agencies Accepting Guarantees from Caribbean Bank (The Wire, September 2024)
An investigation revealed that several Indian state and central agencies—including NHAI, MMRDA, and governments of Andhra Pradesh, Tamil Nadu, Karnataka, and Madhya Pradesh—accepted bank guarantees from Euro Exim Bank of Saint Lucia, despite RBI rules permitting only scheduled or nationalised Indian banks.
• Net worth: ~₹1,900 crore
• Guarantees issued in India by Dec 2023: ₹26,560 crore
• Risk factor: Guarantees issued without collateral
• Regulatory red flag: UK’s FCA flagged the bank for misrepresenting itself as Gambian
Is Exim Bank Fake or Risky for Exporters?
Not all Exim Banks are the same. India’s Export-Import Bank is a government-owned, regulated institution and considered safe.
The controversies above involve Euro Exim Bank, a foreign private entity. For Indian exporters:
• Safe: Finance from India’s Exim Bank are backed by sovereign guarantees.
• Risky: Guarantees or credit from unrecognised foreign banks, especially if not RBI-approved.
Pro tip: Always verify RBI recognition before accepting guarantees or credit to avoid compliance issues and payment risks.
4 Safe Alternatives To Get Export Finance
Exim Bank isn’t the only export finance option for Indian exporters looking for funding. Here are four other reliable routes to explore:
• Scheduled commercial banks with export credit programs
• Specialised trade finance NBFCs
• ECGC (Export Credit Guarantee Corporation) for insurance-backed funding
• International factoring services for invoice-based financing
FAQs
What is the difference between India’s Exim Bank and Euro Exim Bank?
India’s Exim Bank is a government-owned institution regulated by the RBI; Euro Exim Bank is a private foreign entity not recognised in India for issuing bank guarantees.
How can I check if a bank is approved by the RBI?
Visit the RBI’s official website and search under the list of scheduled commercial banks or approved foreign banks.
Has Euro Exim Bank been penalised internationally?
Yes. The UK’s Financial Conduct Authority flagged it for misrepresenting its jurisdiction.
What’s the safest export finance option for MSMEs?
Working with India’s Exim Bank, scheduled commercial banks, or ECGC-backed finance.
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