IB0018 – Export-Import Finance

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ASSIGNMENT

DRIVE	SPRING 2016
PROGRAM	Master of Business Administration- MBA
SEMESTER	4
SUBJECT CODE & NAME	IB0018 – Export-Import Finance
BK ID	B1910
CREDIT & MARKS	4 CREDITS, 60 MARKS

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

Question. 1. Discuss the role of EXIM bank in promoting foreign trade.

Answer:The main objective of Export-Import Bank (EXIM Bank) is to provide financial assistance to promote the export production in India. The financial assistance provided by the EXIM Bank widely includes the following:

·         Direct financial assistance

·         Foreign investment finance

·         Term loaning

Question. 2. Explain the Mechanism for Disbursal of Pre Shipment Finance?

Answer:Packing credit is nothing but a pre shipment finance given to exporters with a law interest rate to boost exports. Packing credit is given by authorized bank by the instruction of Reserve Bank as a government policy to promote exporters to earn foreign currency to strengthen financial status of a country.

Question. 3. What are the various trade financing schemes?

Answer:Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer. Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade.

While a seller (or exporter) can require

Question. 4. What are the various Risks Coverage under ECGC Policies? Discuss in detail.

Answer:Risks covered by Standard Policies fall into two categories – Commercial Risks and Political Risks.

Commercial Risks which includes Insolvency of the buyer, Protracted default in payment ( Importer has to pay within four months of due date) and Under special circumstances specified in the policy, buyer’s failure to accept the goods though there is no fault on the part of exporter.

Political Risks

Question. 5. Discuss the Methods of Import Finance And Import Financing Schemes.

Answer:Export-Import Bank of India (EXIM Bank) is a specialized financial institution, wholly owned by Government of India, set up in 1982, for financing, facilitating and promoting foreign trade of India. Including the share capital of ` 1,300 crore received during the year from Government of India, the paid up capital as on March 31, 2015, stood at ` 5,059 crore and the Net Worth stood at ` 9,902 crore. Profit after tax of the Bank for the year 2014-15 amounted to ` 726 crore.

Question. 6. What is Foreign Exchange Market? Discuss the Participants in Foreign Exchange Markets?

Answer:Central banks are often involved in maintaining foreign reserve volumes in order to meet certain economic goals. For example, ever since pegging its currency (the yuan) to the U.S. dollar, China has been buying up millions of dollars worth of U.S.Treasury bills in order to keep the yuan at its target exchange rate. Central banks use the foreign exchange market to adjust their reserve volumes. They have extremely deep pockets, which allow them to have a significant impact on the currency markets.

Banks and Other Financial Institutions: Along with central banks

Forex Market Participants

Consumers and Travelers

·         Consumers may

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