The Cabinet approved the signing of interbank local currency credit line agreement and cooperation memorandum relating to credit ratings by Exim Bank with member banks under BRICS Interbank Cooperation Mechanism.
Exim Bank finances facilitate and promote India’s international trade. It provides competitive finance at various stages of the business cycle.
As the agreement and the MoU are umbrella pacts and non-binding in nature, the Board of Directors of Exim Bank has been authorised to negotiate and conclude any individual contracts and commitments within their framework.
The initial Master Agreement on Extending Credit Facility in Local Currency under the BRICS Interbank Cooperation Mechanism had a validity of five years, which expired in March 2017.
“It is understood that some of the member banks (like CDB and VEB; CDB and BNDES) have entered into bilateral agreements for local currency financing under the Master Agreement signed in 2012.
It further said although the current conditions are not conducive to usage, it was useful to keep the same alive as an enabling feature in case a suitable opportunity materialises in future.
Exim Bank raises resources in the offshore market in diverse currencies and swaps to mitigate the risk.
The umbrella agreement would serve as an enabler to enter into bilateral agreements with member banks.
Cooperation Memorandum Relating to Credit Ratings would enable sharing of credit ratings amongst the BRICS member banks, based on the request received from another bank.