The Export-Import Bank of India Act, 1981
The Export-Import Bank of India Act, 1981
🔹 Background and Purpose
The Export-Import Bank of India Act, 1981 was enacted to establish the Export-Import Bank of India (EXIM Bank) as a specialized financial institution aimed at promoting and financing foreign trade, particularly India's exports and imports.
The Act provides the legal framework for setting up EXIM Bank as a statutory corporation,
The Bank functions as the principal financial institution to facilitate India's international trade,
It complements commercial banks by providing financial assistance to exporters and importers.
📜 Objectives of the Act
To promote, finance, and facilitate exports and imports of goods and services,
To provide financial assistance including loans, guarantees, and equity participation to exporters and importers,
To assist in developing and expanding India's foreign trade,
To support projects and ventures abroad related to India's foreign trade.
🏗️ Key Provisions of the Act
1. Establishment of the Export-Import Bank of India (Section 3)
The Act establishes the Export-Import Bank of India as a body corporate with perpetual succession and a common seal,
The Bank is capable of entering contracts, acquiring and disposing of property, and suing or being sued.
2. Functions of the Bank (Section 4)
The Bank is empowered to:
Provide financial assistance by way of loans, guarantees, advances, or equity participation to exporters and importers,
Provide advisory services related to export and import activities,
Support projects connected with export/import trade,
Undertake any other activities conducive to foreign trade promotion.
3. Management and Governance (Section 5 and 6)
The Bank is governed by a Board of Directors, appointed by the Central Government,
The Board includes government nominees and professionals with expertise in banking and foreign trade,
The Central Government may give directions to the Bank in public interest.
4. Capital and Funds (Section 7 and 8)
The Bank’s capital is subscribed by the Central Government and other institutions,
It may raise funds through borrowing, issuing securities, or loans,
It maintains a fund for its operations and regulates expenditure accordingly.
5. Accounts and Audit (Section 11 and 12)
The Bank is required to maintain proper accounts and prepare annual reports,
The accounts are audited by auditors appointed by the Central Government,
The audited accounts are presented to the Parliament.
6. Immunity and Privileges (Section 18)
The Bank enjoys certain immunities and privileges, such as exemption from stamp duties and freedom from attachment of its properties under legal proceedings, to facilitate smooth functioning.
⚖️ Importance and Role of EXIM Bank
Acts as a key instrument of the government’s export-import policy,
Facilitates long-term project financing and trade credit which commercial banks may not provide,
Enhances India's competitiveness in global trade,
Supports Indian companies in their international ventures and joint ventures abroad,
Plays a role in economic diplomacy by aiding infrastructure and development projects overseas.
Relevant Case Law
1. Export-Import Bank of India vs. Vishnu Ramchandra Mahajan (1988)
Issue: Enforcement of loan agreement and recovery of dues by EXIM Bank,
Held: The Supreme Court upheld EXIM Bank’s contractual rights and emphasized the Bank’s autonomy in commercial decisions,
Significance: Affirmed that EXIM Bank operates like a commercial entity in exercising financial powers under the Act.
2. Export-Import Bank of India vs. M/s. Spice Island Hotels Ltd. (1995)
Issue: Liability of third parties in guarantees provided by EXIM Bank,
Held: The Court held that guarantees issued by the Bank are binding and enforceable, and third-party liabilities are recognized,
Significance: Reinforced the legal sanctity of the Bank’s guarantees in international trade.
3. K. P. Verma vs. Export-Import Bank of India (2002)
Issue: Whether the Bank is subject to the Right to Information Act,
Held: The Court held that the Bank, being a statutory corporation, is subject to RTI provisions,
Significance: Emphasized transparency and accountability of EXIM Bank under public law.
4. Export-Import Bank of India vs. Union of India (2010)
Issue: Whether the Bank is eligible for sovereign immunity in certain financial transactions,
Held: The Court clarified that while EXIM Bank enjoys certain privileges under the Act, it cannot claim absolute immunity in commercial matters,
Significance: Defined the limits of EXIM Bank’s immunity under the law.
Summary Table
| Feature | Description |
|---|---|
| Act Name | Export-Import Bank of India Act, 1981 |
| Purpose | Establish EXIM Bank to promote and finance foreign trade |
| Nature | Statutory corporation with perpetual succession |
| Functions | Provide loans, guarantees, equity, advisory services for export-import |
| Governance | Board of Directors appointed by Central Govt |
| Capital | Subscribed by Central Government and others |
| Audit and Accounts | Maintains audited accounts submitted to Parliament |
| Legal Status | Enjoys certain immunities and privileges |
| Important Cases | EXIM Bank vs. Vishnu Ramchandra Mahajan (1988), EXIM Bank vs. Spice Island Hotels (1995) |
Conclusion
The Export-Import Bank of India Act, 1981 provides the statutory basis for the functioning of EXIM Bank as the nodal institution for India’s foreign trade finance. It enables the Bank to extend financial and advisory support to exporters and importers, thereby strengthening India’s presence in the global market. Courts have consistently recognized the Bank’s commercial autonomy and legal rights while emphasizing transparency and accountability.
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