Module: | MODULE A: INTERNATIONAL BANKING
Q170: Consider the following statements regarding the core functions of the Export-Import Bank of India:
1. It functions as the principal financial institution for coordinating the working of institutions engaged in financing export and import.
2. It provides finance for export capability creation, including equipment finance and working capital for export-oriented units.
3. The Bank is strictly prohibited from financing joint ventures and strategic acquisitions in foreign countries.
Which of the statements given above is or are INCORRECT?
2. It provides finance for export capability creation, including equipment finance and working capital for export-oriented units.
3. The Bank is strictly prohibited from financing joint ventures and strategic acquisitions in foreign countries.
Which of the statements given above is or are INCORRECT?
✅ Correct Answer: C
🎯 Quick Answer:
Option C is correct because only statement 3 is incorrect.Structural Breakdown: Its financing programs are broadly divided into Export Credits, Finance for Export Capability Creation, and Overseas Investment Finance.
Statement 3 is false because Overseas Investment Finance is a major pillar of the Bank, wherein it specifically funds Indian companies to set up joint ventures or acquire wholly-owned subsidiaries abroad.
Historical Context: Historically, as Indian corporations expanded globally post-liberalization, the Bank adapted its charter to support outward foreign direct investment, not just inward export receipts.
Causal Reasoning: This outward financing mechanism is caused by the strategic need to help Indian businesses secure raw material assets, establish global supply chains, and bypass protectionist trade barriers in foreign markets by operating locally.