Module: | MODULE A: INTERNATIONAL BANKING
Q171: Consider the following statements regarding the specific credit facilities offered by the Export-Import Bank of India:
1. Under Suppliers Credit, the Bank extends credit directly to the overseas buyer to facilitate the purchase of Indian goods.
2. Buyers Credit enables foreign entities to import goods and services from India on deferred credit terms.
3. Buyers Credit is often extended under the National Export Insurance Account to support medium and long-term project exports.
Which of the statements given above is or are correct?
2. Buyers Credit enables foreign entities to import goods and services from India on deferred credit terms.
3. Buyers Credit is often extended under the National Export Insurance Account to support medium and long-term project exports.
Which of the statements given above is or are correct?
✅ Correct Answer: B
🎯 Quick Answer:
Option B is correct because only statements 2 and 3 are accurate.Structural Breakdown: Suppliers Credit is extended to the Indian exporter, enabling them to offer credit to the overseas buyer.
In contrast, Buyers Credit is extended directly to the overseas buyer or their bank, which then pays the Indian exporter upfront.
Therefore, Statement 1 is incorrect.
The National Export Insurance Account structurally supports Buyers Credit by providing a safe funding mechanism for complex project exports.
Historical Context: Buyers Credit under the National Export Insurance Account was formalized to boost project exports from India to countries where commercial and political risks were high, ensuring that Indian contractors could compete for large infrastructure tenders abroad.
Causal Reasoning: The causal logic behind shifting from Suppliers to Buyers credit in large-scale projects is that it removes the receivables risk from the Indian exporter's balance sheet, allowing them to undertake massive global projects without exhausting their domestic borrowing limits.