Module: | MODULE A: INTERNATIONAL BANKING
Q175: Consider the following statements regarding the financial resource mobilization and asset quality of the Export-Import Bank of India:
1. The corporate loan book of the Bank has witnessed growth supported by lending to technology-intensive and renewable energy sectors.
2. Market borrowings, including foreign currency bonds, constitute the vast majority of the Bank's total resources, typically exceeding 80 percent.
3. The gross Non-Performing Assets of the Bank have consistently remained above 10 percent in recent years due to high-risk overseas lending.
Which of the statements given above is or are correct?
2. Market borrowings, including foreign currency bonds, constitute the vast majority of the Bank's total resources, typically exceeding 80 percent.
3. The gross Non-Performing Assets of the Bank have consistently remained above 10 percent in recent years due to high-risk overseas lending.
Which of the statements given above is or are correct?
✅ Correct Answer: A
🎯 Quick Answer:
Option A is correct because only statements 1 and 2 are accurate.Structural Breakdown: The bank raises funds through market borrowings, such as issuing sustainability bonds under its environmental and social governance framework, making market borrowing its primary resource base at over 80 percent.
Statement 3 is incorrect because the Bank's asset quality has historically been robust and highly regulated, with gross Non-Performing Assets remaining well below the 10 percent threshold, often dropping below 2 percent in recent fiscal cycles.
Historical Context: The Bank has historically maintained high credit ratings on par with the sovereign, allowing it to borrow at competitive rates globally.
This is essential since it acts as an intermediary passing on these competitive rates to Indian exporters.
Causal Reasoning: The causal link between strong asset quality and export growth is critical.
By maintaining rigorous underwriting standards to keep Non-Performing Assets low, the Bank secures cheaper global capital, which directly translates into lower financing costs for Indian exporters, enhancing their global pricing competitiveness.