What is an Export Import Bank (Ex-Im Bank)?

//What is an Export Import Bank (Ex-Im Bank)?
What is an Export Import Bank (Ex-Im Bank)? 2017-10-04T08:12:47+00:00

Definition: Export Import Bank (Exim Banks) are government or semi government agencies that ensure the safety and growth of a country’s foreign trade. They provide customized financial instruments to safeguard the interests of exporters against default/nonpayment from the importers. Facilitating easier finances for foreign trade, trade rules and conditions are some of the functionality of an EXIM Bank.

What Does Export Import Bank Mean?

What is the definition of import export bank? Exim Banks are particularly focused on the foreign trade and do not involve in within country transactions. They work closely in accordance with the concerned departments of the government, overseas logistics companies and customs to ensure the central export policies are being followed and the interests of the people in the trade are safeguarded.

While foreign trade has due inputs from the exporter, logistics partner, customs on the exporter’s side and a similar list of stakeholders on the importer’s side, it becomes imperative to work in coordination not only with the agencies within the country, but also with respective counterparts abroad.

Example:

Mr. E, who owns a handicrafts manufacturing unit in Country X has a purchase order from Mr. I from Country Y. While the trade in itself is quite similar to the traditional trade with supply based on purchase order and agreed payment terms, it becomes a lot more risky when it happens across nations.

The risks of custom rejection, counterparty default (due to delay, quality issues, denial or delay of payment etc.) might result in non-performance even when both Mr. E and Mr. I are up to the mark with their commitments. The Exim banks provides a framework for overseas trade wherein, at each step of trade, responsibility transfers are clearly defined to avoid any ambiguity that may result in default.

Summary Definition:

Define Import Export Bank: An Exim Bank of the country works closely in coordination with the stakeholders of overseas trade around the world and ensure smooth trade for the exporters.