Section 17 of The Export-Import Bank of India Act, 1981
Utilisation of Export Development Fund.
- (1)Where the Exim Bank considers it necessary or desirable so to do, it may, subject to the provisions of sub-sections (2) and (3), disburse or spend from the Export Development Fund any amount on account or in consequence of the grant of any loan or advance, or on account or in consequence of entering into any arrangement under sub-section (1) or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause (s) or clause (w) or clause (x) of sub-section (2) of section 10: Provided that before granting any such loan or advance or entering into any such arrangement, the Exim Bank shall obtain the prior approval of the Central Government.
- (2)Before seeking the approval of the Central Government under sub-section (1), the Exim Bank shall satisfy itself that banking or other financial institutions or other agencies are not likely to grant such loan or advance, or to enter into any such arrangement in the ordinary course of business.
- (3)The Central Government shall, before giving its approval, satisfy itself that such loan, advance or arrangement is necessary as a matter of priority in the interests of the international trade of the country.
- (4)For the removal of doubts, it is hereby declared that nothing contained in this section shall be deemed to preclude the Exim Bank from granting any loan or advance or from entering into any arrangement under sub-section (1) or clause (b) or clause (c) or clause (d) or clause (q) or clause (r) or clause (s) or clause (w) or clause (x) of sub-section (2) of section 10 without the approval of the Central Government, if no amount in respect thereof is to be disbursed or spent from the Export Development Fund.
Summary
- The Exim Bank can use the Export Development Fund to give loans or advances.
- It can also use the Fund for various specific business activities listed in Section 10, such as underwriting, guarantees, or research.
- The bank must get approval from the Central Government before using Fund money for these purposes.
- Before asking for approval, the bank must be satisfied that other financial institutions would not likely provide this money in their normal course of business.
- The Central Government will only approve the use of the Fund if it believes the project is a priority for India's international trade.
- If the bank performs these business activities without using any money from this specific Fund, it does not need the government approval required by this section.
Practical examples
FAQ
1. Can the Exim Bank use the Export Development Fund for any business listed in Section 10?
It can use it for loans under Section 10(1) and for specific activities listed in several clauses of Section 10(2), such as underwriting, guarantees, and research.
2. Does the Exim Bank need permission to spend money from the Fund?
Yes, it must obtain the prior approval of the Central Government.
3. What must the bank check before using this Fund?
It must satisfy itself that other banks or agencies are not likely to grant the loan in their ordinary course of business.
4. When is the Central Government allowed to give its approval?
Only after it satisfies itself that the loan or arrangement is a priority for the country's international trade.
Test yourself
Q1.According to Section 17 of The Export-Import Bank of India Act, 1981, what is required before the bank spends money from the Export Development Fund?
Q2.Under Section 17 of The Export-Import Bank of India Act, 1981, what must the Exim Bank confirm about other financial institutions before seeking government approval?
Q3.What standard must the Central Government use to decide whether to approve a Fund expenditure under Section 17 of The Export-Import Bank of India Act, 1981?
Q4.If the Exim Bank decides to grant a loan mentioned in Section 10 using its own General Fund instead of the Export Development Fund, does Section 17 of the Act require government approval?