The Export-Import Bank of the US (US Exim Bank) has set a target of granting $6 billion (over Rs 25,000 crore) through letters of credit (LoC) to Indian carriers for acquiring aircraft from US producers.
The US Exim Bank provides credit assistance to projects against imports from the US. The loan values are tied directly to purchase of US goods and services.
The bank is also offering pre-approved LoCs of $2.2 billion (over Rs 9,200 crore) to eight Indian financial institutions for onward lending against imports from the US.
“Our commitments to aircraft purchases from India will rise in the future. We are planning to offer LoCs of $6 billion to airlines in India for buying aircraft from the US,” US Exim Bank Chairman and President James H Lambright said here today.
During his visit to India, Lambright is signing eight agreements for offering LoCs to IDBI Bank ($250 million), Infrastructure Development Finance Company ($250 million), Infrastructure Leasing & Financial Services ($100 million) and State Bank of India ($250 million), India Infrastructure Finance Company ($250 million), Power Finance Corporation ($800 million) Indian Renewable Energy Development Agency ($50 million) and Punjab National Bank (250 million).
“These dollar-denominated LoCs are available at half the rate at which they are available in India. These include the Libor-linked interest rate, margin on that and guarantee fee, which changes with the longevity of the loan,” Lambright said. US Exim Bank’s exposure to Indian companies is $3.5 billion (over Rs 14,700 crore), which accounts for 6 per cent of the bank’s total global exposure.
“The pipeline of transactions in India will be the largest for the bank. We are very optimistic about the Indian economy and private corporate sector initiatives in India’s growth,” Lambright added.