Export-Import Bank of India (Exim Bank India) has extended a second US$ 20 million short-term line of credit to six Iranian commercial banks.

The new credit line follows the apparent success of an earlier scheme, now fully committed, that like its successor aims to make it easier for Iranian importers to obtain letters of credit (L/Cs) to purchase Indian goods.

Full reimbursement

Under this facility, Exim Bank India will reimburse Indian exporters 100 per cent of the value of L/Cs opened by any one of six Iranian banks.

The institutions participating in the scheme are Bank Melli Iran, Bank Mellat, Bank Saderat, Bank Tejarat, Bank Sepah and Industry & Mine Bank.

One-year credit

Iranian importers participating in the scheme will enjoy a one-year credit facility.

Transactions under the facility must be approved by Exim Bank India and the Iranian central bank, Bank Markazi.

Fully committed

Exim Bank India's first short-term line of credit for identical amount of US$ 20 million has been fully committed according to the bank.

India's official export credit agency says the first facility has been used for exports of pharmaceuticals, chemicals, steel products and other items.

Medium-term boost

Iran appears to be emerging as a major lucrative market for Indian projects, goods and services, and one that Exim Bank India seems keen to support.

As well as short-term facilities, the bank operates a medium-term US$200 million facility for exports from India of capital goods, projects and related services to Iran.

L/C based facilities

Indian companies eyeing opportunities in Iran have shown interest in selling Indian goods and services in the power, railway, port, hydrocarbon, automobiles, cement and pharmaceuticals sectors.

Exim Bank India has several short-term L/C based facilities open for Indian exports to Asia, Africa, Latin America, Eastern Europe and Russia.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.