The International Finance Corporation (IFC) and the Bank of Tokyo-Mitsubishi have agreed to jointly extend a six-year US$60-million line of credit to Export-Import Bank of India (Exim Bank India).

While the deal does not specifically support letters of credit (L/Cs), the additional cash destined for India's banking system should help free-up all types of trade finance flows.

First deal

The Exim Bank India deal is the first under the IFC's Export Credit Agency initiative that began in May 2009.

The deal aims to enable Exim Bank of India to support export-orientated small- and medium-sized enterprises, many of which have suffered in the credit crunch as banks tightened their lending to customers.

According to the IFC, the deal is meant to address problems banks and their exporting customers have experienced over recent months, including the shortage of L/Cs.

Several measures

The IFC has launched a set ofinitiatives to help private enterprises cope with the global financial and economic crises.

IFC is expected to finance more than US$31 billion over the next three years, combining IFC funds with contributions mobilised from various sources, including governments and other international financial institutions.

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