Lines of credit extended to Sri
Lanka may go through rough patch: Exim Bank
lines of credit extended to the Sri Lankan government by India Exim Bank may go
through a "rough patch" as the island nation faces the worst economic
crisis, a senior bank official said on Thursday.
Import Bank of India (Exim Bank), however, said there is no overdue payment
from the Sri Lankan government as of now.
Bank, at the behest of the government of India, extends lines of credit (LOCs)
to financial institutions, regional development banks, sovereign governments
and other entities overseas to enable buyers in those countries to import
developmental and infrastructure projects, equipment, goods and services from
India, on deferred credit terms.
has extended LOCs worth USD 1.3 billion to the Sri Lankan government.
the Buyers' Credit- National Export Insurance Account (BC-NEIA), the
development finance institution has an exposure of around USD 230 million in
LOC part is going to get into some negotiation between the two governments. I
don't think everything is rosy with Sri Lanka. This is going to be a rough
patch," Exim Bank's managing director Harsha Bangari told reporters.
we navigate Sri Lanka in the near term is going to be a little difficult, but I
am sure at least the government of India is totally invested in Sri
Lanka," she said.
extending LOCs, Exim Bank takes risk, which is backed by the government of
India, but it does not do credit assessment, Bangari said, adding that any
decision on restructuring of LOCs will have to get initiated by the finance ministry.
am sure discussions have happened and there will be imminent restructuring. We
will become a partner in negotiation but the table will be set by the
government," she said.
said the Sri Lanka government made its last repayment on March 31, 2022 and
there are no bills overdue currently.
there is no overdue from Sri Lanka today but that doesn't mean it will not be
there (in future). Going forward, there could be some stress," she noted.
Bank has a very small exposure to Sri Lankan banks but there are no concerns
over it, she said.
Lanka is facing its worst economic crisis since gaining independence from
Britain in 1948. The crisis is caused in part by the lack of foreign currency,
which has meant that the country cannot afford to pay for imports of staple
foods and fuel, leading to acute shortages and very high prices.
the impact of Ukraine-Russia conflict on the bank's exposure, Bagari said none
of the exporters of the development finance institution has exposure to Ukraine.
the bank does not have any direct exposure to Russia, it has provided project
guarantees to Indian companies that are doing contract work for Russian
are very closely monitoring it on a daily basis. We are in touch with these
companies. We have not seen any sign of stress till now. So, on the financial
transaction side we do not have exposure," she said.
export credit agency has provided assistance to a couple of companies in India,
which are the licensed manufacturer of Sputnik vaccine, but there are no
concerns over it, she said.