| Export Import Bank of India | ||||||||||||||||||
| Rated amount enhanced | ||||||||||||||||||
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| & Amount outstanding under long-term and short-term certificates of deposit programmes, Term Deposit and commercial paper programme will not exceed Rs 22,645.52 crore at any point in time.^ Amount outstanding under long-term and short-term certificates of deposit programmes, Term Deposit and commercial paper programme will not exceed Rs 22,645.52 crore at any point in time.% Amount outstanding under long-term and short-term certificates of deposit programmes, Term Deposit and commercial paper programme will not exceed Rs 22,645.52 crore at any point in time. | ||||||||||||||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||||||||||||||
| 1 crore = 10 million | ||||||||||||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has increased the limits on the long-term and short-term certificates of deposit programmes and the commercial paper programme of Export Import Bank Of India (EXIM Bank) to 22,645.52 crore from Rs 21,520.52 crore, and reaffirmed the ratings at ‘CRISIL AAA/Stable/CRISIL A1+. The net own funds (NoF) of EXIM increased to Rs 15,097.01 crore as a result of capital infusion of Rs. 750 crore out of the budgetary allocation of Rs 1,500 crore in first half of fiscal 2022, thereby improving the overall umbrella limit for borrowings under these instruments to Rs 22,645.52 crore (150% of NoF).The enhancement is in line with CRISIL’s policy.
CRISIL Ratings has also reaffirmed its ratings on the other debt instruments, bank facilities and term deposit programme of Exim Bank at 'CRISIL AAA/CRISIL AA+[1]/FAAA/Stable/CRISIL A1+’.
CRISIL Ratings has also withdrawn its rating on the bond of Rs 500 crore and (See Annexure 'Details of Rating Withdrawn' for details) in line with its withdrawal policy. CRISIL Ratings has received independent confirmation that these instruments are fully redeemed.
The ratings continue to reflect the expectation of strong support from the government given the EXIM Bank’s key role in implementing India’s foreign trade policy, adequate capitalisation, and strong resource-raising ability. These strengths are partially offset by the bank’s modest asset quality and profitability.
The rating on Exim Bank's Tier-I Bonds (under Basel III) has been reaffirmed at 'CRISIL AA+/Stable', one notch lower than its long-term rating. The extent of notch-down continues to reflect CRISIL belief that EXIM Bank’s strategic importance in the Indian financial system is unique and would ensure that it receives whatever fund is required to comfortably meet its capital requirement. With better performance in first half of fiscal 2022 and fiscal 2021 compared to fiscal 2019, cushion for the coupon payments remains comfortable. [1] For Tier 1 bonds under Basel III |
Analytical Approach The rating of EXIM Bank is centrally driven by its unique strategy role and quasi-sovereign perception, further supported by complete ownership by the Government of India. |
Key Rating Drivers & Detailed Description Strengths:
Wholly owned by the government, EXIM Bank is a specialised institution ensuring India’s increasing integration with the global economy by promoting, financing, and facilitating international trade and investment. The government continues to route its lines of credit to sovereign nations through EXIM Bank, reflecting the latter’s importance in furthering global strategic interests. As an institution involved in expanding India’s share in international trade, the bank receives continuous funding support from the government. In fiscal 2012, the bank’s authorised capital was enhanced to Rs 10,000 crore (from Rs 2,000 crore) by amending the Export Import Bank of India Act 1981; and further increased in fiscal 2019 to Rs 20,000 crore. Government infused equity capital of Rs 1,300 crore each in fiscals 2015 and 2016, Rs 500 crore each in fiscals 2017 and 2018, Rs 5,000 crore in 2019, Rs 1,500 crore in fiscal 2020, Rs 1300 crore in fiscal 2021 and Rs 750 crore in first half of fiscal 2022, thereby further augmenting the bank’s capital levels. EXIM Bank’s strategic role in facilitating international trade will continue to derive strong support from the government over the medium term.
As a result of the capital infusion, net loan book stood at Rs 109,836 crore as on September 30, 2021 (Rs 103,851 crore as on March 31, 2021). Of the total loans ended September 30, 2021, 76% was foreign currency loans while the remaining 24% was rupee denominated (80% and 20%, respectively, as on March 31, 2021). Also, the share of policy business (as a proportion of total business as on September 30, 2021) has remained almost stable at 60% as compared to 61% in fiscal 2021 and 60% in fiscal 2020.
The capitalisation profile has been supported by regular capital infusion from the Government of India (GOI) post incurring losses in fiscal 2018. From fiscal 2019, GOI has overall infused Rs 8,550 crore till end of second quarter of fiscal 2022. Further, coupled with positive internal accrual, networth improved to Rs 18,564 crore as on September 30, 2021 (Rs 17,814 crore as on March 31, 2021). As a result, the bank’s total capital adequacy and Tier I ratio stood at 28.12% and 26.22%, respectively, as on September 30, 2021 (25.89% and 24.00%, respectively, as on March 31, 2021). The Government of India has also allocated Rs 1,500 crore for EXIM Bank in the budget for fiscal 2022. Out of which Rs. 750 crore has been infused in first half of fiscal 2022 and remaining Rs. 750 crore is expected to be infused in the second half of fiscal 2022. Capitalisation is expected to remain strong over the medium term, backed by periodic capital infusions from the government.
The bank has successfully raised wholesale funds at competitive interest rates in the domestic and global capital markets. In the Indian debt market, EXIM Bank’s paper is accepted as a benchmark in its category and has wide acceptance among institutional investors.
Weakness:
EXIM Bank’s asset quality deteriorated in fiscal 2018 post the compliance with RBI’s circular on resolution of stressed assets and its high exposure to NCLT cases. However, since then, the Bank changed its strategy for commercial business with focus on high rated clients with satisfactory track record to ensure strong asset quality. Consequently, the asset quality improved in the last three fiscals, with bank reporting gross non-performing assets (GNPA) at 4.65% as on September 30, 2021 (6.69% as on March 31, 2021 and 8.75% as on March 31, 2020).
The reduction in GNPA was on account of recoveries, including under NCLT and technical write-offs implemented by the bank. Provision coverage ratio remained comfortable at 98% as on September 30, 2021 (97% end of fiscal 2021), owing to which the net NPA ratio stood at 0.23% as on September 30,2021 (0.51% as on March 31, 2021).
Exim Bank has relatively low profitability as compared to commercial banks given its mandate to promote India’s international trade resulting in lower interest spreads. In first half of fiscal 2022 the bank reported a profit of Rs 301 crore(up 176%) on a net interest income of Rs 1,417 crore as compared to profit of Rs 109 crore on net interest income of Rs 1,050 crore. In fiscal 2021 the bank reported a profit of Rs 254 crore (up by 105%) on a net interest income of Rs 2,562 crore as compared to profit of Rs 124 crore on net interest income of Rs 1,994 crore. The margins (on total income net of interest expenses) remained stable at 2.35% as on September 30, 2021 in comparison to 2.38% as on March 31, 2021 driven by reduced cost of borrowings in fiscal 2021. However, the provisioning costs increased in fiscal 2021 from 1.5% in fiscal 2020 to 1.9% in fiscal 2021 on account of proactive additional provisions made by the Bank against standard advances (including the accounts that have availed the moratorium facility under the RBI’s COVID relief package) which in the Bank’s assessment are stressed. Consequently, the overall profitability remained stable with return on average assets of 0.45% in first half of fiscal 2022, as compared to 0.19% in fiscal 2021. Nevertheless, given the current economic situation, the earnings profile remains vulnerable to that extent. |
Liquidity: Superior Asset liability maturity profile as on September 30, 2021, shows no cumulative negative gap in the maturity buckets till 1 year bucket. The bank has cash and bank balances of about Rs 8,185 crore as on September 30, 2021. |
Outlook: Stable CRISIL believes EXIM Bank will continue to benefit from government support over the medium term, given its strategic role in the formulation and implementation of India’s national foreign trade policy into action. Capitalisation is also expected to improve |
Rating Sensitivity factors Downward factors:
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About the Company Established in 1982, EXIM Bank’s operations are structured into two major lending areas—export credit and finance for export capability creation—to support Indian companies that want to globalise operations. The bank also provides a range of information and advisory services to supplement their globalisation efforts.
For the half year ended September 30, 2021, the bank reported a net profit of Rs 301 crore (Rs 254 crore for fiscal 2021) on total income (net of interest expenses) of Rs 1,580 crore (Rs 3,158 crore for fiscal 2021). |
Key Financial Indicators
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Any other information: Not Applicable
Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments
The distinguishing features of non-equity Tier-I capital instruments (under Basel III) are the existence of coupon discretion at all times, high capital thresholds for likely coupon non-payment, and principal write-down (on breach of a pre-specified trigger). These features increase the risk attributes of non-equity Tier-I instruments over those of Tier-II instruments under Basel III, and capital instruments under Basel II. To factor in these risks, CRISIL notches down the rating on these instruments from the bank's corporate credit rating.
The factors that could trigger a default event for non-equity Tier-I capital instruments (under Basel III), resulting in non-payment of coupon, include: i) the bank exercising coupon discretion, ii) inadequacy of revenue reserve to honor coupon payment if the bank reports low profit or a loss, or iii) the bank breaching the minimum regulatory common equity Tier (CET) I, including counter cyclical buffer (CCB), ratio. Moreover, given their additional risk attributes, the rating transition for non-equity Tier-I capital instruments (under Basel III) can potentially be higher than that for Tier-II instruments. |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
@ Perpetual Bond with call option after five years from the date of issuance. #Amount outstanding under long-term and short-term certificates of deposit programmes and commercial paper programme will not exceed Rs 22,645.52 crore at any point in time % ECB facility of SBI converted at 1 Euro = Rs.80
Annexure - Details of Rating Withdrawn
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||
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% ECB facility of SBI converted at 1 Euro = Rs.80
This Annexure has been updated on 07-Jan-2022 in line with the lender-wise facility details as on 17-Aug-2021 received from the rated entity.
Criteria Details
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