UNIT- 2

International Investment and finance

International Investment and finance

• International investing is an investment strategy that

involves selecting global investment instruments as
part of an investment portfolio. People often invest
internationally to expand diversification and distribute
investment risk between markets and global companies.
• There are two main categories of international
investment: portfolio investment and foreign direct
investment (FDI). Portfolio investment refers to the
investment in a company's stocks, bonds, or assets, but
not for the purpose of controlling or directing the firm's
operations or management.
• International finance is the study of monetary
interactions that transpire between two or more
countries. International finance focuses on areas such as
foreign direct investment and currency exchange rates.
Increased globalization has magnified the importance of
international finance.
Meaning
Export Import Bank
• Export Import Bank (Exim Banks) are government or
semi government agencies that ensure the safety and
growth of a country's foreign trade. They provide
customized financial instruments to safeguard the
interests of exporters against default/nonpayment from
the importers.
• EXIM provides trade financing solutions – including export
credit insurance, working capital guarantees, and
guarantees of commercial loans to foreign buyers – to
empower exporters of U.S. goods and services.
Other products

• EXIM also offers other products as part of our portfolio to

assist in what tend to be larger projects in areas such as
energy, infrastructure, and capital equipment.
• Loan Guarantee
• Direct Loan
EXIM provides many benefits for
community banks, including:

• meeting customers' needs for export financing.

• attracting new customers.
• increasing profits.
• limiting country and buyer risks.
• satisfying bank regulatory requirements.
• selling, transferring and assigning EXIM-supported loans
to third parties.
Export and Import Bank of India (EXIM)
• The Export and Import Bank of India, popularly known as the
EXIM Bank was set up in 1982. It is the principal financial
institution in India for foreign and international trade. It was
previously a branch of the IDBI, but as the foreign trade sector
grew, it was made into an independent body.
• The main function of the Export and Import Bank of India is to
provide financial and other assistance to importers and exporters
of the country. And it oversees and coordinates the working of
other institutions that work in the import-export sector. The
ultimate aim is to promote foreign trade activities in the country.
• The management of the EXIM bank is done by a board, headed
by the Managing Director. There are 17 other Directors on the
board. The whole paid-up capital of the bank (100 crores
currently) is subscribed by the Central Government exclusively.
Functions of the EXIM Bank
• Let us take a look at some of the main functions of Export
and Import Bank of India bank:
• Finances import and export of goods and services from
India
• It also finances the import and export of goods and
services from countries other than India.
• It finances the import or export of machines and
machinery on lease or hires purchase basis as well.
• Provides refinancing services to banks and other financial
institutes for their financing of foreign trade
• EXIM bank will also provide financial assistance to
businesses joining a joint venture in a foreign country.
• The bank also provides technical and other assistance to
importers and exporters. Depending n the country of origin there
are a lot of processes and procedures involved in the import-
export of goods. The EXIM bank will provide guidance and
assistance in administrative matters as well.
• Undertakes functions of a merchant bank for the importer or
exporter in transactions of foreign trade.
• Will also underwrite shares/debentures/stocks/bonds of
companies engaged in foreign trade.
• Will offer short-term loans or lines of credit to foreign banks and
governments.
• EXIM bank can also provide business advisory services and
expert knowledge to Indian exporters in respect of multi-funded
projects in foreign countries
Importance of the EXIM Bank

• Other than providing financial assistance, the Export and

Import Bank of India bank is always looking for ways to
promote the foreign trade sector in India. In the early
1990s, EXIM introduced a program in India known as the
Clusters of Excellence.
• The aim was to improve the quality standards of our
imports and exports. It also has a tie-up with the European
Bank for Reconstruction and Development. It has agreed
to co-finance programs with them in eastern Europe.
• In order to promote exports EXIM bank also has schemes
such as production equipment finance program, export
marketing finance, vendor development finance, etc.