Indias National Export Credit Agency Investor Presentation 1 - PowerPoint PPT Presentation

India’s National Export Credit Agency Investor Presentation 1

Presentation Outline Exim Key Credit Highlights 1 2 The India Story 3 The Exim Bank Story Appendix 4 2

Exim Key Credit Highlights 3

Exim Key Credit Highlights  100% owned by the Government of India (“GoI”). 1 India: Strong Macro  An Instrument of Government policy as India’s official Export Credit Agency . backed by supportive policy Environment  Assists GoI in policy formulation and project selection under Economic 5 2 Diplomacy. Management Exim: India’s engine Strength Proxy to Sovereign for growth of  Rated at par with the Sovereign . International Trade  Policy Business Guaranteed / Insured by the Sovereign . Policy Role at  Strong regulatory capital position. Financial Highlights National Level 4 3 4

The India Story 5

India: Strong Macro backed by supportive Policy Environment Resilient GDP Growth (1,2,3) 8.2% 7.4% 7.1% 7.3% 7.5% 7.1% 6.7% 6.4% 6.7% (% Growth) Nominal GDP (US$ bn) 6.9% 6.7% 6.6% 6.4% 3.9% 2585.0 3.7% 3.9% 2271.0 3.2% 2147.2 2043.3 1919.4 53.8% 52.8% 52.5% 51.8% 50.6% 2.9% 2.7% 2.3% 29.1% 29.3% 29.8% 30.8% 30.0% 1.5% 17.1% 18.6% 18.2% 17.7% 17.9% 2016 2017 2018(p) 2019(P) FY 14 FY 15 FY 16 FY 17 FY 18E Agriculture (%) Industry (%) Services(%) Real GDP Growth (%) India China United States World  World’s 6th largest economy based on nominal GDP in 2017. (2) Nominal GDP for 2017: ~US$ 2.6 tn. (2) o  World’s 3rd largest economy based on GDP measured in PPP terms in 2017. (2) o GDP in PPP terms for 2017: ~US$ 9.5 tn. (2)  GDP growth for Q1 2018-19 (Apr-Jun) estimated at 8.2%, as against 7.0% in Q3 (Oct-Dec) and 7.7% in Q4 (Jan-Mar) . (3)  GDP growth forecast for CY2018 at 7.3% (5)  Economic growth to be driven by a recovery from the transitory effects of the currency exchange initiative (demonetization) and implementation of the Goods and Service Tax (GST) and supported by strong private consumption . (2)  Favorable demographic profile: 66% of the population is between the age of 15 to 64 years . (4) 6 Source: (1) Institute of International Finance (IIF); (2) IMF World Economic Outlook April 2018. Data for CY; (3) Ministry of Statistics and Programme Implementation (MOSPI); (4) World Bank Database; (5) IMF World Economic Outlook July 2018 Update. FYxx means financial year ended March 31, 20xx.; E- Estimated P - Projected;

Indian Economy: Key Economic Indicators General Government Debt (% of GDP) (1) Current Account Deficit (2) Currency Movement (4) Centre State FY 19 FY13 FY14 FY15 FY16 FY17 FY 18 (Apr-Jun) 67.1 68.2 67.7 67.6 66.6 67.5 (15.2) (15.8) (26.8) (22.1) (32.3) (48.7) -0.7% 14.9 16.6 15.2 17.6 17.5 18.7 -1.1% -1.3% (87.8) -1.7% -1.9% -2.4% 52.2 51.4 51.6 50.1 50.1 48.8 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 -4.8% Indian Rupee Russian Ruble FY 14 FY 15 FY 16 FY 17E FY 18F FY 19F Current Account Balance (US$ bn) % of GDP Brazilian Real Chinese Yuan CPI Inflation Rate (2)** Key Macroeconomic Metrices Key Parameters FY08 FY13 FY18 Change 9.3% Gross National Saving (% of GDP) (3) 36.8 33.8 30.0 # (380 bps) Gross Domestic Investment (% of GDP) (3) 30.6 # 38.0 38.6 (800 bps) 5.8% 4.9% Gross Fixed Capital Formation (% of GDP) (3) 32.9 33.4 28.5 (490 bps) 4.5% 3.7% 3.6% Capital Expenditure (3)(5) 16.9 11.8 12.3 ## 50 bps Fiscal Deficit (% of GDP) (3) 2.5 4.9 3.3 ## (160 bps) Revenue Deficit (% of GDP) (3) 1.1 3.7 2.2 ## (150 bps) FDI Inflows (US$ bn) (2) 34.8 34.3 61.0 77.84% FY14 FY15 FY16 FY17 FY 18 FY 19 Exchange Rate (INR/US$, avg.) (2) 40.2 54.1 64.4 19.04% (Apr-Aug) CPI 7 Source: (1) Institute of International Finance (IIF) Database; (2) Reserve Bank of India, Press Release and Online Database (accessed online on 18/09/2018); (3) Central Statistics Office; (4) Bloomberg (Rebased to 100); (5) % of Total Expenditure for FY08 & FY13 and % of Budget estimate for FY19; # Data pertains to FY17 Revised Estimates; ## Data pertains to Budget Estimates FY19 ; ** Base year for CPI Inflation FY13-FY17 is 2012=100.

Sound External Sector Trend of Services Trade (2) Trend of Merchandise Trade (1) 163 158 158 154 491 152 146 466 450 448 (US$ bn) (US$ bn) 381 384 96 310 95 314 304 300 86 85 81 82 276 79 262 218 53 136 -53 -91 -87 -34 -56 -66 -43 FY13 FY14 FY15 FY16 FY 17 FY 18 FY 19 (Apr- FY13 FY14 FY15 FY16 FY17 FY 18 FY 19 (Apr- Aug) Aug) Exports Imports Exports Imports Non-oil Trade Deficit India’s Export Pattern (1) India’s Import Pattern (1) 43.0 28.9 60.9 32.9 21.5 32.7 16.6 19.2 44.7 US$ 300.4 bn FY 2013 FY 2013 US$ 490.7 bn 164.0 83.9 32.9 37.4 35.7 26.0 26.7 16.8 67.3 FY 2018 US$ 303.5 bn FY 2018 41.5 37.6 37.5 36.0 28.2 27.8 24.6 23.5 46.8 22.2 108.7 74.7 51.5 40.4 39.1 31.7 27.4 69.9 US$ 465.6 bn Gems & Jewellery Chemicals Petroleum Products Petroleum Crude & Products Gems & Jewellery Electronics Items Textiles Base Metals Agri & Allied Products Chemicals Machinery Ores & Minerals Machinery Transport Equipments Others Base Metals Agri & Allied Products Others  Merchandise trade (exports + imports) as percentage of GDP stood at 29.7% in FY18. (1) India’s share in global merchandise trade stood at 2.1% (2017). (3)  India emerged as the 20 th largest merchandise exporter in 2017; and accounted for 1.7% of global merchandise exports in the same year. (3)  India is the 9 th largest exporter of services in 2017, accounting for 3.4% of global services exports. (3) 8 Source: (1) MOCI/IIF; (2) Balance of Payment Statistics, RBI; (3) World Trade Organization (accessed on 18/09/2018).

External Debt vis-à-vis External Reserves External Reserves : 403% 394% 391% External Debt 371% 301% FC Assets : External 269% Debt 94% 90% 92% 87% 86% 80% 87% 72% 74% 78% 73% 75% 71% 68% 67% 69% Volatile Capital Flows: 63% 62% External Reserves FCA: Short-term debt FY13 FY14 FY15 FY16 FY17 FY 18 (US$ bn) External Debt 409.4 446.2 474.7 485.0 471.3 529.7 External Reserves 292.0 304.2 341.6 360.2 370.0 424.5 External Debt External Reserves FY 13 FY 18 FY 13 FY 18 2% 1% 2% Commercial Borrowings 5% 6% 4% 5% Foreign 11% Short Term 9% Currency 34% 14% Assets 38% Non Resident Gold Multilateral 24% Bilateral 17% SDRs / Trade Credit 19% Reserve 24% 89% 94% Tranche 9 (1) ‘Volatile Capital Flows’ is defined to include cumulative portfolio inflows and short-term debt (RBI). For FY18, Volatile Capital Flow data pertains to end-Dec’17; (2) Volatile Capital Flows to Reserves ratio peaked at 97.4% in September 2013; (3) Source: RBI/Ministry of Finance, Government of India.

India’s Twin Balance Sheet Problem  Investment-GDP Ratio soared by 11% points to 38% in four years to FY08.  GNPA Ratio for Scheduled Commercial Banks (SCBs) soared from 2.3% as on March 31, 2008, to 11.6% as on March 31, 2018. GNPA ratio for Public Sector Banks (PSBs)  Expectations of sustained double digit growth by corporates. as on March 31, 2018 was 15.6%*.  In three years to FY09, bank credit doubled.  SCB’s GNPA Ratio projected to increase to 12.2% by March 2019*.  Indian companies aggressively acquired companies overseas (e.g.: TATA Steel’s  Bunching of bad loan recognition due to previous regulatory forbearance. acquisition of Corus Steel, Hindalco’s acquisition of Novelis Inc).  Not a systemic failure - exogenous factors / delay in recognition. Bad-Loan- Pre Global Financial Crisis Encumbered Banks Post Global Financial Crisis Resolution  Accommodative monetary policy tightened due to rise in inflation: o Repo rates increased from 4.75% in April 2009 to 8.50% in October 2011.  Asset Quality Review (AQR).  INR Depreciation added to the stress in FC debt servicing:  Schemes - 5:25 Flexible Refinancing, Strategic Debt Restructuring (SDR), Scheme for Sustainable Structuring of Stressed Assets (S4A) - withdrawn w.e.f. February 12, o USD/INR depreciated from 52.97 in February 2013 to 68.36 in August 2013. 2018.  In 2013, 33% of corporate debt was owed by companies with ICR < 1; increased to above  The Insolvency and Bankruptcy Code, 2016 (IBC). 40% in late 2016.  Announcement of INR 2.11 tn capital infusion into PSBs, including re-capitalisation  Capacity Utilization in Industry declined from 80.9% in Q3FY10 to 75.2% in Q4FY18. bonds of INR 1.35 tn (INR 800 bn capital already allocated to PSBs). 10 Source: RBI Economic Survey 2016-17 & 2017-18, Bloomberg Database. * Financial Stability Report, RBI, June 2018.