Fitch Ratings affirms EXIM Bank's rating, outlook remains stable
EXIM Bank finances and facilitates India's international trade. Fitch Ratings said it has affirmed the bank's Long-Term IDR at 'BBB-' and its Government Support Rating (GSR) at 'bbb-'.
According to Fitch, a 'BBB' rating denotes good prospects for ongoing viability with adequate fundamentals and a low risk of needing extraordinary support to avoid default. However, adverse business or economic conditions could impair this capacity.
Also read: Mint Primer: The fallout of India's unpredictable farm trade policy "EXIM's IDR and Outlook are at the same level as India's sovereign rating (BBB-/Stable). The IDR is driven by the GSR, which is underpinned by Fitch's view of a high probability of extraordinary state support for EXIM if needed," the agency said.
It added, "This reflects EXIM's high strategic importance to the state, which stems from its long-term policy role, its status as a policy institution, 100% state ownership and significant protection for EXIM's creditors due to access to liquidity from the authorities during periods of crisis. "EXIM's longstanding policy role as the principal financial institution that finances and promotes India's international trade is driven by its founding act.
EXIM extends lines of credit to less developed countries, underpinning its close linkages to the sovereign. Also read: Amid global concerns over India-made drugs, government plans an exports revamp “All of its loans are linked to foreign trade, with policy loans backed by sovereign guarantees making up nearly 51% of its loans [in the first nine months of FY24]." The rating agency said that a positive rating action on India's sovereign rating, although unlikely, would most likely result in a similar positive change for EXIM's
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