July 14, 2015

GIFT to host India’s First Maritime Finance Centre

Gujarat International Finance Tec-City (GIFT) might become India’s first maritime finance centre, if the proposals go as per discussions. Exim Bank of India is coming up with an innovative finance model to have a National Maritime Cluster in GIFT City. Under the model,banks would form a consortium and would operate out of GIFT City. It would operate as a single-window facility for financing India’s maritime sector.

The proposal is to float maritime bonds which can be attractive to the investor community and make them invest in the sector. This maritimecentrewill be developed on the like of Korea, wherein public investment is generated by issue of debt and equity instruments to raise capital and channelize it into the sector.

Yaduvendra Mathur, CMD Exim Bank, while interacting with the press statedthat EXIM Bank is planning to float maritime bonds that would attract the investor community. There would be a bank consortium functioning out of GIFT City, which would operate as a shipping or maritime financing centre. This consortium would act as a single-window facility. The bonds could be listed on the international exchanges for easy trading.

This is the model being followed in Korean and European nations for maritime financing. GIFT City is an ideal location since it is the upcoming International Finance Centre.

Exim Bankwhich is an export credit agency is planning to increase its shipping portfolio. Currently, its exposure to the shipping sector in India is around Rs. 8,000 crore. As per Mr. Mathur, the shipping portfolio of China's Exim Bank is around USD 200 billion.

Mr. Mathur said that the EXIM Bank is proposing to have a Shipping Investment Trust – this can be on the lines of the Real Estate Investment Trust. India's share in global shipbuilding is a meagre 1% now, and India’s share can increase dramatically and the ship building industry could get a huge boost if such a plan could be implemented.

Indian banks have an exposure of around Rs. 1 lakh crore to the shipping industry, of which 35% of the loans are now being considered for Corporate Debt Restructuring (CDR). As per estimates, out of the total loan portfolio, around Rs. 40,000 crores is for port projects, a similar amount has been lent for shipyard projects, and Rs10,000-15,000 crore for shipping companies.





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