VIII.  Trade and Project Financing

Banking system

As of June 1991, approximately 60,000 branches of
commercial banks provided financial services in India.
All large Indian banks are nationalized, and all Indian
financial institutions are public enterprises.  Twenty-
four foreign banks operated about 140 branches.  U.S.
banks having branches in India include American Express
Bank, the Bank of America, and Citibank.

The Reserve Bank of India (RBI) is the central bank.
The RBI lends to the Government, to the government-
owned banks, and to commercial banks and other
financial institutions.  The RBI issues Indian rupee
bank notes used as currency in India.  The RBI
supervises all banking operations and enforces exchange
control regulations.  By managing the cost and
availability of credit, it administers the Government's
monetary policy.

The State Bank of India (SBI) and other major
nationalized banks are dominant.  SBI is almost wholly
owned by the RBI and is India's biggest commercial
bank.  Four national specialized financial institutions
are the Industrial Development Bank of India (IDBI),
the Industrial Finance Corporation of India (IFCI), the
Industrial Credit and Investment Corporation of India
(ICICI), and the Industrial Reconstruction Bank of
India (IRBI).

Foreign bank branches in India finance trade through
their global networks.  They are permitted to accept
deposits and provide credit in accordance with the
banking laws and RBI regulations.

Specialized public enterprises offer investment and
insurance services.  The Unit Trust of India (UTI)
offers individuals a variety of mutual fund
investments.  The Life Insurance Corporation of India
has a monopoly on writing life insurance in India.  The
General Insurance Corporation and its subsidiaries have
the monopoly on casualty (fire, theft, etc.) insurance
services.

Foreign exchange controls affecting trading

The Indian rupee is freely convertible on the trade
account.  The Indian rupee is not freely convertible on
the capital account.  In practice, paying dividends to
U.S. owners on profits generated in India will require
advance approval by the RBI.

Availability of financing

U.S. firms seeking rupee loans from Indian banks have
encountered high interest rates and been locked in to
such loans when banks have refused to accept pre-
payment.  The state-owned banking sector has a well-
deserved reputation for its sluggish pace of service,
indifference to customer preferences, and high costs.
Bank employee unions have consistently fought banking
automation, with the result that most branches of SBI
and other public sector banks are still using hand-
written ledgers and counting currency by hand for every
transaction.  Current interest rates for rupee loans
(as of June 1994) are 15 percent.

Export finance, payment methods

Finance for exports may be obtained from commercial
bank branches in India.  State-owned commercial banks'
loans for working-capital financing of exports is in
turn refinanced by the Export-Import Bank of India.
Payment terms are specified by contract between the
bank and the applicant for the loan.

U.S. Export-Import Bank

The Export-Import Bank of the U.S. (Eximbank) provides
export finance to high-value capital goods and major
projects.  In the past, Eximbank has financed the sale
of Boeing 747's to Air India and a variety of capital
equipment including electric power station generators.
For details of Eximbank programs and service, please
contact Eximbank at (202) 566-2117.

Overseas Private Investment Corporation

OPIC has provided insurance to U.S. firms' investments
in India.  For details of OPIC programs and services,
please contact OPIC at (202) 336-8400.

Multilateral development bank funding for projects

India has a substantial amount of bank funding from the
World Bank, the Asian Development Bank, and other
multilateral development banks (MDB's).  This lending
supports a broad portfolio of infrastructure
development projects, from ports to telecommunications.
The US&FCS Office of Multilateral Development Banks
provides assistance to U.S. firms who are seeking
information about major projects funded by these
international financial institutions (IFI's).  For
details, please contact the Office of MDB's at the U.S.
Department of Commerce at (202) 482-3399.

India's sovereign risk and credit rating

As of June 1994, investments in India are not
considered "investment-grade" by Moody's or Standard
and Poors.

U.S. bank branches in India

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