The Ministry of External Affairs is considering a proposal to allow commercial banks to extend lines of credit to foreign countries. At present, only the Exim Bank is allowed to do so.

All lines of credit offered to countries directly by the Government of India would now be routed only through the Exim Bank.

Addressing an interactive session with Indian commercial representatives from West European countries, organised by the Federation of Indian Export Organisations, R Viswanathan, joint secretary, ministry of external affairs, said: "We are considering the inclusion of commercial banks along with Exim bank to provide the line of credit to foreign countries."

"Commercial banks with overseas branches can avail the advantage of extending line of credit to these countries. The lines of credit provided by Indian government to other governments will be abolished as all lines of credit given to other countries will now be routed through Exim Bank," he added.

The Government of India has decided to subsidise the interest rate at Libor plus 0.5 per cent for advances from eight to 12 years given to exporters by the Exim Bank.

"We would be providing line of credit worth $1.5 billion extending to five years for pharmaceuticals companies exporting to sub-Saharan African countries. The line of credit would be extended to pharmaceutical products, especially to HIV related products. We are in talks with the Department of Economic Affairs on this," he added.

In July 2003 India had extended about $200 million under programme called the new partnership for Africa's development' to African countries and so far there have been no disbursements made. India has also given about $5 million as project assistance for setting-up of information technology in Ghana and Senegal.