The new government is likely to infuse Rs 200 crore (Rs 2 billion) equity in Export Import Bank of India during this fiscal as part of the efforts to step up credit for the needy sectors.

"The bank has a capital base of Rs 650 crore (Rs 6.50 billion) and the government is likely to infuse another Rs 200 crore during the financial year 2004-05," Exim Bank chairman T C Venkat Subramanian told PTI in New Delhi.

The National Democratic Alliance government had agreed to infuse additional capital last fiscal. The bank will take up the matter with the new Congress-led government.

Official sources said the proposal may be approved as it will increase Exim Bank's capital base to Rs 850 crore (Rs 8.50 billion) by March 31, 2005, enabling it to borrow more funds from domestic and international markets and step up lending to exporters.

A formal announcement may be made in the Budget or in the Exim Policy, they added.

"Periodical infusion of capital into the bank by the government is meant to enhance the bank's borrowing power and expansion of business," Subramanian said.

The bank targets to disburse loans worth Rs 9,000 crore (Rs 90 billion) this fiscal, he added.

In order to step up credit to exporters and importers, the bank plans to raise Rs 7,000 crore (Rs 70 billion) in 2004-05, he said, adding half of it would be from the domestic market and the remaining in foreign currency.

The Reserve Bank of India has already given its approval to the bank for the external commercial borrowing of $300 million, Subramanian said.       

Disclosing plans for its lending operations, he said the bank will also encourage Indian companies to invest overseas to set up manufacturing or assembly units in potential markets like China, Central Asia and Eastern Europe as well as Africa.