OREANDA-NEWS. Fitch Ratings has affirmed the ratings of Export-Import Bank of India (EXIM) at 'BBB-'. The Outlook on the ratings of the policy institution is Stable. The full list of the rating action is provided at the end of this commentary.

KEY RATING DRIVERS

IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR
EXIM's rating is equalised with that of the Indian sovereign (BBB-/Stable) based on its key policy role of financing, facilitating and promoting India's foreign trade, and its establishment by a statute that ensures strong linkages with the government.

The Export-Import Bank of India Act, 1981 requires the government to directly own 100% of EXIM. The government's strong control of EXIM is further highlighted by representation from three government ministries - the Ministry of Finance, Ministry of External Affairs and Ministry of Commerce and Industry - on its board. Under the act, EXIM can only be liquidated with the approval of the government and this need not be in line with liquidation laws that apply to other companies.

EXIM also acts as an agent of the government in extending line of credit loans (35% of the loan book at the end of the financial year to March 2015 (FY15)) to other developing economies. The Indian government guarantees the principal and interest on these loans, which EXIM extends at the government's behest, and provides EXIM with interest subsidies for them. The government's periodic capital injections - INR13bn in each of FY15 and FY16 - and the Reserve Bank of India providing liquidity support to EXIM in the past underscore the strength of EXIM's linkage with the sovereign. Fitch does not assign EXIM a Viability Rating (VR) given its policy role-oriented business profile.

The Stable Outlook on the rating mirrors the Stable Outlook on the sovereign rating.

RATING SENSITIVITIES

IDRS, SUPPORT RATING AND SUPPORT RATING FLOOR
EXIM's rating is equalised to that of the sovereign and would move in tandem with the sovereign's rating. Further, any perceived or actual weakening of the linkages between EXIM and the sovereign, by way of sustained deviation of EXIM's business model from its policy focus or reduction in the government's ownership below 100%, could lead Fitch to revise its rating down from the sovereign rating. Fitch does not expect EXIM's linkage with the sovereign to undergo any change in the near term.

FULL LIST OF RATING ACTIONS
Export-Import Bank of India (EXIM):
Long-Term IDR affirmed at 'BBB-'; Outlook Stable
Short-Term IDR affirmed at 'F3'
Support Rating affirmed at '2'
Support Rating Floor affirmed at 'BBB-'