Export-Import Bank of India was founded in 1982 with a government mandate to enhance exports from India and to boost the contribution of foreign trade and investment to the country’s overall economic growth. Among its current services, the bank is active in helping Indian entities secure export contracts, offers a variety of facilities for Indian investments and acquisitions overseas, and extends credit to overseas financial institutions and governments to finance Indian imports: only last week the bank approved a $300 million line of credit to Ethiopian government for the construction of a cross-border railway line into Djibouti.
The range of complex transactions the bank undertakes were a key draw for CP Ravindranath Menon when he joined the legal group in 2002. He had moved in-house almost a decade earlier, having practised before the High Court of Kerala since the early 1980s: “The court was primarily concerned with labour matters,” he says. “There was very little corporate work available so I moved in house to pursue corporate practice.”
Chief general manager of Exim Bank’s legal group since 2008, Menon cites the in-depth transactional analysis the role entails as creating his chief professional satisfaction. Speaking personally, he also notes the family-friendly working hours and the lack of an obligation to market himself or his firm as the particular boons of life in-house: “I enjoyed the challenges of the legal profession except self-promotion - it didn’t come naturally to me!”.
Tell us about a typical day in your role
The day begins at 9.45am when I check e-mails and the post, and mark them for the respective officers in the legal group, or for me, to attend to later. I then have a quick meeting with the legal group officers to ascertain the pending issues and what the plan for the day is.
Thereafter I head for the group heads meeting, which is an informal meeting with the CEO, the executive director and the heads of other groups.
By about 11am I am back at my desk until lunch. At about 1.45pm, members of my group come for approval of drafts that go under my signature, mostly to government departments and senior counsels. Issues they would like me to take up – either with the credit team or the borrower – are also tackled during this time. In between, I glance at the mailbox to check if any urgent matters that need my attention has come in.
At about 3.30pm I catch up with the GCs of other banks and financial institutions and spend about 15 to 20 minutes chatting with them. I then spend 30 to 45 minutes on reading the law journals or browsing the net to check on issues that cropped up during the day, either in the meeting with the legal group or at the group heads meeting.
From 4.30pm till about 6.30pm I have meetings with external counsels or officers of other groups who would like to discuss issues they think need my intervention.
At 6.30pm, after most of the staff has left, I have a look at the correspondence of my group. This helps me to better understand the quantity and quality of each officer’s work.
I leave the office around 8pm and, weather permitting (it’s monsoon season now!), walk home.
How big is your legal department?
Exim Bank’s Legal Group has nine fully qualified law officers and two administrative staff.
Where were you previously employed?
I began my career as a lawyer before the High Court of Kerala at Kochi. I practised law from December 1981 to March 1993. I then joined the Bank of India as chief legal officer. I was promoted as chief manager in April 1999 and thereafter as assistant general manager in June 2000. I left Bank of India in February 2002 and joined Exim Bank as deputy general manager. I was promoted to general manager in April 2005 and later as chief general manager in May 2008.
What are the advantages of doing work in-house?
The major factor in favour of an in-house counsel is the timely and proactive legal advice. Being entrenched in the day-to-day functioning of the organisation, in-house counsels are well aware of the needs of the organisation and can see issues before they become a problem. As an in-house counsel’s advice is easily available at no additional, cost as opposed to external counsel, other departments do not hesitate to refer issues to us – and, in certain cases call us up to seek oral views for guidance. One other major factor that weighs in favour of an in-house counsel is the cost. An in-house counsel’s work is as good as that of an external counsel, if not better, and it comes at a fraction of the cost paid to external counsels.
What percentage of Export-Import Bank of India’s legal work is performed by in-house lawyers?
The entire domestic documentation for standard loans, and loans where Exim Bank is sole lender, is done in-house. This accounts for about 85 per cent of the domestic documentation work, the remaining 15 per cent being syndicated loan documents, which are outsourced. The entire cross-border loan documentation is done with the assistance of external law firms.
Do you tend to work with the same law firms?
Law firms are chosen depending on the time frames for the transaction. In cases where tight schedules are not insisted upon, we scout for new and young legal firms, although we also place an emphasis on past experience and cost.
What qualities do you look for in private practice lawyers/teams?
We look at past experience in banking-related work, which is gathered from peer financial institutions and banks. The other quality I insist is on the ease of doing the transaction, which comes out usually during the first round of discussion. Needless to say, cost does have weight in the final decision as the borrower, who has to foot the bill, would add this to the total cost of funds.
Tell us about any recent notable projects the team has been working on. Which law firms did you work with?
One recent notable project involved financial assistance granted by Exim Bank to part-finance subscription of bonds to be issued by a Singaporean company. It was a highly structured financial product. It required many protracted hours of negotiation with both the client and the counsels, in order to effectuate the security package that dealt with assignment of the bonds to Exim Bank in Singapore, as well as a Panamanian ship mortgage assignment.
The law firm we worked with was Dentons.
The government of India has projected a strong increase in exports over the course of the 2013–14 financial year. How significant would such an increase be for the economy as a whole? What role will the legal team at Exim Bank play in this expansion?
For the current year, the government has set an export target of $325 billion, projecting a nominal growth of 8 per cent. GOI has announced a set of measures to boost India’s exports, including measures to revive investors’ interest in SEZs.
As one would agree, growth in exports is influenced by international dynamics, and not solely dependent on domestic policy measures. So, it is very difficult to clearly project the achievability of target growth at this stage. Appropriate timely policy measures would however help in achieving targets.
Increasing diversification of India’s exports to other developing countries – especially Africa, Asia and Latin America – has contributed to enhancing India’s exports. With many of these developing countries forecast to depict a robust growth in the medium term, continued exports to such countries would further help India achieve its export growth target.
A sustained growth in exports would immensely contribute to increased economic activity and productivity in the country, while also reducing the current account deficit and thereby further contributing to economic growth.
Are there any notable challenges – practical, legal or political – currently facing foreign trade and investment in India?
At the end of December 2011, India’s current account deficit was estimated to be 4.2 per cent of GDP, which was significantly higher than the 2.7 per cent recorded in the corresponding period of the previous year. Current account deficit is estimated to account for 5.4 per cent of GDP as of the end of December 2012, which means something in the range of $100 billion.
A modest pick-up in exports in Q$ of 2012–13 and some deceleration in imports are likely to help moderate the current account deficit in Q4 of 2012-13 after a record high of 6.7 per cent of GDP in Q3. Despite this, the CAD/GDP ratio for the year 2012–13 is expected to be around 5 per cent, twice the sustainable level.
India's external debt has also risen, reflecting continued dependence on external commercial borrowing and short-term borrowings to meet the widening current account deficit.
The depreciation of the rupee in recent times is also a serious impediment to the growth of the external sector.
How would you describe the Indian legal marketplace? How competitive is it? And how can firms distinguish themselves?
The Indian legal marketplace consists more of litigation than corporate practice. Litigation is what law graduates from all schools look forward too, barring a few of the new law schools where emphasis is placed on corporate practice. Corporate practice is restricted to the four metros, with Mumbai and Delhi taking a major chunk of the work.
The corporate law marketplace is particularly competitive in the banking sector.
For a law firm to distinguish itself it will need to show a thorough understanding of the area in which it works. It should be aware of the industry practices (more so in banking). Once this expertise is established then the cost, though a tilting factor, can be justified.
What makes India a good place to do business?
For the past two decades, India has been one of the world’s fastest-growing economies, with a largely self-sufficient agriculture sector, a diversified industrial base and a stable financial and services sector. India now ranks as the tenth largest economy in the world and the third largest in terms of GDP on PPP basis.
Among its many strengths, India has a favourable demography, high levels of tertiary education, rising per capita incomes, English proficiency and a flourishing democracy. India also has a strong credit market with a wide range of financial institutions, such as commercial banks, regional rural banks, cooperative banks and non-banking financial institutions.
As compared to other countries, India has been and continues to be relatively insulated from external shocks due to its strong domestic consumption pattern and savings culture. Savings as a percentage of GDP increased to 32.3 per cent in FY11 from 23.5 per cent in FY02.
Investors generally perceive India as having an effective tax credit mechanism, which helps in reducing their overall tax burden. Indian tax climate is considered to be reasonably favourable and India continued to be an attractive investment destination despite some dissatisfaction in the minds of the investors with the existing tax policy and the litigation framework in India.
Moreover, according to UNCTAD’s World Investment Prospects Survey 2012–2014, India is the world’s third-most attractive destination for FDI (after China and the US). Indian markets have significant potential and offer prospects of high profitability and a favourable regulatory regime for investors.
The World Economic Forum’s Global Competitiveness Index Ranking 2012–13 placed India 59th among 144 countries. This index measures the ability of a country to provide high levels of prosperity to its citizens based on the set of institutions, policies, and factors that set the sustainable current and medium-term levels of economic prosperity.