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South Korean 10,000 won note is seen on U.S. 100 dollar notes in this picture illustration taken in Seoul, South Korea, December 15, 2015.Reuters file

The Union Cabinet on Wednesday approved an agreement between the Export-Import Bank of India (EXIM Bank) and the Export-Import Bank of Korea (KEXIM) for export credit of $9 billion to develop infrastructure in India and for the supply of goods and services to third countries.

The agreement is proposed to be signed between the two banks during the forthcoming visit of the Finance Minister Arun Jaitley, to Seoul, Korea during June 14 and 15, 2017 for the Annual Financial Bilateral Dialogue.

The decision is expected to promote the country's international exports, and deepen political and financial ties between India and Korea. The export credit will be utilized through lending by EXIM Bank for promoting projects for priority sectors, including smart cities, railways, power generation and transmission etc., in India and for the supply of goods and services from India and Korea as part of projects in third countries.

Implementation strategy

Under the implementation strategy, the parties to the agreement will hold mutual consultations to structure the financial assistance, review existing arrangements and related procedures. EXIM Bank will identify viable projects in India.

For projects in third countries, both parties will jointly identify viable projects. It is understood from EXIM Bank that the $9 billion would be extended by KEXIM by way of Investment Credit (typically export credit facility to finance projects with a certain level of Korean import content and interest rates as per OECD export credit guidelines). This amount may also be utilized by KEXIM as the financier without the participation of EXIM Bank subject to satisfaction of the purpose.

The supply of goods and services from India and Korea as part of projects in third countries will be an additional avenue which this MoU will enable. It will help in exchanging mutual experience, sharing information on financing export and import operations, project assessment and knowledge generated in respective fields of activities.

 India, Iran to cooperate on capital markets

In another move, the Union Cabinet approved an agreement between the Securities and Exchange Board of India (Sebi) and the Securities and Exchange Organization (SEO), Iran, to cooperate on matters pertaining to securities markets.

The MoU is expected to contribute towards strengthening the information sharing framework between SEBI and SEO, Iran.