What changed
RBI has informed authorised dealers about two new Lines of Credit extended by Exim Bank: USD 10 million to Unibanco in Brazil and USD 56.358 million to Myanma Foreign Trade Bank in Myanmar. The credits became effective in October and September 2004 respectively, with specific last dates for LC opening and disbursement.
What it means for you
Banks can now facilitate Indian exports to Brazil and Myanmar under these LOCs, with clear timelines for LC issuance and disbursement. No agency commission is allowed generally, except for after-sales service cases under the Brazil LOC, where prior RBI approval is needed and commission is capped at 5% of invoice value.
What you must do
- Inform exporter customers about the two LOCs and direct them to Exim Bank for full details.
- Ensure shipments under these credits are declared on GR/SDF Forms as per existing instructions.
- Remind exporters that no agency commission is payable except with prior RBI approval for after-sales service under the Brazil LOC, and that commission must be paid from exporter's own resources in other cases.
Who it affects
Authorised Dealer banks handling export transactions, Indian exporters to Brazil and Myanmar, Exim Bank
What are the last dates for opening LCs under these LOCs?
For the Brazil LOC (Unibanco), LCs must be opened by October 13, 2006. For the Myanmar LOC (MFTB), the deadline is September 28, 2006.
Can exporters pay agency commission on shipments under these credits?
Generally no. However, for the Brazil LOC, RBI may allow commission up to 5% of invoice value for after-sales service, subject to prior approval. In all other cases, commission must be paid from the exporter's own resources.
Which sectors are covered under the Myanmar LOC?
The credit finances export of equipment, machinery, goods, and services for upgrading the Yangon-Mandalay Railway System and related workshop and track maintenance in Myanmar.