What changed
Exim Bank signed a $60 mn Line of Credit agreement with Ghana, effective February 27, 2006, for financing Indian exports for two projects. The circular outlines utilization periods (48 months for project exports, 60 months for other contracts) and clarifies that no agency commission is payable under this LOC.
What it means for you
Banks must ensure exporters use GR/SDF forms for shipments under this credit and follow existing commission payment rules. The LOC boosts Indian export opportunities in Ghana, but lenders need to verify compliance with FEMA and Exim Bank terms.
What you must do
- Inform exporter customers about the $60 mn LOC to Ghana and its project-specific eligibility.
- Ensure all shipments under this credit are declared on GR/SDF forms as per RBI instructions.
- Remind exporters that no agency commission is payable under this LOC; commission can only be paid from own resources or EEFC after full contract value realization.
- Verify that any commission remittances comply with prevailing RBI guidelines on agency commission.
Who it affects
Authorised Dealer banks handling foreign exchange, Exporters dealing with Ghana under this LOC, Exim Bank and its counterparties
What are the utilization periods for this credit?
For project exports, the terminal utilization period is 48 months from the scheduled completion date; for other supply contracts, it is 60 months from the date of execution of the agreement (August 23, 2010).