What changed
Exim Bank signed a Line of Credit agreement with DR Congo for up to USD 33.5 million, effective February 20, 2006. The credit covers specific exports: 228 buses (USD 12.5 mn), MIBA equipment (USD 2 mn), cement factory setup (USD 13 mn), and mine rehabilitation (USD 6 mn). Terminal utilization is 48 months for project exports and 72 months for other supply contracts from respective start dates.
What it means for you
Banks must treat this as a government-backed export credit facility, requiring strict adherence to FEMA guidelines. No agency commission is allowed under this LOC, but exporters can use own resources or EEFC balances for commission in free foreign exchange after full contract value realisation. This expands financing options for Indian exporters targeting DR Congo.
What you must do
- Inform exporter constituents about this Line of Credit and its terms.
- Ensure all shipments under this credit are declared on GR/SDF forms as per existing instructions.
- Do not allow any agency commission payments under this LOC; only permit commission from exporter's own resources or EEFC after full payment realisation.
- Verify that exports financed under this credit are eligible under India's Foreign Trade Policy.
Who it affects
Authorised Dealer banks handling foreign exchange, Indian exporters to DR Congo, Exim Bank
What is the total amount of this Line of Credit?
The Line of Credit is for an aggregate sum of USD 33.5 million, effective from February 20, 2006.
Can exporters pay agency commission under this credit?
No agency commission is payable under this line of credit. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full contract value realisation.
What are the terminal utilization periods?
For project exports, the terminal utilization period is 48 months from the scheduled completion date of the contract. For other supply contracts, it is 72 months from the date of execution of the agreement, i.e., August 23, 2011.