What changed
Exim Bank signed a credit agreement with Senegal's government for a $27 million line of credit, effective May 10, 2006. The credit supports Indian exports of equipment, goods, and services for irrigation projects in Senegal. Terminal dates for LCs and disbursement are set at 48 months from project completion or 72 months from the agreement date.
What it means for you
Indian exporters can now access this credit line to finance eligible exports to Senegal, with specific timelines for LC opening and disbursement. AD banks must ensure no agency commission is paid under this credit, though exporters may use their own EEFC funds for commission in free foreign exchange. This facilitates trade finance for irrigation-related exports.
What you must do
- Inform exporter constituents about the $27 million line of credit and direct them to Exim Bank for full details.
- Ensure shipments under this credit are declared on GR/SDF forms as per RBI instructions.
- Do not allow agency commission payments under this line of credit; permit remittance only from exporter's own resources or EEFC account after full payment realization.
- Verify compliance with FEMA sections 10(4) and 11(1) when processing related transactions.
Who it affects
Category I Authorised Dealer Banks, Indian exporters of equipment, goods, and services for irrigation projects, Exim Bank
What is the purpose of this line of credit?
It finances Indian exports of eligible equipment, goods, and services for setting up irrigation projects in Senegal.
What are the key timelines for this credit?
For project exports, LCs must be opened and disbursement completed within 48 months from the scheduled contract completion date. For other supply contracts, the deadline is 72 months from the credit agreement date, i.e., February 7, 2012.
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 payment realization.