What changed
Exim Bank signed a credit agreement with Mali and Senegal for a $27.7 mn Line of Credit, effective April 27, 2006. The LOC is earmarked for financing Indian exports of railway coaches and locomotives. Terminal dates for L/C opening and disbursement are set at 48 months for project exports and 72 months for other supply contracts from the agreement date.
What it means for you
Banks can now process export transactions under this LOC, ensuring compliance with FEMA and RBI guidelines. No agency commission is payable, but exporters may use EEFC balances for commission in free foreign exchange after full payment realisation. AD banks must advise exporters to get full details from Exim Bank.
What you must do
- Inform exporter constituents about this LOC and direct them to Exim Bank for details.
- Ensure shipments under this credit are declared on GR/SDF Forms as per RBI instructions.
- Allow remittance of agency commission only after full contract value realisation, using exporter's own resources or EEFC balances.
- Verify that L/Cs and disbursements adhere to the specified terminal dates (48/72 months).
Who it affects
All Category I Authorised Dealer Banks, Exporters of railway coaches and locomotives to Mali and Senegal, Exim Bank
What is the total value of the Line of Credit and how is it split?
The total LOC is USD 27.7 million, with USD 20.62 million for Mali and USD 7.08 million for Senegal.
What are the terminal dates for opening Letters of Credit?
For project exports, 48 months from the scheduled completion date of the contract; for other supply contracts, 72 months from the execution date of the Credit Agreement (i.e., August 7, 2011).
Can exporters pay agency commission under this LOC?
No agency commission is payable under this credit. However, if required, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full payment realisation.