What changed
Exim Bank signed a line of credit agreement with TIDCORP (Philippines) on March 7, 2003, amended on Feb 28, 2005, effective June 10, 2005, for USD 2 million. The credit covers capital goods, machinery, consumer durables, and other eligible exports under India's Foreign Trade Policy.
What it means for you
Banks can facilitate export financing under this LOC, with clear deadlines for LC issuance and disbursement. Commission rules are restrictive: no agency commission ordinarily, but up to 5% may be allowed for after-sales service, paid only in Philippines by invoice deduction, with prior RBI approval needed.
What you must do
- Inform exporter customers about this USD 2 million LOC to Philippines.
- Ensure LCs are opened by Dec 10, 2006, and disbursements by June 10, 2007.
- Advise exporters to declare shipments on GR/SDF forms as per extant instructions.
- Handle commission requests carefully: only up to 5% for after-sales service, with prior RBI approval and deduction from invoice.
Who it affects
Authorised dealer banks handling export transactions, Indian exporters to Philippines, Exim Bank
What is the total amount of this line of credit?
The line of credit is for an aggregate sum of USD 2 million (US Dollar Two Million only).
What are the key deadlines for this credit?
Letters of credit must be opened by December 10, 2006, and disbursements must be completed by June 10, 2007.
Can exporters pay commission under this LOC?
No agency commission is ordinarily payable. However, for goods requiring after-sales service, commission up to 5% of f.o.b./c&f/c.i.f. value may be allowed with prior RBI approval, paid only in Philippines by invoice deduction.