What changed
Exim Bank signed a credit agreement with Senegal on January 15, 2007, effective February 20, 2007, for a USD 11 million line of credit. The credit supports Indian exports of 400 vehicles and items for a women poverty alleviation programme. Terminal utilisation period is 48 months for project exports and 72 months (until January 14, 2013) for other supply contracts.
What it means for you
AD Category-I banks must inform exporter clients about this LOC and ensure shipments are declared on GR/SDF forms as per RBI instructions. No agency commission is allowed on these exports, but exporters can use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realisation. Banks can permit such remittances subject to existing commission payment rules.
What you must do
- Notify exporter constituents about Exim Bank's USD 11 million LOC to Senegal and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per prevailing RBI instructions.
- Do not allow any agency commission on exports financed under this LOC; if commission is needed, ensure it is paid from exporter's own resources or EEFC account after full contract value realisation.
- Verify that at least 85% of the credit is used for goods of Indian origin as per the Foreign Trade Policy.
Who it affects
AD Category-I banks, Exporters dealing with Senegal, Exim Bank
What is the minimum Indian content requirement for exports under this LOC?
At least 85% of the total credit must be used to finance purchase of eligible goods from India or goods of Indian origin.
Can exporters pay agency commission on these exports?
No agency commission is payable on exports financed under this LOC. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full contract value realisation, subject to RBI's prevailing instructions.
What is the terminal utilisation period for supply contracts under this LOC?
For supply contracts other than project exports, the terminal utilisation period ends 72 months from the date of the credit agreement, i.e., January 14, 2013.