What changed
Exim Bank signed a credit agreement on August 31, 2006, with Bancoldex, Colombia, for a USD 10 million line of credit. The credit became effective from November 27, 2006, with a 12-month window for opening letters of credit and 30 months for disbursements. RBI circular provides operational instructions to AD Category-I banks.
What it means for you
Indian exporters gain a dedicated credit facility to boost exports to Colombia, with Exim Bank financing eligible goods under India's Foreign Trade Policy. Banks must ensure shipments are declared on GR/SDF forms and adhere to commission payment rules, including a 5% cap for after-sales service cases. This strengthens bilateral trade finance channels.
What you must do
- Inform exporter clients about the USD 10 million line of credit and direct them to Exim Bank for full details.
- Ensure all shipments under this credit are declared on GR/SDF forms as per RBI instructions.
- Process commission payments only as per circular: no agency commission generally; up to 5% for after-sales service with prior RBI approval, paid in Colombia.
- Allow remittance of commission from exporter's own resources or EEFC account only after full contract value realisation, for non-after-sales service cases.
Who it affects
AD Category-I banks, Indian exporters to Colombia, Exim Bank
What is the terminal date for opening Letters of Credit under this line of credit?
The terminal date for opening Letters of Credit is November 26, 2007, which is 12 months from the effective date of the credit agreement (November 27, 2006).
Can commission be paid for exports under this line of credit?
No agency commission is payable generally. However, for exports requiring after-sales service, commission up to 5% of f.o.b./c&f/c.i.f. value may be considered by RBI on merit, paid in Colombia by deduction from invoice. For other cases, commission can be paid from exporter's own resources or EEFC account after full payment realisation.
What documentation is required for shipments under this credit?
Shipments must be declared on GR/SDF forms as per RBI instructions issued from time to time.