What changed
Exim Bank signed a credit agreement with Jamaica on January 19, 2007, for a USD 7.50 million line of credit to finance water pump exports from India. The credit became effective on March 2, 2007, with LCs allowed until March 1, 2009, and disbursements until January 18, 2013. No agency commission is payable on these exports, though exporters may use EEFC balances for commission in free foreign exchange after full payment realisation.
What it means for you
AD Category-I banks must facilitate this LOC by handling LCs and ensuring shipments are declared on GR/SDF forms as per RBI instructions. Banks should inform exporter clients about the LOC details and the restriction on agency commission, while allowing remittance from EEFC accounts if needed. This supports Indian exports under the Foreign Trade Policy.
What you must do
- Notify exporter constituents about Exim Bank's USD 7.50 million LOC to Jamaica for water pump exports.
- Ensure all shipments under this credit are declared on GR/SDF forms as per prevailing RBI instructions.
- Do not allow any agency commission payments for exports financed under this LOC; only permit remittance from EEFC accounts after full contract value realisation.
- Advise exporters to contact Exim Bank at their Mumbai office for full LOC details.
Who it affects
AD Category-I banks handling export credit and LCs, Exporters of water pumps and eligible goods to Jamaica, Exim Bank and its financing operations
What is the purpose of this line of credit?
It finances the purchase of water pumps by National Water Commission, Jamaica, with at least 85% of goods sourced from India, under the Foreign Trade Policy.
Can exporters pay agency commission on these exports?
No agency commission is payable. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full payment realisation.
What are the key dates for this LOC?
The credit agreement is effective from March 2, 2007. Letters of Credit must be opened by March 1, 2009, and disbursements completed by January 18, 2013.