What changed
Exim Bank signed a Line of Credit agreement with the Government of Seychelles on July 10, 2006, effective from April 25, 2007, for USD 8 million. The LOC finances essential commodities eligible under India's Foreign Trade Policy. Shipments must be declared on GR/SDF forms, and no agency commission is payable except via exporter's own resources or EEFC accounts.
What it means for you
Banks must facilitate exports under this LOC by ensuring compliance with GR/SDF declaration and commission rules. The 72-month disbursement window requires careful tracking of letter of credit openings. Exim Bank's role as financier means banks should guide exporters to Exim Bank for full details.
What you must do
- Inform exporter constituents about the LOC and direct them to Exim Bank for details.
- Ensure all shipments under this LOC are declared on GR or SDF forms as per RBI instructions.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Monitor that no agency commission is paid from export proceeds under this LOC.
Who it affects
AD Category-I banks, Exporters dealing with Seychelles under this LOC, Exim Bank
What is the last date for opening Letters of Credit under this LOC?
The last date for opening LC or disbursements is 72 months from the effective date of the Credit Agreement, which is April 25, 2007.
Can exporters pay agency commission on exports under this LOC?
No agency commission is payable from export proceeds. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange, after full contract value realization.
Which authority issued this circular?
This circular was issued under sections 10(4) and 11(1) of FEMA, 1999, by the Chief General Manager of RBI.