What changed
RBI has informed AD Category-I banks about a new Line of Credit (LOC) of USD 10 million from Exim Bank to the Government of Senegal, effective September 19, 2007. The LOC is for financing exports of eligible goods and services, including consultancy, for an IT Training Project. At least 85% of the contract price must be supplied from India.
What it means for you
Banks can now facilitate exports under this LOC, ensuring exporters comply with the 85% Indian content rule. No agency commission is payable under the credit, but exporters may use EEFC balances for commission after full payment realisation. AD banks must guide exporters to Exim Bank for full details.
What you must do
- Inform exporter customers about the USD 10 million LOC to Senegal for IT training projects.
- Ensure shipments under this credit are declared on GR/SDF forms as per RBI instructions.
- Remind exporters that at least 85% of contract value must be sourced from India.
- Allow remittance of agency commission only after full contract payment realisation, using EEFC or own resources.
- Advise exporters to contact Exim Bank's Mumbai office for detailed LOC terms.
Who it affects
AD Category-I banks, Exporters of eligible goods and services to Senegal, Exim Bank
What is the last date for opening Letters of Credit under this LOC?
For project exports, LCs must be opened within 48 months from the scheduled completion date of the contract. For other supply contracts, the last date is 72 months from the execution date of the Credit Agreement, i.e., July 1, 2013.
Can exporters pay agency commission under this line of credit?
No agency commission is payable under the LOC. However, if required, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange, but only after full realisation of the contract value.
What is the minimum Indian content requirement for exports under this LOC?
At least 85% of the contract price must be supplied by the seller from India.