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Exim Bank's USD 122 mn Line of Credit to Ethiopia for Sugar Projects

Current · Source: Reserve Bank of India · RBI/2007-08/245 · issued 22 Feb 2008 · ~2 min read

Quick answerRBI notifies AD Category-I banks about Exim Bank's USD 122 million Line of Credit to Ethiopia for sugar industry projects. At least 85% of contract value must be sourced from India. Banks must ensure GR/SDF form declarations and no agency commission from LOC proceeds.

The rule, in the simplest words

Exim Bank gave a loan of USD 122 million to Ethiopia for sugar projects.
At least 85% of the contract value must be bought from India.
Banks must make sure all shipments are reported on GR/SDF forms (special export forms).
No commission (extra payment) can be paid from the loan money; if needed, the exporter must use their own money or EEFC account (foreign currency account) after getting full payment.
Banks must tell their exporter customers about this loan and send them to Exim Bank for more details.

How it plays out — a real example

A forex & trade-finance officer in Indore receives a call from an exporter who wants to ship sugar-making machines to Ethiopia under this line of credit. The officer checks that the exporter's contract shows at least 85% of the machines are made in India, then processes the shipment on a GR form. Later, when the exporter asks to pay a commission to a local agent, the officer explains that the commission cannot come from the loan money and must be paid from the exporter's own funds after the full payment is received.

What changed

Exim Bank signed a Line of Credit agreement with the Government of Ethiopia on October 4, 2007, effective January 22, 2008, for USD 122 million to finance sugar industry projects. The circular outlines operational guidelines for AD Category-I banks, including sourcing requirements, timelines for LCs and disbursements, and commission restrictions.

What it means for you

AD Category-I banks must facilitate this credit line by allowing remittances for exports under the LOC, ensuring at least 85% of contract value is sourced from India. Banks can permit agency commission payments only from exporter's own resources or EEFC accounts after full contract realization. This supports Indian exports to Ethiopia's sugar sector.

What you must do

Inform exporter constituents about Exim Bank's LOC details and direct them to Exim Bank for full information.
Ensure all shipments under the LOC are declared on GR/SDF forms as per RBI instructions.
Verify that at least 85% of contract value goods/services are sourced from India before processing transactions.
Do not allow agency commission payments from LOC proceeds; only permit from exporter's own resources or EEFC after full payment realization.
Adhere to FEMA sections 10(4) and 11(1) while processing transactions under this circular.

Who it affects

AD Category-I banks, Exporters dealing with sugar industry projects in Ethiopia, Exim Bank

❓ Common questions

Regulatory timeline

Stated effective date effective January 22, 2008
Decoded by BankPulse 2026-06-19 14:32 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What is the minimum Indian content requirement under this LOC?

At least 85% of the contract price must be supplied by the seller from India. The remaining 15% (excluding consultancy services) can be procured from outside India.

Can exporters pay agency commission under this LOC?

No agency commission is payable from the LOC proceeds. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange after full contract value realization.

What are the timelines for opening LCs and disbursement?

For project exports, the last date is 48 months from scheduled completion dates. For supply contracts, it is 72 months from the execution date of the Credit Agreement (January 22, 2008).

📜 Read the original circular — full text as issued by RBI

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P. (DIR Series) Circular No.29 February 22, 2008 To, &nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All Category - I Authorised Dealer Banks Madam / Sir, Exim Bank's Line of Credit (LOC) of USD 122 million to the Government of the Federal Democratic Republic of Ethiopia Export-Import Bank of India (Exim Bank) has concluded an agreement dated October 04, 2007 with the Government of the Federal Democratic Republic of Ethiopia, making available to the latter, a Line of Credit (LOC) of USD 122 million (USD One hundred twenty two million only) for financing export and services relating to projects for development of sugar industry in Ethiopia. The goods and services, including consultancy services, for export from India under the agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by Exim Bank under this agreement. Out of the total credit under this Agreement, the goods and services of the value of at least 85 per cent of the contract price shall be supplied by the seller from India and the remaining goods and services (other than consultancy services), may be procured by the seller, for the purpose of Eligible Contract from outside India. &nbsp;2. The Credit Agreement under the LOC is effective from January 22, 2008. Under the LOC, the last date for opening Letters of Credit and disbursement will be 48 months from the scheduled completion dates(s) in case of project exports and 72 months from the execution date of the Credit Agreement in case of supply contracts. 3. Shipments under the credit will have to be declared on GR / SDF Forms as per instructions issued by Reserve Bank from time to time. 4. No agency commission shall be payable under the above line of credit. However, if required, the exporter may use his own resources or utilize balances of his EEFC account for payment of commission in free foreign exchange. Authorised Dealer Category &ndash; I (AD Category &ndash; I ) banks may allow such remittance after realisation of full payment of contract value subject to compliance with the prevailing instructions on payment of agency commission. 5. AD Category - I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from Exim Bank's office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005. 6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-08/245 · issued 22 Feb 2008. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Exporters dealing with sugar industry projects in Ethiopia, Exim Bank), your first concrete step on “Exim Bank's USD 122 mn Line of Credit to Ethiopia for Sugar Projects” is: “Inform exporter constituents about Exim Bank's LOC details and direct them to Exim Bank for full information.” (RBI issued this 22 Feb 2008).

Circular: RBI/2007-08/245 -- Exim Bank's USD 122 mn Line of Credit to Ethiopia for Sugar Projects
Issued: 22 Feb 2008
Action required: Inform exporter constituents about Exim Bank's LOC details and direct them to Exim Bank for full information.
Action required: Ensure all shipments under the LOC are declared on GR/SDF forms as per RBI instructions.
Action required: Verify that at least 85% of contract value goods/services are sourced from India before processing transactions.
Action required: Do not allow agency commission payments from LOC proceeds; only permit from exporter's own resources or EEFC after full payment realization.
Action required: Adhere to FEMA sections 10(4) and 11(1) while processing transactions under this circular.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4062&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.