What changed
Exim Bank signed a credit agreement on January 8, 2008, with Vietnam's government for a USD 45 million Line of Credit. The credit became effective from February 18, 2008. It covers eligible goods and services for the Nam Chien Hydro Power Project (200 MW).
What it means for you
Indian exporters can now access this LOC to supply goods and services for Vietnam's hydro power project. Banks must ensure at least 85% of contract value is sourced from India. No agency commission is payable under the LOC, but exporters may use their own EEFC funds for commission if needed.
What you must do
- Inform exporter clients about the LOC and direct them to Exim Bank for full details.
- Ensure shipments under the LOC are declared on GR/SDF forms as per RBI instructions.
- Allow remittance of agency commission only after full contract payment is realized and from exporter's own resources or EEFC account.
- Verify that at least 85% of contract value is sourced from India before processing transactions.
Who it affects
AD Category-I banks, Indian exporters to Vietnam, Exim Bank
What is the last date for opening Letters of Credit under this LOC?
For project exports, the last date is 48 months from the scheduled completion date of the contract. For supply contracts, it is 72 months from the execution date of the credit agreement (January 8, 2008).
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange, after full contract payment is realized.