What changed
Exim Bank signed a Line of Credit agreement with Honduras on August 17, 2006, effective August 21, 2007, for USD 30 million. The credit supports exports of communication, medical, and transportation equipment under India's Foreign Trade Policy, with a minimum 85% Indian-origin requirement.
What it means for you
Indian exporters can now access this LOC to secure payments for eligible exports to Honduras. AD banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the credit; exporters may use EEFC balances for commissions post-realization.
What you must do
- Inform exporter clients about the LOC and direct them to Exim Bank for full details.
- Ensure shipments under this credit are declared on GR/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.
- Verify that at least 85% of goods/services supplied are of Indian origin.
Who it affects
AD Category-I banks, Indian exporters to Honduras, 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 supply contracts, the deadline is 72 months from the credit agreement date (August 16, 2012).
Can exporters pay agency commission under this LOC?
No agency commission is payable from the credit. However, exporters may use their own resources or EEFC account balances to pay commission in free foreign exchange, after full contract value realization.