What changed
Exim Bank signed a credit agreement with PTA Bank on October 16, 2007, effective November 16, 2007, providing a $15 million LOC. This enables Indian exporters to access financing for eligible goods and services to PTA member countries. The circular outlines operational timelines, commission caps, and documentation requirements for AD Category-I banks.
What it means for you
Indian exporters gain a structured credit facility to expand into 17 African markets, reducing payment risks. Banks must ensure shipments are declared on GR/SDF forms and adhere to commission limits—5% for after-sales service goods, with reimbursement capped at 90% of invoice value. Non-service exports require exporters to use own resources or EEFC for commission.
What you must do
- Inform exporter clients about the LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this credit are declared on GR/SDF forms per RBI instructions.
- Process commission payments only as per circular: 5% max for after-sales service goods, deducted from invoice; for others, allow remittance after full payment realization.
- Verify that LC opening and disbursement deadlines are met—LCs by Nov 15, 2010, disbursements by May 15, 2011.
Who it affects
AD Category-I banks, Indian exporters to PTA Bank member countries, Exim Bank
What is the maximum commission allowed under this LOC?
For exports requiring after-sales service, commission up to 5% of f.o.b./c&f/c.i.f. value is allowed, but must be deducted from the invoice. Reimbursement from Exim Bank is then 90% of the invoice value minus commission. For other exports, commission can be paid from exporter's own resources or EEFC after full payment realization.
Which countries are covered under this line of credit?
The LOC covers 17 PTA Bank member countries: Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia, and Zimbabwe.
What are the key deadlines for this credit facility?
The credit agreement is effective from November 16, 2007. Letters of Credit must be opened by November 15, 2010 (36 months), and disbursements must be completed by May 15, 2011 (42 months).