What changed
Exim Bank signed a credit agreement with Suriname on May 16, 2008, effective September 26, 2008, for a USD 10.59 million Line of Credit. The LOC covers eligible goods and services from Indian companies like BEL, HAL, and Ordnance Factory Board, with at least 85% of contract value sourced from India. Last date for opening LCs and disbursement is 48 months from project completion or 72 months (May 15, 2014) from agreement date for supply contracts.
What it means for you
Banks must facilitate exports under this LOC by handling GR/SDF forms and remittances as per RBI instructions. No agency commission is payable under the LOC, but exporters can use own resources or EEFC balances for commission after full payment realization. AD Category-I banks should inform exporters and direct them to Exim Bank for details.
What you must do
- Advise exporter clients about the LOC and its terms, including the 85% Indian content requirement.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI guidelines.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Direct exporters to Exim Bank's Mumbai office or website for complete LOC details.
Who it affects
AD Category-I banks, Exporters dealing with Suriname under this LOC, Indian companies like BEL, HAL, and Ordnance Factory Board
What is the minimum Indian content required under this LOC?
At least 85% of the contract price must be supplied from India; the remaining 15% can be procured from outside India, excluding consultancy services.
Can agency commission be paid under this LOC?
No agency commission is payable under the LOC itself, but exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realization.
What are the key timelines for this LOC?
The credit agreement is effective from September 26, 2008. For project exports, LCs and disbursement must be within 48 months of scheduled completion; for supply contracts, by May 15, 2014 (72 months from agreement execution).