What changed
Exim Bank signed a Line of Credit agreement with Syria on June 5, 2008, effective October 27, 2008, for USD 25 million. The credit covers up to 90% of contract value for eligible goods under India's Foreign Trade Policy. Last date for LC opening/disbursement is 48 months for project exports and 72 months (June 4, 2014) for supply contracts.
What it means for you
Banks can now process export transactions under this LOC with Syria, ensuring compliance with FEMA provisions. No agency commission is payable under the LOC, but exporters may use own resources or EEFC balances for commission after full payment realization. AD banks must verify GR/SDF form declarations as per RBI guidelines.
What you must do
- Inform exporter constituents about Exim Bank's LOC to Syria and direct them to Exim Bank for full details.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Ensure shipments under this LOC are declared on GR/SDF forms as per prevailing RBI instructions.
- Verify that exports financed under this LOC comply with India's Foreign Trade Policy eligibility criteria.
Who it affects
AD Category-I banks handling export transactions, Exporters dealing with Syrian buyers under this LOC, Exim Bank as the credit provider
What is the maximum financing percentage under this LOC?
Exim Bank can finance up to 90% of the FOB/CFR/CIF contract price for eligible contracts with the Syrian government.
Can exporters pay agency commission 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 after full contract value realization, subject to RBI guidelines.
What are the deadlines for using this LOC?
For project exports, LCs must be opened and disbursed within 48 months from scheduled contract completion. For supply contracts, the deadline is 72 months from the credit agreement execution date (June 5, 2008), i.e., June 4, 2014.