What changed
Exim Bank signed a Line of Credit agreement with Ghana on September 2, 2008, effective December 18, 2008, for USD 25 million. The credit covers three projects: ICT and Good Governance (USD 5 mn), Railway Corridors (USD 13 mn), and Agro Processing Plant (USD 7 mn). At least 85% of goods/services must be from India; the rest can be sourced abroad.
What it means for you
Indian exporters can now access this LOC to supply goods and consultancy services to Ghana, with payment guaranteed by Exim Bank. Banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds. This opens a structured financing route for project and supply contracts to Ghana.
What you must do
- Inform exporter clients about the LOC and its terms, including the 85% Indian content requirement.
- Advise exporters to contact Exim Bank for full details and contract eligibility.
- Ensure all shipments under the LOC are declared on GR/SDF forms as per RBI instructions.
- Allow remittance of agency commission only from exporter's own resources or EEFC account after full contract value realization.
Who it affects
AD Category-I banks, Indian exporters to Ghana, Exim Bank
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 from the LOC proceeds. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realization.
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, i.e., September 1, 2014.