What changed
Exim Bank signed a credit agreement with Senegal on September 19, 2008, effective January 2, 2009, for a USD 25 million line of credit. The LOC covers two projects: rural electrification (USD 15 mn) and fishing industry development (USD 10 mn). Exports must have at least 85% Indian content, and the last date for LC opening/disbursement is 48 months from project completion or 72 months from agreement date for supply contracts.
What it means for you
AD Category-I banks must now process export transactions under this LOC with specific compliance: ensure 85% Indian content, no agency commission from LOC funds, and proper GR/SDF form filing. Banks can allow commission remittances from exporter's own resources after full contract realization. This opens a structured financing channel for Indian exporters to Senegal.
What you must do
- Inform exporter customers about this LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Verify that at least 85% of contract value goods/services are sourced from India.
- Do not allow agency commission payments from LOC proceeds; permit only from exporter's own resources after full payment realization.
- Track LC opening and disbursement deadlines: 48 months from project completion or 72 months from agreement date (Sept 18, 2014) for supply contracts.
Who it affects
AD Category-I banks handling export transactions, Indian exporters to Senegal in rural electrification and fishing sectors, Exim Bank as LOC provider
What is the minimum Indian content required for exports under this LOC?
At least 85% of the contract price must be for goods and services supplied from India. The remaining 15% can be procured from outside India, but this excludes consultancy services.
Can we pay agency commission from the LOC proceeds?
No, no agency commission is payable under this LOC. However, exporters can use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value is realized.
What are the key deadlines for this LOC?
The credit agreement is effective from January 2, 2009. For project exports, LCs must be opened and disbursed within 48 months from scheduled completion. For supply contracts, the deadline is 72 months from the agreement execution date, i.e., September 18, 2014.