What changed
Exim Bank signed a Line of Credit agreement with Gambia on August 8, 2008, effective February 2, 2009, for USD 10 million to finance exports for building the National Assembly Building Complex. The circular outlines operational instructions for AD Category-I banks, including last dates for LC opening and disbursement (48 months for project exports, 72 months for supply contracts from execution date).
What it means for you
Banks handling this LOC must verify that at least 85% of contract value is sourced from India and that no agency commission is paid from LOC funds. They can allow commission remittances from exporter's own resources or EEFC accounts only after full contract payment realization. This reinforces compliance with FEMA provisions and export declaration procedures.
What you must do
- Inform exporter clients about the LOC and direct them to Exim Bank for full details.
- Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Do not allow agency commission payments from LOC proceeds; permit only from exporter's own resources or EEFC after full payment realization.
- Verify that at least 85% of contract price goods/services are from India for each eligible contract.
Who it affects
AD Category-I banks handling export transactions under this LOC, Exporters seeking financing for projects in Gambia under this credit line, Exim Bank as the lending institution
What is the purpose of this USD 10 million Line of Credit to Gambia?
It finances export of Indian goods and services for constructing the National Assembly Building Complex in Gambia, with at least 85% of contract value from India.
Can exporters pay agency commission from this LOC?
No, agency commission cannot be paid from LOC proceeds. Exporters may use their own resources or EEFC balances for commission after full contract payment is realized.
What are the deadlines for using this credit line?
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 (August 7, 2014).