What changed
Exim Bank signed a USD 100 million line of credit agreement with Vnesheconombank, Russia, effective January 18, 2010, to finance Indian exports of eligible goods and services. The circular outlines operational timelines, documentation requirements, and commission rules for AD Category-I banks.
What it means for you
Indian exporters now have a dedicated credit facility to boost exports to Russia, with clear timelines for LC opening and disbursement. Banks must ensure shipments are declared on GR/SDF forms and handle commission payments strictly as per RBI guidelines, including prior approval for after-sales service commissions.
What you must do
- Inform exporter customers about the 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.
- Process agency commission remittances only after full contract value realization and compliance with prevailing rules.
- For after-sales service exports, obtain RBI approval before shipment for commission up to 5% of f.o.b./c&f/c.i.f. value.
Who it affects
AD Category-I banks, Indian exporters to Russia, Exim Bank
What is the total value of the line of credit?
The line of credit is USD 100 million, provided by Exim Bank to Vnesheconombank, Russia.
What is the deadline for opening Letters of Credit under this LOC?
Letters of Credit must be opened by January 17, 2013, which is 36 months from the effective date of the agreement (January 18, 2010).
Can agency commission be paid for exports under this LOC?
Yes, but only up to 5% of the f.o.b./c&f/c.i.f. value for exports requiring after-sales service, with prior RBI approval. For other exports, commission can be paid from the exporter's own resources or EEFC account after full payment realization.