What changed
Exim Bank signed a credit agreement with Mali on October 14, 2009, effective January 18, 2010, for a USD 15 million Line of Credit. This circular informs AD Category-I banks about the operational details, including sourcing requirements and timelines for letters of credit and disbursement.
What it means for you
Banks can now facilitate export transactions under this LOC, ensuring compliance with the 85% Indian content rule. The circular clarifies that no agency commission is payable under the LOC, but exporters may use their own resources or EEFC balances for commission after full payment realization. AD banks must guide exporters to obtain full LOC details from Exim Bank.
What you must do
- Inform exporter constituents about the LOC and its terms, including the 85% Indian sourcing requirement.
- Ensure shipments under the LOC are declared on GR/SDF Forms as per prevailing RBI instructions.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Advise exporters to contact Exim Bank for detailed LOC information.
Who it affects
AD Category-I banks, Exporters dealing with Mali under this LOC, 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% may be procured from outside India, excluding consultancy services.
What are the timelines for opening letters of credit and disbursement?
For project exports, the last date is 48 months from the scheduled completion date of contracts; for supply contracts, it is 72 months from the execution date of the credit agreement (October 13, 2015).
Can agency commission be paid under this LOC?
No agency commission is payable under the LOC, but exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full payment realization.