What changed
Exim Bank signed a credit agreement with the DRC government on August 27, 2009, effective January 20, 2010, for a USD 25 million line of credit. This circular informs AD Category-I banks of the terms, including the 85% Indian content requirement and timelines for project and supply contracts.
What it means for you
Indian banks can now facilitate exports under this LOC, ensuring compliance with FEMA and RBI guidelines. The 85% local sourcing rule boosts Indian exports, while the no-agency-commission clause and specific disbursement deadlines require careful monitoring by lenders.
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.
- Verify that at least 85% of contract value is sourced from India before processing transactions.
- Allow agency commission remittances only after full contract value realization and compliance with existing rules.
Who it affects
AD Category-I banks, Indian exporters to Democratic Republic of Congo, Exim Bank
What is the purpose of this USD 25 million line of credit?
It finances installation of hand pumps and submersible pumps in the Democratic Republic of Congo, covering eligible goods, machinery, equipment, and consultancy services from India.
What is the last date for disbursement under this LOC?
For project exports, it is 48 months from the scheduled completion date of contracts; for supply contracts, it is 72 months from the credit agreement execution date, i.e., August 26, 2015.
Can exporters pay agency commission under this LOC?
No agency commission is payable under the LOC. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full contract value realization.