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Exim Bank's USD 25 mn LOC to PTA Bank

Current · Source: Reserve Bank of India · RBI/2010-11/198 · issued 14 Sep 2010 · ~2 min read

Quick answerRBI notified a USD 25 million Exim Bank line of credit to PTA Bank (Kenya) for financing Indian exports to 17 African member countries. AD Category-I banks must inform exporters and follow revised commission rules.

The rule, in the simplest words

Exim Bank (India's export-import bank) gave a $25 million loan to PTA Bank (a bank in Kenya) so Indian exporters can sell goods to 17 African countries.
Letters of Credit (a promise from the buyer's bank to pay) must be opened by August 24, 2013, and all payments finished by February 24, 2014.
No commission (extra payment to a middleman) is allowed for these exports, except for after-sales service (like fixing machines after sale), which needs RBI (India's central bank) permission first and can be up to 5% of the invoice value.
Banks must tell their exporter customers about this loan and ask them to get full details from Exim Bank.

How it plays out — a real example

A forex & trade-finance officer in Indore learns about this new line of credit and calls her exporter client, Mr. Sharma, who ships farm equipment to Kenya. She explains that he can now use PTA Bank's credit to get paid safely, but warns him that no agent commission is allowed—only if he needs after-sales service, he must get RBI approval first. She reminds him to open the Letter of Credit before August 24, 2013, and finish the shipment by February 24, 2014.

What changed

Exim Bank signed a credit agreement on July 27, 2010, effective August 25, 2010, providing a USD 25 million LOC to PTA Bank. The LOC covers eligible goods and services under India's Foreign Trade Policy for exports to 17 specified African nations. Key timelines: LCs must be opened by August 24, 2013, and disbursements completed by February 24, 2014.

What it means for you

Indian exporters gain a new financing channel for shipments to PTA Bank member countries, reducing payment risks. Banks must handle LOC-related documentation and commission payments per revised norms—agency commission is generally prohibited except for after-sales service cases, where prior RBI approval is needed. This expands export credit options for Indian firms targeting East and Southern Africa.

What you must do

Inform exporter customers 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.
Process commission payments only as per circular: no agency commission generally; for after-sales service, allow up to 5% deduction from invoice with prior RBI approval.
Verify that LCs are opened before August 24, 2013, and disbursements completed by February 24, 2014.

Who it affects

AD Category-I banks handling export transactions, Indian exporters to PTA Bank member countries, Exim Bank and its negotiating banks

❓ Common questions

Regulatory timeline

Stated effective date effective August 25, 2010
Decoded by BankPulse 2026-06-19 04:23 IST

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Which countries are covered under this LOC?

The LOC covers 17 PTA Bank regional member countries: Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia, and Zimbabwe.

Can exporters pay agency commission on shipments under this LOC?

Generally, no agency commission is payable. However, for exports requiring after-sales service, RBI may allow commission up to 5% of invoice value, paid by deduction from the invoice, with prior approval before shipment.

What are the key deadlines for this LOC?

Letters of Credit must be opened by August 24, 2013 (36 months from the effective date), and disbursements must be completed by February 24, 2014 (42 months from the effective date).

📜 Read the original circular — full text as issued by RBI

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(DIR Series) Circular No. 12 September 14, 2010 To All Category - I Authorised Dealer Banks Madam / Sir, Exim Bank's Line of Credit (LOC) of USD 25 million to the Eastern and Southern African Trade and Development Bank (PTA Bank) Export-Import Bank of India (Exim Bank) has concluded an agreement dated July 27, 2010 with the Eastern and Southern African Trade and Development Bank (PTA Bank), Kenya making available to the latter, a Line of Credit (LOC) of USD 25 million (USD twenty five million). The credit is available for financing export of eligible goods and services from India to any PTA Bank regional member countries viz., Burundi, Comoros, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tanzania, Uganda, Zambia and Zimbabwe. The goods and services under the Agreement are those which are eligible for export under the Foreign Trade Policy of the Government of India and whose purchase may be agreed to be financed by the Exim Bank under this agreement. 2. The credit agreement is effective from August 25, 2010 and under the LOC, the terminal date for opening Letters of Credit will be August 24, 2013 (36 months from the effective date of the Credit Agreement) and terminal date for disbursements will be February 24, 2014 (42 months from the effective date of the Credit Agreement). 3. Shipments under the LOC will have to be declared on GR / SDF Forms as per instructions issued by the Reserve Bank from time to time. 4. While no agency commission shall be payable in respect of exports financed under the above line of credit, Reserve Bank may consider, on merits, requests for payment of commission up to a maximum extent of 5 per cent of the f.o.b./ c&f /c.i.f. value in respect of goods exported and which require after sales service. In such cases, commission will have to be paid only by deduction from the invoice of relevant shipment and the reimbursable amount by the Exim Bank to the negotiating bank will be 90 per cent of the f.o.b. / c&f/ c.i.f value minus commission paid. Approval for the payment of commission should be obtained before the relevant shipment is effected. In other cases, (i.e. exports not involving after sales service), if required, the exporter may use his own resources or utilize balances of his EEFC account for payment of commission in free foreign exchange. Authorised Dealer Category-I (AD Category-I) banks may allow such remittance after realisation of full payment of contract value subject to compliance of prevailing instructions on payment of agency commission. 5. AD Category-I banks may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from Exim Bank's office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade, Mumbai 400 005 or log on to www.eximbankindia.in . 6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (G. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2010-11/198 · issued 14 Sep 2010. The plain-English explanation above is BankPulse’s own independent summary.

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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks handling export transactions, Indian exporters to PTA Bank member countries, Exim Bank and its negotiating banks), your first concrete step on “Exim Bank's USD 25 mn LOC to PTA Bank” is: “Inform exporter customers about the LOC and direct them to Exim Bank for full details.” (RBI issued this 14 Sep 2010).

Circular: RBI/2010-11/198 -- Exim Bank's USD 25 mn LOC to PTA Bank
Issued: 14 Sep 2010
Action required: Inform exporter customers about the LOC and direct them to Exim Bank for full details.
Action required: Ensure shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
Action required: Process commission payments only as per circular: no agency commission generally; for after-sales service, allow up to 5% deduction from invoice with prior RBI approval.
Action required: Verify that LCs are opened before August 24, 2013, and disbursements completed by February 24, 2014.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________

Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=5990&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.