What changed
Exim Bank signed a Line of Credit agreement with Kenya on November 16, 2010, effective December 14, 2010, for USD 61.60 million. The credit is for financing power transmission lines, with a requirement that at least 75% of goods and services come from India. Last date for opening LCs is 48 months from scheduled completion for projects, or 72 months from agreement execution for supply contracts.
What it means for you
Indian exporters can now tap this LOC to supply goods and services for Kenya's power transmission projects, with assured financing from Exim Bank. Banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds; any commission must come from exporter's own resources or EEFC account. This opens a structured export credit channel for Indian firms.
What you must do
- Inform exporter constituents about the LOC and advise them to contact 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; only permit remittance from exporter's own resources or EEFC account after full contract value realization.
- Verify that at least 75% of contract value is sourced from India for eligible contracts.
Who it affects
AD Category-I banks handling export credit, Indian exporters of power transmission equipment and services, Exim Bank
What is the total value of this Line of Credit?
The LOC is for USD 61.60 million, as per the agreement dated November 16, 2010.
What are the sourcing requirements for exports under this LOC?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India, excluding consultancy services.
Can agency commission be paid from the LOC proceeds?
No, agency commission is not payable under this LOC. If needed, exporters must use their own resources or EEFC account balances, and remittance is allowed only after full contract value realization.