What changed
Exim Bank signed an agreement on September 29, 2010, with Indo-Zambia Bank to provide a USD 5 million Line of Credit for eligible Indian goods and services. The credit agreement became effective from June 29, 2011, with Letters of Credit to be opened by June 28, 2014, and disbursements by December 28, 2014.
What it means for you
Indian exporters can now access this LOC to finance exports to Zambia, with shipments requiring GR/SDF form declarations. No agency commission is allowed generally, but RBI may permit up to 5% commission for after-sales service exports, with reimbursement capped at 90% of invoice value. For other exports, commission must be paid from exporter's own resources or EEFC account after full payment realization.
What you must do
- Advise exporter customers about the USD 5 million LOC to Indo-Zambia Bank 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 existing guidelines.
- Refer exporters seeking commission for after-sales service to obtain prior RBI approval from the concerned regional office.
Who it affects
AD Category-I banks, Indian exporters to Zambia, Exim Bank
What is the total value of the Line of Credit announced?
The Line of Credit is for USD 5 million, made available by Exim Bank to Indo-Zambia Bank.
Can exporters pay agency commission on shipments under this LOC?
Generally no agency commission is allowed. However, for exports requiring after-sales service, RBI may permit up to 5% commission on FOB/CFR/CIF value, with prior approval and reimbursement limited to 90% of invoice value.
What are the key deadlines for this LOC?
Letters of Credit must be opened by June 28, 2014, and disbursements completed by December 28, 2014, from the credit agreement execution date of September 29, 2010.