What changed
Exim Bank signed a Line of Credit agreement with the Government of Burundi on May 24, 2011, effective from April 19, 2012, for USD 80 million. The credit is specifically for financing Indian goods, machinery, equipment, and services for the Kabu Hydro Electric Project. At least 75% of the contract price must be supplied from India, with up to 25% procured from outside India.
What it means for you
Indian exporters can now access this LOC to supply to the Burundi hydro project, with financing backed by Exim Bank. AD Category-I banks must ensure that shipments are declared on GR/SDF forms and that no agency commission is paid from the LOC proceeds. Banks can allow commission remittances from exporters' own resources after full payment realization.
What you must do
- Advise exporter clients about the Exim Bank LOC for Burundi 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.
- Do not allow any agency commission payment from the LOC proceeds; only permit from exporter's own resources or EEFC account after full payment.
- Verify that at least 75% of contract value is sourced from India for exports under this LOC.
Who it affects
AD Category-I banks handling export transactions, Indian exporters of goods, machinery, equipment, and services for hydro projects, Exim Bank as the lending institution
What is the purpose of this Line of Credit?
The USD 80 million LOC from Exim Bank to the Government of Burundi is for financing eligible Indian goods, machinery, equipment, and services for the Kabu Hydro Electric Project in Burundi.
What are the sourcing requirements for exporters?
At least 75% of the contract price must be supplied from India. The remaining 25% (excluding consultancy services) can be procured from outside India.
Can agency commission be paid under this LOC?
No agency commission is payable from the LOC proceeds. However, exporters may use their own resources or EEFC account balances for commission in free foreign exchange, after full payment realization.