What changed
RBI circular informs AD Category-I banks of Exim Bank's Line of Credit agreement with Togo, effective April 27, 2012. It details sourcing requirements (75% Indian content), timelines for L/C opening and disbursement (48 months for projects, 72 months for supply contracts), and commission payment rules.
What it means for you
Banks must guide exporters on utilizing this credit for eligible exports under India's Foreign Trade Policy. The 75% local sourcing rule boosts Indian exports, while the no-agency-commission clause requires exporters to use own funds or EEFC accounts for any commissions. Banks need to ensure compliance with FEMA provisions.
What you must do
- Inform exporter clients about Exim Bank's LOC to Togo for agricultural projects.
- Ensure GR/SDF forms are correctly filed for shipments under this LOC.
- Allow remittance of agency commission only after full contract value realization, using exporter's own resources or EEFC balances.
- Direct exporters to Exim Bank for detailed LOC terms and conditions.
Who it affects
AD Category-I banks, Exporters dealing with agricultural machinery, equipment, and consultancy services, Exim Bank
What is the minimum Indian content required under this LOC?
At least 75% of the contract price must be supplied from India, including goods, services, and consultancy.
Can exporters pay agency commission under this LOC?
No agency commission is payable from the credit. Exporters may use their own resources or EEFC balances for commission after full payment realization.
What are the key deadlines for this LOC?
Last date for L/C opening and disbursement is 48 months from contract completion for projects, and 72 months (by January 11, 2018) from the credit agreement date for supply contracts.