What changed
Exim Bank signed a Line of Credit agreement with the Government of Guyana on October 30, 2012, effective December 20, 2012, for USD 19 million to finance a multispecialty hospital. The circular outlines the sourcing requirement (75% from India), timelines for LC opening and disbursement (48 months for projects, 72 months for supply contracts), and commission payment rules.
What it means for you
Banks must ensure that exports under this LOC comply with the 75% Indian content rule and that GR/SDF forms are used for shipments. No agency commission is payable from the credit, but exporters can use their own EEFC funds or resources for commission after full payment realization. This facilitates Indian exports to Guyana under a government-backed credit line.
What you must do
- Inform exporter constituents 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.
- Allow remittance of agency commission only after full contract value realization and from exporter's own resources or EEFC account.
- Verify that at least 75% of contract price goods/services are sourced from India.
Who it affects
AD Category-I banks, Exporters dealing with Guyana under this LOC, Exim Bank
What is the minimum Indian content requirement under this LOC?
At least 75% of the contract price must be supplied by sellers from India. The remaining 25% can be procured from outside India, excluding consultancy services.
Can exporters pay agency commission under this LOC?
No agency commission is payable from the credit. However, exporters may use their own resources or EEFC balances to pay commission in free foreign exchange after full realization of the contract value.
What are the timelines for LC opening and disbursement?
For project exports, the last date is 48 months from scheduled completion. For supply contracts, it is 72 months from the credit agreement execution date (October 29, 2018).