What changed
Exim Bank signed a Line of Credit agreement with Nicaragua on June 14, 2013, effective January 31, 2014, for USD 10 million. The credit finances Indian exports for building two electric sub-stations, with at least 75% of contract value sourced from India. Last date for LC opening and disbursement is 48 months for project exports or 72 months (June 13, 2019) for supply contracts.
What it means for you
Indian exporters can now access this LOC to supply equipment and services for Nicaragua's power projects, with Exim Bank financing. AD banks must ensure shipments are declared on GR/SDF forms and no agency commission is paid from the LOC proceeds. This opens a targeted export opportunity for Indian firms in the Central American infrastructure sector.
What you must do
- Inform exporter clients about the LOC terms 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 agency commission payments from LOC proceeds; remit only from exporter's own resources or EEFC after full contract 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 transactions, Indian exporters of goods, machinery, equipment, and services for power infrastructure, Exim Bank as the lending institution
What is the purpose of this Line of Credit?
It finances Indian exports for building two electric sub-stations in Nicaragua, covering goods, machinery, equipment, and consultancy services.
Can exporters pay agency commission from this LOC?
No, no agency commission is payable under the LOC. Exporters may use their own resources or EEFC balances for commission after full payment realization.
What are the key timelines for this LOC?
The credit agreement is effective from January 31, 2014. For project exports, LCs must be opened within 48 months of contract completion; for supply contracts, within 72 months (by June 13, 2019).