What changed
Exim Bank signed an agreement on December 17, 2020, with Sierra Leone for a USD 15 million LoC, effective August 31, 2021. The LoC funds expansion of ongoing water rehabilitation projects in four communities. RBI circular provides operational instructions to AD Category-I banks for handling related exports.
What it means for you
AD banks must ensure exporters comply with LoC terms: at least 75% contract value from Indian goods/services, no agency commission payable from LoC proceeds, and EDF declarations as per RBI norms. Banks can allow commission remittances from exporter's own resources or EEFC after full export realization. This facilitates Indian exports under government-backed credit lines.
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 in Export Declaration Form per RBI instructions.
- Verify that at least 75% of contract value is sourced from India for eligible exports.
- Allow agency commission remittances only from exporter's own resources or EEFC after full export value realization, as no commission is payable under the LoC.
Who it affects
AD Category-I banks handling export transactions under Exim Bank LoCs, Exporters eligible to supply goods/services under the Sierra Leone LoC, Exim Bank as the LoC administering institution
What is the purpose of the USD 15 million LoC to Sierra Leone?
The LoC funds expansion of ongoing projects for rehabilitating existing potable water facilities in four communities in Sierra Leone.
Can exporters pay agency commission under this LoC?
No agency commission is payable from LoC proceeds. Exporters may use their own resources or EEFC balances for commission, and AD banks can allow such remittance after full export value realization.
What is the Indian content requirement under this LoC?
At least 75% of the contract price must be for goods, works, and services supplied from India. The remaining 25% may be procured from outside India by the seller.