What changed
Exim Bank signed a LoC agreement with the Government of Maldives on September 2, 2021, effective February 8, 2022, for USD 40 million to develop sports infrastructure. The circular outlines the sourcing requirement (75% from India) and terminal utilization period (60 months from project completion).
What it means for you
Indian exporters can now bid for contracts under this LoC, with financing from Exim Bank. AD banks must ensure shipments are declared on Export Declaration Forms and that no agency commission is paid from LoC funds; commissions can only come from exporter's own resources or EEFC accounts after full export value realization.
What you must do
- Inform exporter constituents about the LoC details and direct them to Exim Bank for complete information.
- Ensure all shipments under this LoC are declared on Export Declaration Forms as per RBI instructions.
- Verify that at least 75% of contract value is sourced from India for each eligible contract.
- Allow agency commission remittances only after full export value realization and from exporter's own resources or EEFC accounts.
- Monitor terminal utilization period of 60 months from project completion date.
Who it affects
AD Category-I banks, Indian exporters of goods and services, Exim Bank, Government of Maldives
What is the purpose of this USD 40 million Line of Credit?
It is for development of sports infrastructure in the Republic of Maldives, financed by Exim Bank under a Government of India-supported LoC.
What are the sourcing requirements for exporters under this LoC?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India for the eligible contract.
Can agency commission be paid from the LoC proceeds?
No, agency commission is not payable under this LoC. Exporters may use their own resources or EEFC balances for commission, and AD banks can allow remittance only after full export value realization.