What changed
Exim Bank signed an agreement on June 23, 2022, with Banco Exterior de Cuba for a EUR 100 million Short-Term Line of Credit (STLoC) to finance rice procurement from India. The credit became operational on September 9, 2022, with an 8-month terminal utilization period from contract inclusion. At least 75% of contract value must be sourced from India, and no agency commission is payable under this STLoC.
What it means for you
Indian rice exporters now have a dedicated credit facility to boost exports to Cuba, with Exim Bank financing the purchases. AD banks must ensure shipments are declared correctly and that no agency commission is paid from the credit proceeds, though exporters can use own resources for commissions after full export value realization. This aligns with India's foreign trade policy and FEMA provisions.
What you must do
- Inform exporter constituents about the STLoC details and direct them to Exim Bank for full terms.
- Ensure shipments under this credit are declared in Export Declaration Form/Shipping Bill per RBI instructions.
- Verify that at least 75% of contract value is sourced from India for eligible contracts.
- Do not allow agency commission payments from STLoC proceeds; only permit remittance from exporter's own resources after full export value realization.
Who it affects
AD Category-I banks, Indian rice exporters, Exim Bank, Banco Exterior de Cuba
What is the purpose of this EUR 100 million credit line?
It is a Short-Term Line of Credit from Exim Bank to Banco Exterior de Cuba to finance the purchase of rice from India.
Can exporters pay agency commission under this STLoC?
No, agency commission is not payable from the credit. Exporters may use their own resources or EEFC balances for commission after full export value realization.
What is the sourcing requirement for goods under this credit?
At least 75% of the contract price must be supplied from India; the remaining 25% can be procured from outside India.