What changed
Exim Bank signed an agreement on October 2, 2022, with the Maldives government for a $100 million LOC, effective January 19, 2023. RBI has now issued operational instructions to AD Category-I banks for handling exports under this facility.
What it means for you
Banks must process export declarations and remittances under this LOC, ensuring compliance with the 75% Indian content requirement and the no-commission rule. This opens a structured financing channel for Indian exporters to Maldives, but banks need to verify eligibility under the Foreign Trade Policy and the specific agreement terms.
What you must do
- Advise exporter constituents about the LOC and direct them to Exim Bank for full details.
- Ensure export declarations (EDF/Shipping Bill) are made as per RBI instructions.
- Verify that at least 75% of contract value is sourced from India for each eligible contract.
- Do not allow agency commission from export proceeds; if commission is needed, ensure it is paid from exporter's own resources or EEFC account after full realization.
- Allow remittance of commission only after full eligible export value is realized and extant instructions are complied with.
Who it affects
AD Category-I banks, Indian exporters to Maldives, Exim Bank
What is the terminal utilization period for this LOC?
The terminal utilization period is 48 months from the scheduled completion date of the project, as per the agreement effective January 19, 2023.
Can exporters pay agency commission from the export proceeds under this LOC?
No, agency commission is not payable from export proceeds. If required, exporters must use their own resources or balances in their Exchange Earners' Foreign Currency Account, and remittance can be allowed only after full realization of the eligible export value.