What changed
Exim Bank signed an agreement with the Government of Mongolia on January 16, 2025, for a $700 million Line of Credit to finance a crude oil refinery plant. The LoC became effective on May 6, 2025, with disbursements allowed up to 48 months after the scheduled project completion date. RBI has now communicated these details to all AD Category-I banks for implementation.
What it means for you
Indian exporters can now supply eligible goods and services to Mongolia under this LoC, with payments backed by Exim Bank. AD banks must ensure shipments are declared on Export Declaration Forms or Shipping Bills as per RBI norms. No agency commission is payable from the LoC proceeds, but exporters may use their own funds or EEFC balances for commission 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.
- Verify that all exports under this LoC comply with Foreign Trade Policy and RBI declaration requirements.
- Allow remittance of agency commission only after full realization of eligible export value, using exporter's own resources or EEFC balances.
- Ensure no commission is paid from the LoC proceeds itself.
Who it affects
AD Category-I banks, Indian exporters of eligible goods and services to Mongolia, Exim Bank
What is the total value of this Line of Credit?
The LoC is for USD 700 million, supported by the Government of India, to finance construction of a crude oil refinery plant in Mongolia.
Can exporters pay agency commission under this LoC?
No agency commission is payable from the LoC proceeds. However, exporters may use their own resources or EEFC balances for commission after full realization of the eligible export value.
When does the LoC become effective and what is the disbursement deadline?
The LoC is effective from May 6, 2025. The last date for disbursement is 48 months after the scheduled completion date of the contract.