Executive Summary:
This circular announces a Government of India-supported Line of Credit (LoC) of USD 100 million from Exim Bank to the Government of the Democratic Socialist Republic of Sri Lanka for financing solar energy projects. The agreement is effective from September 13, 2021, with a terminal utilization period of 60 months from the scheduled completion date of the eligible contract. The circular outlines the terms, conditions, and procedures for exports under this LoC.
Key Points / Main Content:
* **Line of Credit Details:**
* Exim Bank provides a USD 100 million LoC to the Government of Sri Lanka.
* The LoC aims to finance solar energy projects in Sri Lanka.
* The agreement was made on March 16, 2021
* Agreement is effective from September 13, 2021.
* **Eligibility and Content Requirements:**
* Financing is allowed for eligible goods and services from India, compliant with India's Foreign Trade Policy.
* At least 75% of the contract price must be for goods, works, and services supplied from India.
* The remaining 25% can be procured from outside India.
* The Indian content requirement may be reduced by up to 10% on a case-by-case basis with the approval of the Government of India.
* Goods or services should not be procured from countries other than the Borrower or India.
* **Export Procedures:**
* Shipments under the LoC must be declared in the Export Declaration Form as per RBI instructions.
* **Agency Commission:**
* No agency commission is payable for exports under this LoC.
* Exporters may use their own resources or Exchange Earners Foreign Currency Account balances for commission payments in free foreign exchange.
* AD Category I banks can allow such remittances after full export value realization, complying with existing agency commission payment instructions.
* **Further Information:**
* Exporters should obtain complete LoC details from Exim Bank's Mumbai office or website.
Impact Analysis:
* **AD Category I Banks:**
* Impact: Must understand the guidelines to process export transactions under this LoC.
* Action Required: Inform exporter constituents about the LoC details and comply with FEMA regulations while processing payments.
* **Indian Exporters:**
* Impact: Opportunity to export goods and services for solar energy projects in Sri Lanka, financed by the LoC.
* Action Required: Obtain details of the LoC from Exim Bank, ensure compliance with eligibility criteria and documentation requirements, and adhere to the specified content requirements.
* **Exim Bank:**
* Impact: Responsible for administering the LoC and ensuring compliance with the agreement terms.
* Action Required: Provide necessary information and support to exporters and AD Category I banks, and monitor the utilization of the LoC.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the issuer of this circular.
Export-Import Bank of India: An Indian export finance institution, also known as Exim Bank.
Mumbai, Maharashtra: Financial capital of India, location of both Reserve Bank of India and Exim Bank offices mentioned in the circular.
Government of Democratic Socialist Republic of Sri Lanka: The recipient of the USD 100 million Line of Credit from Exim Bank.
Line of Credit (LoC): A credit facility of USD 100 million from Exim Bank to the Government of Democratic Socialist Republic of Sri Lanka.
Foreign Trade Policy: The export regulations and guidelines set by the Government of India.
Foreign Exchange Management Act (FEMA), 1999: The legal framework under which the circular's directions are issued.
Exchange Earners Foreign Currency Account: An account exporters can maintain to deposit foreign exchange earnings
भारतीय �रज़व र् बक� /RESERVE BANK OF INDIA
मबुं ई/ MUMBAI – 400 001
RBI/2021-2022/103
A.P. (DIR Series) Circular No.15 September 30, 2021
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit (LoC) of
USD 100 million to the Government of Democratic Socialist Republic of Sri Lanka
Export-Import Bank of India (Exim Bank) has entered into an agreement dated March 16,
2021 with the Government of the Democratic Socialist Republic of Sri Lanka (Borrower),
for making available to the latter, Government of India supported Line of Credit (LoC) of
USD 100 million (USD One Hundred Million only) for the purpose of financing projects in
the Solar Energy Sector in the Democratic Socialist Republic of Sri Lanka. Under the
arrangement, financing of export of eligible goods and services from India, as defined
under the agreement, would be allowed subject to their being eligible for export under the
Foreign Trade Policy of the Government of India and whose purchase may be agreed to
be financed by the Exim Bank under this agreement. Out of the total credit by Exim Bank
under the agreement, goods, works and services of the value of at least 75 per cent of
the contract price shall be supplied by the seller from India, and the remaining 25 per cent
of goods and services may be procured by the seller for the purpose of the eligible
contract from outside India. Provided however at the request of the borrower and with the
approval of the Government of India, Exim Bank may consider reduction in the India
content not exceeding 10% of contract price on a case to case basis. Provided further
that such view/consent of Government of India be obtained before a project procurement
is initiated and the said goods or services shall not be from a country other than that of
the Borrower or India.2. The Agreement under the LoC is effective from September 13, 2021. Under the LoC,
the terminal utilization period is 60 months from the scheduled completion date of
specified in the eligible contract.
3. Shipments under the LoC shall be declared in Export Declaration Form as per
instructions issued by the Reserve Bank from time to time.
4. No agency commission is payable for export under the above LoC. However, if
required, the exporter may use his own resources or utilize balances in his Exchange
Earners’ Foreign Currency Account for payment of commission in free foreign exchange.
Authorised Dealer (AD) Category- I banks may allow such remittance after realization of
full eligible value of export subject to compliance with the extant instructions for payment
of agency commission.
5. AD Category – I banks may bring the contents of this circular to the notice of their
exporter constituents and advise them to obtain complete details of the LoC from the Exim
Bank’s office at Centre One, Floor 21, World Trade Centre Complex, Cuffe Parade,
Mumbai 400 005 or from their website www.eximbankindia.in
6. The directions contained in this circular have been issued under section 10(4) and
11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are
without prejudice to permissions/ approvals, if any, required under any other law.
Yours faithfully
(R. S. Amar)
Chief General Manager