This circular, RBI/2020-2021/38 A.P. (DIR Series) Circular No. 01, issued by the Reserve Bank of India on September 17, 2020, informs all Category I Authorised Dealer Banks about a Government of India-supported Line of Credit (LoC) of USD 215.68 million (USD Two Hundred Fifteen Million Six Hundred Eighty Thousand only) from the Export-Import Bank of India (Exim Bank) to the Government of the Republic of Malawi. The agreement, dated June 12, 2020 and effective from September 09, 2020, is intended to finance drinking water supply schemes and other development projects in Malawi.
Under the LoC, exports of eligible goods and services from India, as defined by the agreement and compliant with the Foreign Trade Policy of the Government of India, will be financed by Exim Bank. A minimum of 75% of the contract price for goods, works, and services must be supplied by the seller from India, while the remaining 25% may be procured from outside India. The terminal utilization period for the LoC is 60 months after the scheduled project completion date.
Shipments under the LoC must be declared in the Export Declaration Form as per RBI instructions. No agency commission is payable for exports under this LoC; however, exporters may use their own resources or Exchange Earners Foreign Currency Account balances to pay commission in free foreign exchange, subject to AD Category I banks' compliance with existing regulations after full realization of the export value.
AD Category I banks are instructed to inform their exporter clients about this LoC and advise them to obtain complete details from 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. The circular is issued under the Foreign Exchange Management Act (FEMA), 1999. Inquiries may be directed to R. S. Amar, Chief General Manager.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the country's monetary policy and banking system.
Mumbai, Maharashtra: The financial capital of India, where the Reserve Bank of India is located.
Exim Bank: Export-Import Bank of India, a financial institution that facilitates and promotes foreign trade of India.
Government of the Republic of Malawi: The governing body of Malawi, recipient of the Line of Credit.
Line of Credit LoC of USD 215.68 million: A credit facility extended by Exim Bank to the Government of the Republic of Malawi.
India: The country from which goods and services are being exported under the Line of Credit agreement.
Foreign Trade Policy of the Government of India: The set of guidelines and regulations governing the import and export of goods and services in India.
Foreign Exchange Management Act FEMA, 1999: An Act of the Parliament of India to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.
भारतीय �रज़व र्बक� RESERVE BANK OF INDIA
मुंबई/ MUMBAI
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– 400 001
RBI/2020-2021/38
A.P. (DIR Series) Circular No.01 September 17, 2020
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit (LoC) of
USD 215.68 million to the Government of the Republic of Malawi
Export-Import Bank of India (Exim Bank) has entered into an agreement dated June 12, 2020
with the Government of the Republic of Malawi, for making available to the latter, Government
of India supported Line of Credit (LoC) of USD 215.68 million (USD Two Hundred Fifteen Million
Six Hundred Eighty Thousand only) for the purpose of financing drinking water supply schemes
and other development projects in the Republic of Malawi. 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.
2. The Agreement under the LoC is effective from September 09, 2020. Under the LoC, the
terminal utilization period is 60 months after the scheduled completion date of the project.
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
Category- I (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