**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on January 01, 2020, notifies all Category I Authorised Dealer (AD Category I) banks about a Government of India-supported Line of Credit (LoC) of USD 75 million from the Export-Import Bank of India (Exim Bank) to Banco Exterior De Cuba, the nominated agency of the Government of Cuba. The LoC, established through an agreement dated July 16, 2019, is intended to finance the installation of 75 MW Photovoltaic Solar Parks in Cuba.
Under this arrangement, the financing of eligible goods and services exported from India is permitted, provided they qualify for export under the Government of India's Foreign Trade Policy and are approved for financing by Exim Bank under this agreement. A minimum of 75% of the contract price for goods, works, and services must be supplied by the seller from India. The remaining 25% may be sourced from outside India.
The LoC agreement took effect on December 12, 2019, with a terminal utilization period of 60 months after the project's scheduled completion date. Export declarations must be made in the Export Declaration Form, following RBI's instructions. No agency commission is payable under this LoC, however, exporters may use their own resources or Exchange Earners Foreign Currency Account balances for commission payments in free foreign exchange, subject to existing regulations.
AD Category I banks are directed to inform their exporter clients about the LoC and advise them to obtain further 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 Section 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999, and is without prejudice to other applicable laws.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and managing the country's monetary policy.
Mumbai, Maharashtra: The financial capital of India and location of the Reserve Bank of India headquarters, mentioned with pincode 400 001.
Exim Bank: Export-Import Bank of India, a financial institution that facilitates and promotes foreign trade of India.
Banco Exterior De Cuba: A bank in Cuba that is the recipient of a Line of Credit from the Export-Import Bank of India.
Government of Cuba: The governing body of Cuba, whose nominated agency, Banco Exterior De Cuba, is receiving the Line of Credit.
Line of Credit: A credit facility of USD 75 million supported by the Government of India and extended by Exim Bank to Banco Exterior De Cuba.
Republic of Cuba: The country where the 75 MW Photovoltaic Solar Parks will be installed, financed by the Line of Credit.
Foreign Exchange Management Act, 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.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2019-20/134
A.P. (DIR Series) Circular No. 14 January 01, 2020
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit (LOC) of
USD 75 million to Banco Exterior De Cuba
Export-Import Bank of India (Exim Bank) has entered into an agreement dated July 16, 2019 with
Banco Exterior De Cuba (nominated agency of the Government of Cuba), for making available to
the latter, Government of India supported Line of Credit (LoC) of USD 75 million (USD Seventy
Five Million only) for the purpose of financing installation of 75 MW Photovoltaic Solar Parks in
the Republic of Cuba. 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 December 12, 2019. 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 K Moolchandani)
Chief General Manager