Date: 2019-07-25Category: Not ApplicableState: Union GovernmentCountry: India
Exim Bank's Government of India supported Line of Credit of USD 10 million (as first tranche out of USD 50 million) to the Government of Republic of Seychelles
**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on July 25, 2019, informs all Category I Authorised Dealer (AD) banks about a Government of India-supported Line of Credit (LoC) of USD 10 million, the first tranche of a total USD 50 million, extended to the Government of the Republic of Seychelles through the Export-Import Bank of India (Exim Bank). The agreement between Exim Bank and the Government of Seychelles, dated June 25, 2018, facilitates the financing of goods and projects based on the specified needs of Seychelles.
Under this 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, are permitted, subject to Exim Bank's approval. A minimum of 75% of the contract price for goods and services must be supplied by the seller from India, while the remaining 25% can be procured from outside India.
The LoC agreement took effect on June 24, 2019. The terminal utilization period is 48 months after the project's scheduled completion date and 72 months from the execution of the LoC Agreement in the case of supply contracts.
Shipments under the LoC must be declared in the Export Declaration Form as per 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 AD Category I banks' compliance with existing regulations after realizing the full eligible export value.
AD Category I banks are instructed to inform their exporter clients about this circular and advise them to obtain detailed information about the LoC 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.
These directions are issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999, and are without prejudice to other required permissions or approvals under any other law.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the Indian banking system.
Republic of Seychelles: A country receiving a Line of Credit from India.
Export-Import Bank of India: An Indian export finance organization providing the Line of Credit.
Line of Credit: A credit facility of USD 10 million as first tranche out of USD 50 million from the Government of India to the Government of Republic of Seychelles, managed by Exim Bank.
Foreign Trade Policy: The export and import policy of the Government of India.
Mumbai, Maharashtra: Financial capital of India; location of the Reserve Bank of India and Exim Bank office.
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.
Exchange Earners Foreign Currency Account: A type of account that exporters can hold with Authorised Dealer banks to retain foreign currency earned through exports.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2019-20/18
A.P. (DIR Series) Circular No. 3 July 25, 2019
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 10 million (as first tranche
out of USD 50 million) to the Government of Republic of Seychelles
Export-Import Bank of India (Exim Bank) has entered into an agreement dated June 25, 2018
with the Government of Republic of Seychelles for making available to the latter, a Government
of India supported Line of Credit (LoC) of USD 10 million (USD Ten Million only) as the first
tranche out of USD 50 million (USD Fifty million only) for financing procurement of goods and
projects as per specified needs of Republic of Seychelles. 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 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 June 24, 2019. Under the LOC, the terminal
utilization period is 48 months after the scheduled completion date of the project and 72
months from execution of the LoC Agreement in case of supply contracts
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