**Summary:**
This circular, RBI/2017-18/124 A.P. DIR Series Circular No. 16, issued by the Reserve Bank of India (RBI) on January 25, 2018, informs all Category I Authorised Dealer banks about a Government of India-supported Line of Credit (LoC) of USD 100 million extended by the Export-Import Bank of India (Exim Bank) to the Government of the Republic of Kenya. The LoC is specifically designated for an agricultural mechanization project in Kenya.
The agreement, effective from January 1, 2018, facilitates the export of eligible goods (plant, machinery, and equipment) and services (consultancy services) from India, in accordance with the Foreign Trade Policy of the Government of India. At least 75% of the contract price must be for goods and services supplied by the seller from India, while the remaining 25% can be procured from outside India. The terminal utilization period for the LoC is 60 months after the scheduled project completion date.
Shipments under this LoC must be declared on the Export Declaration Form as per RBI's 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 for commission payments in free foreign exchange, subject to existing regulations.
AD Category I banks are instructed to inform their exporter clients about this 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. This circular is issued under the Foreign Exchange Management Act (FEMA), 1999, and does not supersede any other legal requirements.
Key Entities Referenced
Mumbai, Maharashtra: City in India where the Reserve Bank of India is located.
Exim Bank: Export-Import Bank of India, providing the Line of Credit.
Government of the Republic of Kenya: The recipient of the USD 100 million Line of Credit.
Line of Credit: Government of India supported Line of Credit of USD 100 million to the Government of the Republic of Kenya.
Foreign Trade Policy: The export policy of the Government of India, governing eligible goods and services.
Foreign Exchange Management Act, 1999: Indian legislation governing foreign exchange transactions.
J K Pandey: Chief General Manager at Reserve Bank of India.
Reserve Bank of India: Central bank of India, issuer of the circular.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2017-18/124
A.P. (DIR Series) Circular No.16 January 25, 2018
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 100 million to
the Government of the Republic of Kenya
Export-Import Bank of India (Exim Bank) has entered into an agreement dated January
11, 2017 with the Government of the Republic of Kenya for making available to the
latter, a Government of India supported Line of Credit (LOC) of USD 100 million (USD
One Hundred million only) for agricultural mechanization project in Kenya. Under the
arrangement, financing export of eligible goods and services from India would be
allowed which are 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. The goods include plant, machinery and equipment and services
include consultancy services. Out of the total credit by Exim Bank under this 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 January 01, 2018. Under the LoC, the
terminal utilization period is 60 months after the scheduled completion date of the
project.
3. Shipments under the LoC will have to be declared on Export Declaration Form as per
instructions issued by 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 its own resources or utilize balances in its 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 full 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
J K Pandey
Chief General Manager