This circular, issued by the Reserve Bank of India on July 12, 2018, informs all Category I Authorised Dealer banks about a Government of India-supported Line of Credit (LoC) of USD 18 million extended by the Export-Import Bank of India (Exim Bank) to the Government of the Republic of Zambia. The LoC is intended for the completion of the project establishing prefabricated health posts in Zambia.
Under the agreement dated January 12, 2018, financing is permitted for the export of eligible goods and services from India, as defined by the agreement and the Foreign Trade Policy of the Government of India. A minimum of 75% of the contract price for goods and services must be supplied by the seller from India, with the remaining 25% allowed to be procured from outside India.
The LoC is effective from June 22, 2018, and has a terminal utilization period of 60 months after the scheduled completion date of the project. Export Declaration Forms must be completed for all shipments under the LoC, following Reserve Bank guidelines. No agency commission is payable for exports under this LoC, but 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 override any other legal permissions or approvals required.
Key Entities Referenced
Reserve Bank of India: Central bank of India, issuing the circular.
Mumbai, Maharashtra: City in India where the Reserve Bank of India is located and from where the circular is issued.
Exim Bank: Export-Import Bank of India, involved in the Line of Credit agreement.
Government of the Republic of Zambia: The recipient of the Line of Credit from India.
Line of Credit: A credit facility of USD 18 million from Exim Bank to the Government of the Republic of Zambia.
Foreign Trade Policy: The export regulations policy of the Government of India, under which the export of goods and services will be allowed.
Foreign Exchange Management Act FEMA, 1999: The Act of the Indian Parliament that enables the central government to make and amend rules relating to foreign exchange.
R K Moolchandani: Chief General Manager at Reserve Bank of India
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2018-19/20
A.P. (DIR Series) Circular No. 4 July 12, 2018
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 18 million to the
Government of the Republic of Zambia
Export-Import Bank of India (Exim Bank) has entered into an agreement dated January 12, 2018
with the Government of the Republic of Zambia for making available to the latter, a
Government of India supported Line of Credit (LoC) of USD 18 million (USD Eighteen million
only) for the purpose of completion of balance work under the project for establishment of pre-
fabricated health posts in the Republic of Zambia. 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 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 June 22, 2018. 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 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
(R K Moolchandani)
Chief General Manager