**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on July 12, 2018, notifies all Category I Authorised Dealer (AD Category I) banks about a Government of India-supported Line of Credit (LoC) of USD 36.92 million extended by the Export-Import Bank of India (Exim Bank) to the Government of Cambodia. The LoC is intended to finance the Stung Sva Hab/Slab water resource development project in Cambodia, as per the agreement dated January 27, 2018.
Under this arrangement, the financing of eligible goods and services exports from India is permitted, provided they comply with the Foreign Trade Policy of the Government of India and are approved for financing by Exim Bank. A minimum of 75% of the contract price for goods 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 June 12, 2018, with a terminal utilization period of 60 months from the scheduled completion date of each contract. Shipments under the LoC must be declared in the Export Declaration Form, following RBI guidelines. 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 detailed information 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, and does not override any other legal requirements.
Key Entities Referenced
Reserve Bank of India: The central bank of India, the issuer of this circular.
Mumbai, Maharashtra: City in India where the Reserve Bank of India is located.
Exim Bank: Export-Import Bank of India, which has entered into an agreement with the Government of Cambodia.
Government of Cambodia: The recipient of the Line of Credit from Exim Bank, supported by the Government of India.
Line of Credit: A credit facility of USD 36.92 million from Exim Bank to the Government of Cambodia.
USD 36.92 million: The total amount of the Line of Credit provided by Exim Bank to the Government of Cambodia.
Stung Sva HabSlab water resource development project: The project in Cambodia being financed by the Line of Credit.
Foreign Exchange Management Act FEMA, 1999: The Indian law under which the circular's directions are issued.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2018-19/18
A.P. (DIR Series) Circular No.2 July 12, 2018
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 36.92 million to the
Government of Cambodia
Export-Import Bank of India (Exim Bank) has entered into an agreement dated January 27, 2018
with the Government of the Kingdom of Cambodia for making available to the latter, a
Government of India supported Line of Credit (LoC) of USD 36.92 million (USD Thirty six million
and nine hundred twenty thousand only) for financing the Stung Sva Hab/Slab water resource
development project in Cambodia. 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 12, 2018. Under the LoC, the terminal
utilization period is 60 months from the scheduled completion date of the respective contract.
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
the permissions/ approvals, if any, required under any other law.
Yours faithfully
(R K Moolchandani)
Chief General Manager