**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on July 12, 2018, informs all Category I Authorised Dealer (AD Category I) banks about a Government of India-supported Line of Credit (LoC) of USD 45.27 million extended by the Export-Import Bank of India (Exim Bank) to the Government of Sri Lanka. The LoC, established through an agreement dated January 10, 2018, is intended to finance the rehabilitation of Kankesanthurai Harbour in Sri Lanka.
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 must be for goods and services supplied by the seller from India. The remaining 25% may be procured 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. Export shipments under this LoC must be declared in the Export Declaration Form as per 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 AD Category I banks' compliance with existing regulations after full export value realization.
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. This 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: Central bank of India, the publisher of the circular.
Mumbai, Maharashtra: City in India, location of the Reserve Bank of India.
Exim Bank: Export-Import Bank of India, providing the Line of Credit.
Government of Sri Lanka: Recipient of the Line of Credit from Exim Bank.
Line of Credit: Financial instrument provided by Exim Bank to the Government of Sri Lanka.
Kankesanthurai Harbour: The infrastructure project in Sri Lanka being financed by the Line of Credit.
Foreign Trade Policy of the Government of India: The export regulations that apply to goods and services financed under the Line of Credit.
Foreign Exchange Management Act, 1999: Indian legislation under which the circular is issued.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2018-19/17
A.P. (DIR Series) Circular No.1 July 12, 2018
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 45.27 million to the
Government of Sri Lanka
Export-Import Bank of India (Exim Bank) has entered into an agreement dated January 10, 2018
with the Government of the Democratic Socialist Republic of Sri Lanka for making available to
the latter, a Government of India supported Line of Credit (LoC) of USD 45.27 million (USD Forty
five million and two hundred seventy thousand only) for financing rehabilitation of
Kankesanthurai Harbour in Sri Lanka. 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