**Summary:**
This circular, issued by the Reserve Bank of India (RBI) on December 6, 2018 (RBI/2018-19/92 A.P. DIR Series Circular No.16), informs all Category I Authorised Dealer (AD) banks about a Government of India-supported Line of Credit (LoC) of USD 500 million extended by the Export-Import Bank of India (Exim Bank) to the Government of the United Republic of Tanzania. The LoC, formalized through an agreement dated May 10, 2018, is intended to finance water supply schemes in Tanzania.
The agreement stipulates that exports of eligible goods and services from India, as defined under the agreement and consistent with the Government of India's Foreign Trade Policy, will be financed. 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 September 18, 2018, with a terminal utilization period of 60 months following the project's scheduled completion date. Shipments under the LoC must be declared in the Export Declaration Form as per RBI 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 AD Category I banks' compliance with existing agency commission payment instructions after realizing the full eligible export value.
AD Category I banks are directed 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 Sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 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.
Exim Bank: Export-Import Bank of India, providing the Line of Credit.
Government of the United Republic of Tanzania: The recipient of the USD 500 million Line of Credit.
Line of Credit: A credit facility of USD 500 million from Exim Bank to the Government of Tanzania.
USD 500 million: The total amount of the Line of Credit provided by Exim Bank.
Foreign Trade Policy: The export policies of the Government of India relevant to the Line of Credit.
Foreign Exchange Management Act, 1999: Indian legislation under which the circular's directions are issued.
Mumbai, Maharashtra: City in India where the Reserve Bank of India and Exim Bank offices are located.
RESERVE BANK OF INDIA
________________________________Mumbai – 400 001______________________________
RBI/2018-19/92
A.P. (DIR Series) Circular No.16 December 6, 2018
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit of USD 500 million to the
Government of the United Republic of Tanzania
Export-Import Bank of India (Exim Bank) has entered into an agreement dated May 10, 2018
with the Government of the United Republic of Tanzania for making available to the latter, a
Government of India supported Line of Credit (LoC) of USD 500 million (USD Five hundred
million) for the purpose of financing water supply schemes in the Republic of Tanzania. 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 September 18, 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