Exim Bank’s GOI-supported Line of Credit (LOC) for USD 700 million to the Govt. of Mongolia (GO-MNG), for financing construction of Crude Oil Refinery Plant in Mongolia

## Report on RBI Circular No. 05/2025-26 Regarding GOI-Supported Line of Credit to Mongolia **1. Executive Summary:** This report analyzes Reserve Bank of India (RBI) Circular No. 05/2025-26, dated May 16, 2025, concerning a Government of India (GOI) supported Line of Credit (LoC) of USD 700 million to the Government of Mongolia (GOMNG) for financing the construction of a Crude Oil Refinery Plant in Mongolia. The circular outlines the terms and conditions for export of eligible goods and services from India under this LoC. Key findings include specific instructions for Authorized Dealer (AD) Category I banks regarding export declarations, agency commission, and communication with exporters. **2. Introduction:** The purpose of this report is to provide an informative overview of RBI Circular No. 05/2025-26, detailing the regulations surrounding the GOI-supported LoC to Mongolia for the construction of a Crude Oil Refinery Plant, as outlined in the provided text. The report is intended for stakeholders within the Indian export and banking sectors, particularly Authorized Dealer (AD) Category I banks. **3. Policy Overview:** * This is a *new policy directive* outlining the operational framework for a specific Line of Credit. * **Core Objective(s):** Based on the text, the primary objectives are to: * Facilitate the export of eligible goods and services from India to Mongolia under a GOI-supported LoC. * Provide guidance to AD Category I banks regarding the operational aspects of this LoC. * Ensure compliance with the Foreign Exchange Management Act (FEMA) 1999 in relation to this LoC. **4. Background and Rationale:** As this is a new policy directive specifically tied to a new LoC, the underlying issue it addresses is likely the need to establish a formal framework for managing the financial and procedural aspects of this specific economic cooperation initiative with Mongolia. The LoC agreement between Exim Bank and the Government of Mongolia necessitates clear guidelines for Indian banks and exporters to participate effectively and compliantly. **5. Key Provisions / Changes:** As this is a new policy directive (rather than an amendment), the key provisions are as follows: * **Line of Credit:** Establishes the availability of a USD 700 million LoC to the Government of Mongolia for financing the construction of a Crude Oil Refinery Plant. * **Eligible Exports:** Defines eligible exports as goods and services from India that meet the criteria under the Foreign Trade Policy of the Government of India and are agreed upon to be financed by Exim Bank. * **Effective Date and Disbursement Deadline:** States that the LoC is effective from May 06, 2025, and the last date for disbursement will be 48 months after the scheduled completion date of the contract. * **Export Declaration:** Mandates that shipments under the LoC be declared in the Export Declaration Form/Shipping Bill as per RBI instructions. * **Agency Commission:** Prohibits agency commission payments for exports under the LoC, but allows exporters to use their own resources or Exchange Earners Foreign Currency Account balances for such payments, subject to certain conditions, including realization of the full eligible export value and compliance with extant instructions. * **Information Dissemination:** Directs AD Category I banks to inform their exporter constituents about the details of the LoC and provide them with information on how to obtain further details from Exim Bank. **6. Target Audience and Stakeholders:** The primary target audience and stakeholders are: * **Authorized Dealer (AD) Category I Banks:** Responsible for implementing the guidelines outlined in the circular. * **Indian Exporters:** Those involved in exporting eligible goods and services to Mongolia under this LoC. * **Export-Import Bank of India (Exim Bank):** The entity responsible for managing the Line of Credit. **7. Implementation Aspects (Inferred):** * **Responsible Agency:** The Reserve Bank of India (RBI) is the issuing authority. Exim Bank is responsible for managing the LoC and providing detailed information to exporters. AD Category I banks are responsible for implementing the guidelines. * **Timelines and Procedures:** The LoC is effective from May 06, 2025, with a disbursement deadline of 48 months after the scheduled completion date of the contract. Exporters need to follow RBI instructions for Export Declaration Forms/Shipping Bills. AD Category I banks need to ensure compliance with FEMA regulations and extant instructions for agency commission payments. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes and impact of this new policy directive are: * **Facilitated Trade:** Smoother and more efficient export of eligible Indian goods and services to Mongolia, supporting the construction of the Crude Oil Refinery Plant. * **Increased Exports:** Potential increase in Indian exports due to the availability of the LoC. * **Compliance:** Enhanced compliance with FEMA regulations by AD Category I banks and exporters. * **Transparency:** Clear guidelines for all stakeholders involved in the LoC. **9. Conclusion:** RBI Circular No. 05/2025-26 is a significant policy directive that outlines the operational framework for the GOI-supported LoC to Mongolia. It provides crucial guidance to AD Category I banks and Indian exporters, ensuring compliance and facilitating trade under this specific agreement. The circular is expected to have a positive impact on Indian exports and contribute to the successful completion of the Crude Oil Refinery Plant project in Mongolia.

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