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: GOI-Supported Line of Credit to Mongolia **1. Executive Summary:** This report analyzes Reserve Bank of India (RBI) Circular No. 05/2025-26, issued on May 16, 2025, regarding 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 conditions and procedures for export of eligible goods and services from India under this LoC, including eligibility requirements, disbursement timelines, declaration procedures, agency commission regulations, and relevant contact information. The key finding is that this circular primarily aims to facilitate and regulate exports from India under this specific LoC arrangement. **2. Introduction:** This report aims to provide an informative overview of RBI Circular No. 05/2025-26, based solely on the provided text. The report will outline the policy's purpose, key provisions, affected stakeholders, and potential impact, as understood directly from the document. **3. Policy Overview:** This is a *new* policy announcement related to a specific Line of Credit arrangement. * **Core Objective(s):** The core objective, as inferred from the text, is to establish the operational guidelines for Indian exporters and Authorized Dealer (AD) Category-I banks regarding the GOI-supported Line of Credit (LoC) of USD 700 million extended to the Government of Mongolia for the construction of a crude oil refinery. This includes defining eligible goods and services, outlining export declaration procedures, regulating agency commission payments, and providing relevant contact information for further details. **4. Background and Rationale:** This is a new policy. The likely issue the policy addresses is the need to establish a clear framework for Indian exporters and banks to participate in the GOI-supported LoC to Mongolia. Without this policy, there would be uncertainty regarding eligibility criteria, export procedures, and financial regulations, potentially hindering the effective utilization of the LoC and delaying the construction project in Mongolia. **5. Key Provisions / Changes:** This is a new policy, therefore we detail the main components. * **Line of Credit Establishment:** The circular acknowledges the agreement between Exim Bank of India and the Government of Mongolia for a USD 700 million LoC. * **Eligible Goods and Services:** Exports of eligible goods and services from India are allowed, subject to the Foreign Trade Policy of the Government of India and Exim Bank's agreement. * **Effective Date and Disbursement Timeline:** The LoC is effective from May 06, 2025, with a disbursement deadline 48 months after the scheduled completion date of the contract. * **Export Declaration:** Shipments under the LoC must be declared in the Export Declaration Form/Shipping Bill as per RBI instructions. * **Agency Commission:** No agency commission is payable for exports under the LoC. However, exporters can use their own resources or balances in their Exchange Earners Foreign Currency Account to pay commission in foreign currency, subject to AD Category-I bank approval after realization of the full export value. * **Information Dissemination:** AD Category-I banks are directed to inform their exporter constituents about the LoC details and direct them to Exim Bank for further information. **6. Target Audience and Stakeholders:** The directly affected target audience and stakeholders, based on the provided text, are: * **Category I Authorised Dealer (AD) Banks:** They are responsible for facilitating the transactions, ensuring compliance with regulations, and informing their exporter clients. * **Indian Exporters:** Specifically, those involved in the export of eligible goods and services required for the construction of the Crude Oil Refinery Plant in Mongolia. * **Export-Import Bank of India (Exim Bank):** As the entity administering the LoC, they are a key stakeholder. * **Government of Mongolia (GOMNG):** As the recipient of the LoC, they are an indirect stakeholder **7. Implementation Aspects (Inferred):** * **Responsible Agency/Bodies:** Reserve Bank of India (RBI), Authorised Dealer (AD) Category I banks, and Export-Import Bank of India (Exim Bank). * **Timelines:** The LoC is effective from May 06, 2025, and the last date for disbursement is 48 months after the scheduled completion date of the contract. * **Procedures:** Exporters need to follow the standard Export Declaration Form/Shipping Bill procedures. AD Category I banks need to ensure compliance with existing agency commission regulations if exporters choose to utilize their own resources. * Exporters are advised to obtain complete details of the LoC from the Exim Bank. **8. Expected Outcomes / Impact of Changes:** The likely intended outcomes of this policy, based on the text, are: * **Facilitation of Exports:** The policy aims to streamline the process of exporting eligible goods and services from India for the Mongolian refinery project. * **Efficient Utilization of LoC:** By providing clear guidelines, the policy should contribute to the efficient and timely utilization of the USD 700 million LoC. * **Compliance and Transparency:** The regulations regarding export declarations and agency commissions promote compliance and transparency in transactions under the LoC. * **Support for Indian Exporters:** The policy provides a framework for Indian exporters to participate in the project and benefit from the LoC. **9. Conclusion:** RBI Circular No. 05/2025-26 is significant because it establishes the operational framework for Indian exporters and banks to participate in a strategically important project – the construction of a Crude Oil Refinery Plant in Mongolia, financed by a GOI-supported Line of Credit. The circular's provisions regarding eligibility, procedures, and regulations are crucial for ensuring the smooth and efficient utilization of the LoC, promoting trade between India and Mongolia, and ultimately contributing to the success of the refinery project.

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