RBI/2019-20/109 A.P. (DIR Series) Circular No.11
December 05, 2019
All Category – I Authorised Dealer Banks
Madam/Sir
Exim Bank's Government of India supported Line of Credit (LOC) of USD 500
million to the Government of Bangladesh
Export-Import Bank of India (Exim Bank) has entered into an agreement
dated April 11, 2019 with the Armed Forces Division, Government of the People’s
Republic of Bangladesh for making available to the latter, a Government of India
supported Line of Credit (LoC) of USD 500 million (USD Five hundred million
only) for the purpose of financing defence related procurement, in the Republic
of Bangladesh. 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 the agreement, goods
and services including consultancy 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 (including Bangladesh).
However, based on the nature of the procurement, the eligible goods and services
up to the contract price to be supplied by the Seller from India may be further
reduced from 75% to 65% and further reduction may be considered on a case to
case basis, based on negotiation between the Borrower and GOI. Such exemption
may be mutually agreed upon before the goods and services are tendered.
2. The Agreement under the LoC is effective from November 07, 2019. Under the
LOC, the terminal utilization period is 10 years from the date of signing of the
Agreement.
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 complete 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
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