What changed
Exim Bank signed a Line of Credit agreement with the Government of Democratic Republic of Congo on July 11, 2011, for USD 168 million to finance the Ketende Hydro-electric Project. The credit became effective from October 20, 2011. At least 75% of contract value must be sourced from India, with the remaining 25% allowed from outside India for non-consultancy goods and services.
What it means for you
Indian exporters can now access this LOC to supply goods, services, machinery, and consultancy for the Congo hydro project, with financing backed by Exim Bank. AD banks must ensure shipments are declared on GR/SDF forms and that no agency commission is paid from LOC funds; any commission must come from exporter's own resources or EEFC accounts after full payment realization.
What you must do
- Inform exporter constituents about this LOC and direct them to Exim Bank for full details.
- Ensure all shipments under this LOC are declared on GR/SDF forms as per RBI instructions.
- Verify that no agency commission is paid from LOC proceeds; allow commission remittance only from exporter's own resources or EEFC after full contract payment.
- Adhere to FEMA sections 10(4) and 11(1) while processing transactions under this circular.
Who it affects
AD Category-I banks, Indian exporters of goods, services, machinery, and consultancy, Exim Bank
What is the purpose of this Line of Credit?
It finances the Ketende Hydro-electric Project in the Democratic Republic of Congo, covering eligible goods, services, machinery, equipment, and consultancy from India.
What are the sourcing requirements for exports under this LOC?
At least 75% of the contract price must be supplied from India; up to 25% of non-consultancy goods and services may be procured from outside India.
Can exporters pay agency commission under this LOC?
No agency commission is payable from LOC funds. Exporters may use their own resources or EEFC balances for commission after full payment realization, subject to prevailing RBI instructions.