The Reserve Bank of India (RBI) has issued a notification to operationalize the US$ 500 million loan to Sri Lanka for Petroleum products.
According to the RBI, a seller from India should supply products, works, and services of value of at least 75% out of the total credit.
Issuing a statement, the bank further said the remaining 25% of goods and services may be procured by the seller for the purpose of the eligible contract from outside India.
Full statement by the Reserve Bank of India:
Export-Import Bank of India (Exim Bank) has entered into an agreement dated February 02, 2022 with the Government of the Democratic Socialist Republic of Sri Lanka, for making available to the latter, Government of India supported Line of Credit (LoC) of USD 500 million (USD Five Hundred Million only) for the purpose of financing purchase of petroleum products from India.
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 the following agreement.
1. Out of the total credit by Exim Bank under the agreement, goods, works 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 February 18, 2022. Under the LoC, the terminal utilization period is 6 months from the date of signing of LoC agreement or such other extended date which Exim Bank may agree at the request of Borrower, provided however that such extended date shall in no case be beyond 12 (twelve) months from the date of LoC 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. Authorized Dealer (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. (NewsWire)