RBI/ 2004/ 99

A.P. (DIR Series) Circular No.79

March 15, 2004

To

All Authorised Dealers in Foreign Exchange

Madam/Sirs,

Exim Bank's Line of Credit of USD 10 Million to Central Bank of Djibouti, Djibouti

Export-Import Bank of India (Exim Bank) has concluded an agreement with Central Bank of Djibouti, Djibouti on July 24, 2003 making available to the latter, a Line of Credit (LOC) upto an aggregate sum of USD 10 Million (U.S.Dollar ten million only). The Credit Agreement has become effective from January 14, 2004 and is available for financing export from India of Category 'A' and Category 'B' goods and services as per Memorandum of Instructions on Project and Service Exports (Memorandum PEM) and any other item including raw materials and commodities that may be agreed upon between Exim Bank and Central Bank of Djibouti to buyers in Djibouti.

2. The terminal dates for opening letters of credit and utilisation of credit are January 13, 2006 and July 13, 2006 respectively.

3. Shipments under the credit will have to be declared on Forms GR / SDF as usual.

4. While no agency commission shall be payable in respect of exports financed under the above LOC, Reserve Bank may consider, on merit, requests for payment of commission up to a maximum extent of 5 per cent of the f.o.b./c&f/c.i.f. value in respect of goods exported and which require after sales service. In such cases, commission will have to be paid in Djibouti only by deduction from the invoice of the relevant shipment. The reimbursable amount by the Exim Bank to the negotiating bank will be 90 per cent of the f.o.b./c&f/c.i.f. value minus the commission paid. Approval for the payment of commission should be obtained from the Reserve Bank before the relevant shipment is effected.

In other cases (i.e. exports not involving after sales service) if the exporter is required to pay agency commission, he will have to use his own resources for such payments.

5. Authorised Dealers may bring the contents of this circular to the notice of their exporter constituents and advise them to obtain full details of the Line of Credit from Exim Bank's Office or its web-site.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999).

Yours faithfully,

Grace Koshie

Chief General Manager