The Reserve Bank of India (RBI) on Thursday issued a notification to initiate the $500 million line of credit provided by India to Sri Lanka, to finance the purchase of petroleum products.
On February 2, the Export-Import Bank of India (Exim Bank) entered into an agreement with the Sri Lankan government to provide a USD 500 million line of credit to Sri Lanka for the purchase of products Indian tankers.
In a statement, the RBI said: “Under the arrangement, financing for the export of eligible goods and services from India, as defined in the agreement, would be permitted subject to them being eligible. for export under the foreign trade policy of the Government of India, and the purchase of which may be agreed to be financed by the Exim Bank under this Agreement.”
According to the RBI, out of the total credit extended by Exim Bank under the agreement, goods, works and services worth at least 75% of the contract price must be supplied by the seller from India.
In the meantime, the remaining 25% of the goods and services can be purchased by the seller for the purposes of the qualifying contract from outside India.
The RBI said the deal under the LoC is effective from February 18.
In accordance with the line of credit, the period of use of the terminal is 6 months from the date of signature of the line of credit agreement or such other extended date as Exim Bank may agree at the request of the customer. ‘borrower.
However, such an extended date should not exceed 12 months from the date of the line of credit agreement, the RBI noted.