COLOMBO (News 1st); The Reserve Bank of India (RBI) on March 10 issued a notification to operationalize the $500 million line of credit provided by India to Sri Lanka for the purchase of petroleum products, economic times reports.
The Export-Import Bank of India (Exim Bank) concluded a pact with Sri Lanka on February 2 to provide a line of credit of 500 million dollars intended to finance the purchase of petroleum products.
According to the RBI, out of the total credit of the Exim Bank, goods, works and services worth at least 75% must be supplied by the seller from India, while the remaining 25% of the goods and services can be purchased by the seller from India. out of India.
The agreement under the LoC (line of credit) is effective from February 18, 2022.
Under the LoC, the period of use of the terminal is six months from the date of signing the LoC agreement or any other extended date agreed upon at the request of the borrower.
However, the extended date should not exceed 12 months from the date of the agreement, the RBI said.
Sri Lanka is currently reeling from a severe currency crisis with declining reserves. The country is also struggling with a shortage of almost all basic necessities due to lack of dollars to pay for imports.
Necessary steps to operationalize India’s $500 million line of credit for the purchase of petroleum products are underway as per the agreement between the two governments.
Additionally, Sri Lanka is also set to finalize another credit facility with India for food, medicine and other essential items that would help tackle the crisis, sources say. economic times States.
India is providing the loan against the backdrop of an earlier loan of US$500 million secured for essential goods and another Rs. 400 million in interest payable by Sri Lanka, an extension of which had previously been requested.
Sri Lanka is in talks with India for another $1 billion loan for essential medicines and foodstuffs and the finance minister is due to visit India in the coming weeks to look into the question.