Special currency basket value revised, requiring authorised dealer banks to apply the updated rupee valuation under FEMA directives.
The rupee value of the special currency basket has been revised and fixed at the updated level effective from November 19, 2008; Authorised Dealer Category I banks must implement the revised valuation and notify their constituents. The circular states that the directions are issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act and are without prejudice to permissions under other laws.

ACU settlement options now permit transactions in ACU Dollar or ACU Euro, enabling correspondent accounts for cross border settlement.
Effective January 1, 2009, ACU participants may settle transactions in either ACU Dollar or ACU Euro, with each unit equivalent to one US Dollar and one Euro respectively. Authorised Dealer Category I banks may open and maintain ACU Dollar and ACU Euro accounts with correspondent banks in participating countries and are required to settle eligible payments through those accounts. Amendments to the relevant FEMA regulations and the ACU Memorandum of Procedure will be issued separately.

Line of Credit to Madagascar secures India sourced exports with prescribed local content and FEMA compliance for remittances.
Exim Bank's USD 25 million Line of Credit to Madagascar finances two projects with exports eligible under India's Foreign Trade Policy; at least 85% of contract value must be supplied from India and up to 15% (excluding consultancy) may be procured abroad. The Credit Agreement is effective from December 4, 2008; LCs/disbursements must be opened within 48 months from project completion for project exports and within 72 months from execution for supply contracts. Shipments require GR/SDF declarations. No agency commission is payable under the LOC, though exporters may remit commission from their own resources or EEFC balances after realization. AD Category I banks must inform exporters and implement these directions under FEMA.

Line of credit terms require predominant India-sourced supply, specified disbursement timelines, documentation and remittance rules.
Exim Bank's Line of Credit to Malawi finances eligible goods, services and consultancy largely from India, requiring at least 85% India sourced content and permitting up to 15% non consultancy imports. The Credit Agreement is effective from October 31, 2008, with LC opening and disbursement deadlines linked to contract type (48 months from project completion for projects; 72 months from execution for supply contracts). Shipments require GR/SDF declarations. No agency commission is payable under the LOC; exporters may use own funds or EEFC balances for commission, with AD Category I banks authorised to permit remittances after full realization, subject to prevailing rules.

Mode of payment for foreign travel: cards accepted with KYC/AML, cardholder must be purchaser and card limits apply.
Mode of payment for sale of foreign exchange for travel abroad is expanded to include debit, credit and prepaid travel cards in addition to rupee cash and specified bank instruments, provided KYC/AML compliance is met, the sale is within the card limits prescribed by the bank, and the purchaser and cardholder are the same person; payments above the existing cash threshold must be made by crossed cheque or banker's instruments.

FCCB buyback rules permit premature repurchase subject to specified funding, discount and reporting conditions.
Regulations allow premature buyback of FCCBs under an automatic route-permitted by designated AD Category I banks where buybacks are at least 15% below book value, funded from existing foreign currency resources or fresh ECBs in conformity with ECB norms and subject to all in cost ceilings-or under an approval route-where buybacks are at least 25% below book value, funded from internal accruals evidenced by auditor and AD bank certification, and subject to a per company buyback ceiling; both routes require prior RBI registration, up to date ECB 2 returns, bondholder consent, cancellation of repurchased bonds, escrowing of funds, and post completion reporting.

Special currency basket valuation revised for deferred payment protocols, requiring authorised dealer banks to apply the new rupee value.
Revision of the special currency basket rupee valuation for the Deferred Payment Protocols between the Government of India and the erstwhile USSR is directed; Authorised Dealer Category - I banks must adopt the revised rupee value in relevant transactions and notify their constituents. The circular is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to other statutory permissions or approvals.

Vostro account rules: extended float period and reduced collateral requirement ease operational obligations for non resident exchange houses.
Amendments change operational rules for Vostro accounts of non resident exchange houses by extending the permissible float period for transfers into the designated drawee account and by reducing the collateral coverage requirement under the Non DDA procedure; collateral may be maintained as a cash deposit or as a bank guarantee from an international bank of repute.

Export Credit Refinance eligibility expanded; refinance limit increased and rate linked to prevailing repo rate.
Reserve Bank of India increases the Export Credit Refinance (ECR) eligible limit from 15 per cent to 50 per cent of outstanding rupee export credit as at the end of the second preceding fortnight, maintains interest on ECR at the prevailing repo rate under the Liquidity Adjustment Facility, and modifies Part A of Annex III (Form DAD 389) to prescribe the revised calculation and exclusions for computing outstanding export credit eligible for refinance.

Pre-shipment Rupee Export Credit: interest at BPLR minus a margin extended to longer tenure to aid exporters.
Extension of the prescribed interest regime for Pre-shipment Rupee Export Credit maintains the interest linkage at BPLR minus a margin and increases the allowable period of credit for such pre-shipment facilities, effective mid-November 2008, to provide exporters additional working-capital duration; the revised period is incorporated in the annexure to the referenced directive and communicated to lending institutions.

Export credit interest ceilings set for rupee export credit, with specified short term categories capped and longer tenors deregulated.
Reserve Bank directive prescribes maximum interest rates relative to the Benchmark Prime Lending Rate as ceiling rates for specified short term rupee export credit categories, including pre shipment and various post shipment facilities, credits against government incentives covered by guarantee, undrawn balances, and retention money; banks may charge lower rates, and interest on export credit beyond the prescribed tenors is deregulated, with banks free to determine rates in line with BPLR and spread guidance.

Interest rate ceilings for NRE and FCNR(B) deposits revised to align with LIBOR/SWAP plus prescribed margins.
With effect from the close of business on November 15, 2008, interest on fresh NRE term deposits of one to three years shall not exceed US dollar LIBOR/SWAP plus 175 basis points, the same ceiling applying where maturity exceeds three years and on renewals. For FCNR(B) deposits contracted from that date, interest shall be paid within LIBOR/SWAP plus 100 basis points for the relevant currency and maturity; floating rate FCNR(B) deposits are subject to SWAP plus 100 basis points with a six month reset period.

Line of credit terms: export financing for eligible goods subject to shipment declarations, commission rules, and FEMA compliance.
Exim Bank's Line of Credit to the Government of the Syrian Arab Republic finances exports of goods eligible under India's Foreign Trade Policy, covering a large portion of the FOB/CFR/CIF contract price. The facility has separate cut off periods for letters of credit and disbursement for project and supply contracts. Shipments must be declared on GR/SDF forms. No agency commission is payable from the LOC; exporters may use their own funds or EEFC balances for commission subject to realisation and prevailing rules. AD Category I banks must inform exporters and ensure compliance with FEMA directions and other applicable approvals.

Standby letter of credit for commodity hedging permitted, subject to remittance approval and specified issuance conditions.
AD Category I banks may issue standby letters of credit or bank guarantees to cover payment obligations for overseas commodity derivative contracts if remittance is permitted under delegated authority or specific Reserve Bank approval. Such instruments must be for margin payments on approved hedging activities, limited to previous year's margin amounts to the counterparty, for up to one year with a lien on non funded facilities; issuing banks must have Board approved policies, treat exposures as part of customer credit, apply risk weights for capital adequacy, and verify brokers' month end reports.

Credit to NRE accounts: account payee cheques allowed when supported by authorised encashment certificates.
AD Category I and authorised banks may credit proceeds of account payee cheques, in addition to demand drafts and bankers' cheques, to a Non Resident (External) Rupee (NRE) account where those instruments were issued against encashment of foreign currency and are supported by an encashment certificate issued by an AD Category I or AD Category II bank.

Line of Credit terms permit financing of eligible Indian exports with predominant India-origin supply and fixed LC/disbursement timelines.
Exim Bank's LOC to the Government of Rwanda finances eligible Indian goods, services and consultancy for a power project, requiring at least 85 per cent of contract value to be supplied from India with the remainder (excluding consultancy) procurable abroad; the Credit Agreement effective October 15, 2008 prescribes distinct latest dates for opening Letters of Credit and disbursement for project and supply contracts. Shipments must be declared on GR/SDF forms. No agency commission is payable under the LOC, though exporters may pay commissions from own resources or EEFC balances subject to AD Category-I bank compliance rules and FEMA directions.

Line of Credit for export finance to Lao PDR with India supply content requirement and FEMA compliance.
Exim Bank provided a Line of Credit to Lao PDR to finance Indian origin equipment, goods and consultancy services for designated projects, requiring a predominant portion of supplies to originate in India while allowing a limited portion of non consultancy goods to be sourced abroad; the LOC sets separate timeframes for Letters of Credit and disbursement for projects and supply contracts, mandates shipment declaration on GR/SDF forms, and prohibits agency commission under the LOC though exporters may use their own funds or EEFC balances for commission remittances, subject to AD Category I bank rules and FEMA directions.

Line of Credit conditions require majority Indian sourcing and regulatory compliance for exports under the LOC.
Line of Credit of USD 25.5 million by Exim Bank to Cote d'Ivoire finances eligible goods, services and consultancy from India, requiring at least 85% of contract value supplied from India and permitting 15% foreign procurement (excluding consultancy). The Agreement (executed June 18, 2008; effective October 3, 2008) sets LC/disbursement deadlines-48 months from project completion for projects and 72 months from execution for supply contracts. Shipments must be declared on GR/SDF forms. No agency commission under the LOC; exporters may pay commission from own funds or EEFC balances after realization under prevailing remittance rules. Directions issued under FEMA and subject to other legal approvals.

Line of credit terms require majority Indian-sourced supplies, specific disbursement timelines and FEMA compliance, and AD bank obligations.
Exim Bank's USD 100 million LOC for Sri Lanka's Colombo-Matara railway requires at least 85% of contract value to be supplied from India; remaining non consultancy inputs may be sourced externally. The Credit Agreement is effective from October 3, 2008, with LC/disbursement cutoffs at 48 months from project completion for project exports and 72 months from execution for supply contracts. Shipments must be declared on GR/SDF forms. No agency commission is payable under the LOC, though exporters may use own funds or EEFC balances for commission payments subject to realization and prevailing rules. AD Category I banks must inform exporters and may permit remittances; Directions issued under sections 10(4) and 11(1) of FEMA, 1999.

Line of Credit conditions: Indian content, declaration and commission rules govern exports financed under the Exim Bank-Suriname credit.
Exim Bank provided a Line of Credit of USD 10.59 million to Suriname to finance eligible goods and services from India under India's Foreign Trade Policy, requiring at least 85% of contract value to be supplied from India and permitting up to 15% of non consultancy goods to be sourced abroad. The Credit Agreement (effective September 26, 2008) prescribes 48 month disbursement limits for project exports and 72 months for supply contracts. Shipments must be declared on GR/SDF forms. No agency commission is payable under the LOC, though exporters may remit commission from their own resources or EEFC balances after realisation; AD Category I banks must inform exporters and may allow remittances subject to compliance. Directions issued under FEMA.