Local firms set to benefit from Indian line of credit


16-January-2013

This US $10 million (SCR130 million) line of credit (LOC) is on a 20-year term including a moratorium on capital repayment of five years.
 
Under this scheme, the EXIM Bank of India is the agency which will fund and operate the LOC on the recommendation of the Government of India.

 On its part, the government of Seychelles has chosen the Development Bank of Seychelles (DBS) as its appointed agency, through which funds will be made available to suitable projects which meet the requirements of the EXIM Bank LOC.
 
It is to note that this is the first credit facility that EXIM Bank of India extends to DBS.

The agreement for the line of credit was signed on December 18, 2012 in New Delhi, India by T.C.A Ranganathan, chairman and managing director of the EXIM Bank of India representing the government of India and Pierre Laporte, Minister for Finance, Trade and Investment representing the government of Seychelles.

The LOC is a financing mechanism which will provide local businesses with an alternative to import goods and services from India on deferred credit terms.

Goods eligible for being financed under the LOC includes capital goods, plant and machinery, industrial manufactures, consumer durables and any other items eligible for being exported under the “EXIM Policy” of the government of India.

This new source of finance and procurement of Indian goods and services will be promoted to local entrepreneurs of small and medium enterprises (SMEs) for new, modernisation and expansion projects in the economic sectors of agriculture, fishery, manufacturing, tourism, building & construction, transportation, renewal energy and other services.

The interest will be at an attractive rate compared to lending rates presently being charged by local financial institutions including other DBS facilities. 

The loan tenure under this LOC can be extended up to a maximum duration of 15 years depending on the assets financed.

At the moment, certain conditions precedent of the LOC agreement are being finalised, after which the LOC shall become effective and the DBS shall start accepting applications for this new EXIM Bank scheme.

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