salient features on this scheme - Embassy of India_ Brasilia by chenmeixiu



Introduction                                             and the insurance premium will be borne by
Exim Bank has, in conjunction with ECGC, introduced      the project exporter. Interest differential on the
a new product/initiative viz. Buyer’s Credit under       credit, if interest rate is below market rate, will also
GOI’s National Export Insurance Account (NEIA),          need to be borne by Indian project exporter. Indian
under which the Bank finances and facilitates project    project exporter may suitably adjust its price.
exports from India by way of extending credit facility
to overseas sovereign governments and government         Amount of Loan
owned entities for import of goods and services from     Generally not more than 85% of the contract value.
India on deferred credit terms. Indian exporters can
obtain payment of eligible value from Exim Bank,         Rate of Interest
without recourse to them, against negotiation of         Linked to Exim Bank’s cost of funds plus a spread.
shipping documents. Buyer’s credit is a financing
mechanism that provides a safe mode of non-              Repayment
recourse financing option to Indian exporters and        Credit period would normally be 5 to 8 years. Longer
serves as an effective market entry tool.                credit period could be considered in deserving cases.

About National Export Insurance Account (NEIA)           Security
NEIA is a Trust, set up by Ministry of Commerce and      Sovereign guarantee where the borrower is other
Industry (MOCI), Government of India, for providing      than the foreign government. Guarantee from
export credit insurance cover for promoting project      Central Bank of borrower, as applicable. Any other
exports from India, administered by ECGC. Buyer’s        security as may be stipulated on a case-to-case basis.
Credit under NEIA is a unique mechanism for
promoting India's project exports to traditional as      Loan Appraisal
well as new markets in developing countries, which       Eligibility of the project for covering under Buyer’s
need deferred credit on medium or long term basis.       credit, inter alia, will focus on country risk
                                                         perception, track record of the Indian project
Eligible buyers                                          exporter, sound financials of project exporter,
Sovereign governments and government owned               conformity with RBI’s Memorandum PEM.
entities overseas for finance of eligible import of
goods and services from India on deferred payment        General
terms.                                                   Indian companies are advised to contact Project
                                                         Finance Group of the Bank at Head office in India
Eligible goods                                           before finalizing the contract.
Project exports from India.
                                                         A flow chart covering Approval and Disbursement
Features                                                 processes under the Buyer’s Credit is Annexed.
Buyer’s credit (NEIA) is available for project exports
requiring medium or long term deferred credit. Exim
Bank extends the credit directly to overseas buyer of
projects from India without recourse to Indian
exporter. Exim Bank will obtain credit insurance cover
under NEIA through ECGC


Flow chart for Approval of Buyer’s credit

                               (8) Signing of commercial contract

         Indian Exporter                    (7) BC Approval               Overseas Buyer

      (1) Approaches for Buyer’s
          Credit & Terms                             (2) Due Diligence

                                       Exim Bank
    (5)For proposals
                                                                         (3) Seeks in-principle approval
    exceeding USD 20 mn
                                                                             for cover and premium rates
    approval is sought
                                   (6) Approval
       Working Group                                (4) Conveys In-principle
       Exim Bank, RBI, ECGC,                            approval and                  ECGC -NEIA
       Sponsoring Bank                                  premium

   (1) Indian exporter approaches Exim Bank to seek Buyer’s Credit & terms thereof.

   (2) Exim Bank undertakes due diligence on overseas buyer.

   (3) Exim Bank approaches ECGC for in principle approval for cover and premium rates.

   (4) ECGC, upon approval under National Insurance Export Account (NEIA), conveys in-principle
       approval and rate of premium.

   (5) For cases where credit requirement exceeds USD 20 mn, Exim Bank approaches Working Group
       to seek approval.

   (6) Upon due consideration, Working Group accords approval.

   (7) Exim Bank accords approval of Buyer’s credit to overseas buyer.

   (8) Indian exporter executes commercial contract with overseas buyer.

   (9) Exim Bank and ECGC sign Buyer’s Credit policy agreement.

   Flow chart for Execution of contract and Disbursement under Buyer’s credit

                                           (1) Supplies goods/ provides services

  Indian Exporter                                                                       Overseas Buyer

                    (2) Submits shipping                       (3) Exim Bank will negotiate documents
(4) Funds            documents and                              under Letter of Credit or payments will
 Transfer            Claims disbursement                        be made to exporter against payment

       Exim Bank

               (5) Advises buyer about disbursement and debit to his buyer’s credit a/c
                with Exim Bank

      (1) Indian exporter ships the goods/ provides the services to overseas buyer as per the terms of the
          commercial contract.

      (2) Indian exporter submits original export documents and claims disbursements.

      (3) Exim Bank will negotiate documents under Letter of Credit or payments will be made to
          exporter against payment authorizations.

      (4) Exim Bank remits the eligible amount of disbursement to Indian exporter.

      (5) Exim Bank advises details of disbursement to overseas buyer.


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