A US$15-million credit line is to be extended to Myanmar by the Reserve Bank of India (RBI) under the Indo-Myanmar credit agreement. It will be available on a free on board (FoB) basis and cover 100 per cent of the value of eligible Indian exports.

Every disbursement under the credit line must be made via a letter of credit (L/C) opened by a bank in Myanmar according to RBI's recently circulated written instructions.

The bank also stipulates that all L/Cs must be advised by the banks in Myanmar to the State Bank of India in New Delhi (SBI), for onward transmission to the exporters either directly through SBI or through another bank specified by the exporter. Credits may be negotiable under certain circumstances.

Where appropriate, the credits must clearly state that 100 per cent of the value of goods is financed from the credit line. The Myanmar government and SBI should be informed in respect of each approved contract.

Agency commissions must not in general be charged in relation to goods financed under the credit line. Requests may however be considered for commissions of up to five per cent of the FoB value of goods that require after sales service. Approval for such arrangements must be obtained before goods are shipped.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.