India extends LoC for solar parks in Cuba
India has extended a line of credit of $75 million (over Rs 500 crore) to Cuba for financing solar parks. An agreement signed between Export-Import Bank of India (Exim Bank) and Banco Exterior De Cuba in July last year came into effect from December 12, the RBI said in a statement. Banco Exterior De Cuba is a nominated agency of the Government of Cuba.
- Exim Bank has entered into an agreement dated July 16, 2019 with Banco Exterior De Cuba, for making available to the latter, Government of India supported Line of Credit (LoC) of $75 million for the purpose of financing installation of 75 MW Photovoltaic Solar Parks in the Republic of Cuba.
- Under the LoC, The terminal utilisation period is 60 months after the scheduled completion date of the project.
- As per the agreement, financing of export of eligible goods and services from India would be allowed subject to their being eligible for export under the Foreign Trade Policy.
- Out of the total credit by Exim Bank under the agreement, goods, works and services of the value of at least 75 per cent of the contract price can be supplied by the seller from India, and the remaining 25 per cent of goods and services may be procured by the seller from outside India, the statement added.
What Is a Line of Credit (LOC)?
- A line of credit (LOC) is a preset borrowing limit that can be used at any time.
- The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit.
- A LOC is an arrangement between a financial institution—usually a bank—and a customer that establishes the maximum loan amount the customer can borrow.
- The borrower can access funds from the line of credit at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement and meet any other requirements such as making timely minimum payments. It may be offered as a facility.