RBI launches US$500m fuel line of credit for Sri Lanka – Reuters
NDTV: The Reserve Bank of India (RBI) issued a notification on Thursday to initiate India’s US$500 million line of credit to Sri Lanka which would enable it to purchase petroleum products.
The island nation is going through one of its worst economic crises, mainly due to the coronavirus pandemic.
Export-Import Bank of India (Exim Bank) entered into a pact on February 2, 2022 with Sri Lanka to provide the USD 500 million line of credit for the purchase of petroleum products.
In a notification, RBI said that of the total credit of Exim Bank, goods, works and services worth at least 75% should be provided by the Indian seller.
The remaining 25% of goods and services can be purchased by the seller (Sri Lanka) outside India.
The credit line agreement became effective on February 18, 2022.
In accordance with the conditions of the line of credit, the term of use of the terminal is six months from the date of signature of the agreement or any other extended date agreed at the request of the borrowers.
However, the extended date should not exceed 12 months from the date of the agreement, the RBI said.
Sri Lanka is currently reeling from a severe currency crisis with declining reserves. The country is also struggling with a shortage of almost all basic necessities due to lack of dollars to pay for imports.
Its electricity production has been affected by the currency crisis because fuel to run thermal power plants is scarce. Electricity regulators have warned of five to six hours a day of power cuts over the next few days.