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India may restructure LoC exposure to economic crisis hit Sri Lanka

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Policy

India has extended a letter of credit of about $2.30 bn from 2003-04 to the island nation

India is likely to restructure the $1.3 billion of funding it extended under the so-called letter of credit (LoC) to Sri Lanka, which has been hit by an economic crisis in the last couple of months.

Since 2003-04, India has extended LoC aggregating about $2.30 billion to the island country.

Though the servicing of the LoC facility has been current so far, India may lend a helping hand to Sri Lanka tide over the crisis by restructuring the facility, including through extension of the tenor, said senior Exim Bank officials.

In 2003-04, the Government of India (GOI) formulated the Indian Development Initiative (IDI), now known as Indian Development and Economic Assistance Scheme (IDEAS).

This was done to share India’s development experience through capacity building and skills transfer, trade, and infrastructure development, by extending concessional LOCs routed through Exim Bank to developing partner countries towards creating socio-economic benefits in the partner country.

Published on May 12, 2022

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