RBI Says India’s 507 Million Dollar Line of Credit to Maldives has Taken Effect
The line of credit became effective from August 27, 2026. | Photo: The President’s Office
India’s government-backed line of credit worth 48.50 billion Indian rupees (approximately USD 506.58 million), to the Maldives became effective from August 27, 2026, the Reserve Bank of India (RBI) announced yesterday.
The notification clears the path for individual project-level financial agreements to begin under the overarching credit umbrella, unlocking major funding for infrastructure and development initiatives across the Indian Ocean archipelago.
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According to the central bank’s circular, the deployment of the facility through India’s Export-Import Bank will be structured under individual credit agreements, each carrying a minimum threshold value of 5 billion Indian rupees.
The agreement mandates strict procurement parameters for all funded contracts. At least 75 per cent of the total value of goods, works, and services financed under the contracts must be sourced from suppliers in India, while the remaining 25 percent of contract value may be procured from non-Indian sources.
Furthermore, the facility explicitly prohibits using credit funds to pay agency commissions on exports. However, Indian exporters may fund these expenses independently through their own resources or foreign currency accounts. Disbursements for approved individual projects can be made up to 48 months past the scheduled contract completion date.
The umbrella agreement originates from a bilateral deal concluded in July 2025, where India pledged to extend credit facilities through its Export-Import Bank to bolster developmental infrastructure in the Maldives.
The activation of the credit line reinforces financial cooperation between New Delhi and Malé. The agreement serves a dual economic purpose by providing the Maldives with long-term, structured development capital while ensuring substantial export demand for Indian manufacturers and service providers through its 75 percent procurement mandate.
The diplomatic development follows the administration fully settling the final tranche of a 150 million US dollar Treasury bill facility this month, that was borrowed from the State Bank of India (SBI) for budget support under the previous administration.
