India's Rs 4,850 Crore Credit Line to Boost Maldives Ties

India’s ₹4,850 crore Line of Credit to the Maldives becomes effective, with at least 75% of goods, works and services financed under the facility required to be sourced from Indian sellers.

India’s ₹4,850 crore government-backed Line of Credit (LoC) to the Maldives has become effective, with at least 75% of the goods, works and services financed under the facility required to be supplied by Indian sellers.

The Reserve Bank of India (RBI) issued a circular, outlining the terms of the credit facility, which is being provided through the Export-Import Bank of India (Exim Bank) to finance development projects in the Maldives. The agreement between Exim Bank and the Maldivian government was signed on July 25, 2025, and became effective on August 27, 2026.

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Under the agreement, eligible contracts financed through the LoC must source goods, works and services worth at least 75% of the contract value from India. The remaining 25% can be procured from suppliers outside India, subject to the terms of the agreement. Eligible exports must also comply with India’s Foreign Trade Policy and receive approval for financing under the Exim Bank facility.

The credit line will be implemented through individual credit agreements for specific projects. According to the RBI, each individual credit agreement must have a minimum value of ₹500 crore. These agreements will be signed after the projects proposed for financing have been identified and approved.

The facility is intended to support various developmental projects in the Maldives and forms part of the broader economic cooperation between the two countries. India and the Maldives have previously used Lines of Credit to finance infrastructure and other development projects across the island nation.

India’s High Commission in Malé said the ₹4,850 crore LoC was among the agreements exchanged during Prime Minister Narendra Modi’s state visit to the Maldives in July 2025. The visit also resulted in agreements covering areas including trade, fisheries, digital transformation, meteorology and the rollout of UPI in the Maldives.

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The RBI has also specified that the LoC cannot be used to pay agency commissions on exports. Exporters may, however, use their own funds for such payments. Shipments financed under the facility must be declared through the prescribed Export Declaration Form or Shipping Bill.

The new financing mechanism provides a framework for India-backed development projects in the Maldives while linking a substantial portion of procurement to Indian suppliers. The arrangement is also expected to facilitate exports of Indian goods and services connected with eligible projects.