IMPORT EXPORT FINANCE

Letter of Credit

Letters of credit have been used for centuries to facilitate payment in international trade. Their use will continue to increase as the global economy evolves. A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

FEATURES AND BENEFITS
  • No Pre-Payment penalty.
  • Eligibility on projected Turnover.
  • No vintage required (Age of the firm can be less than 1 year).
  • No interest charged.
  • Only opening charges applicable.
  • Can also be in Foreign Currency.

Letter of Credit (LC Discounting)

Discounting of Letter of Credit (LC) is a short-term credit facility provided by the bank. LC discounting is actually a term used for ease in place of ‘LC Bill Discounting’, which means discounting of a bill backed by LC. In this arrangement, the sale of goods is made by the client on the strength of usage of the term ‘Export Letter of Credit (LC).’ Sellers may request that a buyer obtain a letter of credit from a financial institution prior to shipping goods. This is done to protect the seller against non Payment and the merchandise.

FEATURES AND BENEFITS
  • No Pre-Payment penalty.
  • Eligibility on projected Turnover.
  • No vintage required (Age of the firm can be less than 1 year).
  • No interest charged.
  • Only opening charges applicable.
  • Can also be in Foreign Currency.
  • No Collateral Security required.

Buyers Credit

Buyer credit is a short term credit available to an importer (buyer) from overseas lenders such as banks and other financial institution for goods they are importing. The overseas banks usually lend the importer (buyer) based on the letter of comfort (a bank guarantee) issued by the importer′s bank. For this service the importer’s bank or buyer’s credit consultant charges a fee called an arrangement fee.

Buyer′s credit helps local importers gain access to cheaper foreign funds that may be closer to LIBOR rates as against local sources of funding which are more costly.

The duration of buyer′s credit may vary from country to country, as per the local regulations. For example, in India, buyer′s credit can be availed for one year in case the import is for tradeable goods and for three years if the import is for capital goods.

FEATURES AND BENEFITS
  • No Pre-Payment penalty.
  • Eligibility on projected Turnover.
  • No vintage required (Age of the firm can be less than 1 year).
  • Can also be in Foreign Currency.

Export Packing Credit

Packing Credit is nothing but a pre-shipment finance given to exporters with a low interest rate to boost exports. A packing credit loan will often be extended if a letter of credit has been issued by purchaser of the products that is based in another country or a confirmed order for exporting the goods exists.

Packing Credit is a pre-shipment finance given by bank to procure raw materials and arranging goods ready for export.

FEATURES AND BENEFITS
  • No Pre-Payment penalty.
  • Eligibility on projected Turnover.
  • Only opening charges applicable.
  • Can also be in Foreign Currency.