Buyer Credit, Supplier Credit in Delhi Mumbai Kolkata Chennai India

Buyer’s Credit

Buyer’s Credit refers to loans for payment of imports into India arranged on behalf of the importer through an overseas bank. The offshore branch credits the nostro of the bank in India and the Indian bank uses the funds and makes the payment to the exporter’ bank as an import bill payment on due date.

Benefits of Buyer’s Credit:

The benefits of buyer’s credit for the importer are as follows:

·         The supplier is paid on due date; whereas importer gets extended date for making an import payment.

·         The importer can use this financing for any form of trade viz. open account, collections, or LCs.

Buyers Credit Process flow:

1.       The Indian customer will import the goods either under DC, Collections or open account.

2.       The Indian customer requests us before the due date of the bill to avail buyers credit financing.

3.       We contact overseas bank branches to provide a buyers credit offer letter in the name of the importer. Best rate is quoted to the importer.

4.       Overseas Bank to fund your existing bank nostro account for the required amount.

5.       Existing bank to make import bill payment by utilizing the amount credited.

6.       On due date existing bank to recover the principal and amount from the importer and remit the same to Overseas Bank on due date.

Regulatory Framework:

A. Amount and Maturity

• Maximum Amount Per transaction : $20 Million
• Maximum Maturity in case of import of non capital goods: upto 1 year from the date of shipment
• Maximum Maturity in case of import of capital goods : upto 3 years from the date of shipment

B. All-in-cost Ceilings - 6 Month Libor + 350 bps *

Supplier’s Credit

Supplier’s Credit relates to credit for imports into India extended by the overseas suppliers or financial institutions outside India. Usance Bills under Letter of Credit (LC) issued locally on behalf of their importers are discounted by overseas banks, paying your suppliers at sight against issuance bills under l/c’s.

Process Flow of Transaction

1.       With transaction details importer approaches us to get suppliers credit for the transaction

2.       We arrange an offer letter from overseas bank on the transaction

3.       Importer confirms on pricing to overseas bank and gets LC issued from his bank, restricted to overseas bank counters with other required clauses

4.       Suppliers Bank sends the documents to Supplier’s Credit Bank.

5.       Supplier’s Credit Bank based on acceptance, discounts the bill and makes payment to Supplier.

6.       On maturity, Importer makes the payment to his bank and Importer’s bank makes payment to Supplier’s Credit Bank

Requirement

·         Should be LC backed.

·         Arrangement has to be done before LC gets opened. Incase of LC already opened, relevant amendment needs to be done.

·         LC to be restricted to suppliers credit providing bank under 41D clause of LC

Regulatory framework – same as buyer’s credit

For further details or requirements, send Enquiry