Over the years Indian importers have used Suppliers Credit and Buyers Credit as two different modes of Import financing. RBI had defined them as Trade Credit under Master Direction for ECB and Trade Credit.
Suppliers Credit structure was understood as financing of import usance Letter of Credit (LC) by Overseas branches / Foreign banks where as Buyers Credit was considered as financing against LOU/LOC till it was stopped by RBI.
Continue reading What can be termed as Suppliers Credit?
RBI has issued a new regulatory framework for Trade Credit (TC) on March 13, 2019 effective immediately. Details of the circular is given below. In next articles we will cover the major changes in the RBI circular.
Continue reading RBI Circular : Trade Credit – New Regulatory Framework
In the earlier articles we have discussed about documents required under letter of credit (LC) and how to prepare and submit compliant document.
In this article we will discuss about, what is Negotiable Bill of Lading, Why endorsement is required, who should endorse and what are the endorsements required.
Continue reading How to Endorse a Negotiable Bill of Lading ?
In the earlier articles, we have discussed about LC format MT700, and how to prepare and check documents under LC. This article provides a checklist for exporter after Letter of Credit (LC) is opened before shipment of goods. This will help exporter better understand the details in LC and whether exporter will be able to comply with its terms. If not, exporter should ask to get amendment in relevant clause.
Continue reading How to Check if Letter of Credit is Workable
New Article: RBI Circular: Trade Credit : New Regulatory Framework
RBI revised Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 on December 17, 2018 (link in reference). Revision is made to ECB guidelines, Trade Credit, borrowing by banks outside India and others.
This articles covers changes made to Trade Credit guidelines.
Continue reading Revised Guidelines for Trade Credit
Post RBI disallowed LOU and LOC for buyers credit transactions, importers and banks are trying different structures which can assist in Import finance. Some of these structures are
- Suppliers Credit
- Buyers Credit Against SBLC (Standby Letter of Credit)
- Reimbursement Finance (Usance LC Reimbursement at Sight)
Continue reading Reimbursement Finance (Usance LC Reimbursement at Sight)
Purpose of Letter of credit (“LC”) is to give payment security to the beneficiary subject to documents presented under the LC complying with the requirements of the LC.
To check if documents are compliant, banks examine the required documents based on:
- The terms and conditions of the documentary credit.
- The applicable rules of UCP 600.
- The applicable content of ISBP 745.
Continue reading How to Prepare and Check Letter of Credit Documents
Documents under Documentary Credit (letter of credit) are broadly classified into four categories namely
Continue reading Documents Under Letter of Credit
New Article: What can be termed as Suppliers Credit?
Supplier’s Credit is a structure of financing Import into India. In this structure, overseas suppliers or financial institutions outside India provide financing to importer on Libor linked rates against Usance letter of credit (LC). Supplier’s credit internationally is also known as Usance Payable at Sight (UPAS) structure.
Continue reading Letter of Credit Clauses Related to Suppliers Credit
Earlier article “Types of Swift Message used in Letter of Credit and Suppliers Credit” discussed details related to Category 7 message. This article further explore MT700 used for Letter of Credit Issuance. This will help importers understand various fields in MT700, related UCP 600 reference etc.
Continue reading Letter of Credit – MT 700 Format
SWIFT system is used for Bank to Bank communication and Bank to Corporate communication. There are different type of Swift messages format related to specific purpose. This article focuses on Category 7 message.
Continue reading Types of SWIFT Message used in Letter of Credit and Suppliers Credit
New Article: What can be termed as Suppliers Credit?
Supplier’s Credit is a structure of financing Import into India. In this structure, overseas suppliers or financial institutions outside India provide financing to importer on Libor linked rates against Usance letter of credit (LC). Importer and Overseas Bank will have to follow below process
Continue reading Suppliers Credit Process Flow
Importers banking with Co operative Bank’s both AD Category and Non AD Category, face issues with arranging buyers credit because
- In case of AD Category Co operative Bank: Limited Lines in International Market or No Lines
- Non AD Category Co operative Bank: They cannot deal directly in Import or Export transaction but have to route the transaction through tie up bank.
Continue reading Buyers Credit for Co Operative Bank Customers
In earlier articles on Buyers Credit on Import of Gold and Import of Platinum, Palladium, Rhodium, Silver, as stated, Reserve Bank of India (RBI) had permitted banks to approve Suppliers and Buyers Credit (Trade Credit) including the usance period of Letters of Credit for import of rough, cut and polished diamonds, for a period not exceeding 90 days, from the date of shipment.
Continue reading Buyers Credit on Jewellery
1. LC is one of the payment mode used in the International Trade between importer and exporter to cover third-party credit risk. Meaning if the importer defaults, his bank will have to pay on his behalf. Whereas, Buyers credit is a funding mechanism used by importer to funds his transaction. Continue reading Difference between Buyers Credit and Letter of Credit (LC)