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TRADE
GROUP MEMBERS
Andrea Mathias
Kishore Patil
Nehal Ukani
Reiner D’Costa
Shruti Hosur
Shruti Shetty
Sushil Kaushik
PRESENTATION FLOW
DEFINITION
International trade
Duty Drawback
Tax Concession
Pre-shipment finance
Post-shipment finance
METHODS FOR INTERNATIONAL TRADE
FINANCE
Instruments/methods of financing
Letter of credit
Open account
Factoring
Forfaiting
Document collections
Pre-Shipment Finance
PRE-SHIPMENT FINANCE
Definition:
• Packing Credit
– Packing Credit in Indian Rupee
– Packing Credit in Foreign Currency (PCFC)
• Overdue Packing
INTEREST SUBVENTION SCHEME
• Government steps in by picking up a part of the interest
burden
• Purpose of Finance
• Basic of Finance
• Types of Finance
• Quantum of Finance
• Period of Finance
TYPES OF POST SHIPMENT
FINANCE
• Advance Against
– Export Bills Sent On Collection Basis
– Export On Consignments Basis
– Un-drawn Balance
– Claims Of Duty Drawback
BENEFITS TO EXPORTERS
• Physical Exports
• Deemed Export
• Definition:
A formal document issued by a bank on behalf of
customer, stating the conditions under which the
bank will honour the commitment of the customer
• Importer or Applicant
• Issuing Bank
• Beneficiary
• Advising Bank
2. Documentary
4. Advice of credit Application
Documentay
credit
• Immediate Payment
• Guaranteed Payment
• Performance
– Export Factoring
– Forfaiting
OPEN ACCOUNT – PROS & CONS
Pros & Cons
• Pros:
Boost competitiveness in the global market.
TARGET VENDOR
BANK
OPEN Open
ACCOUNT – PROCESS
Account - Process
BANK
OPEN Open
ACCOUNT – PROCESS
Account - Process
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BANK
DOCUMENTARY COLLECTIONS
• Process Overview
Sends
Documents +
Remitting Instructions for Collecting
Bank Payment Bank
Payment
Draft indicating
Entrusts Payment D/A or D/P
Payment
collection of
payment
Importer Exporter
DOCUMENTARY COLLECTIONS
Documentary Collections
Advantages:
• Documentary collections involve use of drafts which is
less expensive than letter of credit.
Disadvantages:
• Although banks act as facilitators, no verification
process is present.
• Definition –
“Financial transaction whereby a business sells
its accounts receivable to a third party called a
factor (financial institution) at a discount in
exchange for immediate money with which to
finance continued business.”
Customer Client
(2) Invoice
Recourse
Non–Recourse
TYPES OF FACTORING
FACTORING
• Definition –
Forfaiting is a method of trade finance that allows
exporters to obtain cash by selling their medium term
foreign account receivables at a discount on a
“without recourse” basis
• Eliminates Risk