Académique Documents
Professionnel Documents
Culture Documents
No of branches
Deposits
Advances
Gross Profit
Net Profit
NPA
International Business
1.
Export Finance
2.
Letter of Credit
3.
Bank Guarantee
4.
Buyers Credit
Bank Ltd.
TJSB Sahakari bank
no B5, Road no 2,
Wagle Estate,
Thane(west) - 400604
115
8122.05 Cr
4756.80 Cr
142.23 Cr
100.34
4.73%
1750 Cr
-
400059
1
47.25 Cr
114.09Cr
2.20 Cr
11.96 Cr
6.68Cr +
$ 2,35,000
4.279 Cr
$ 2,14,500
$ 3,57,411
INTERNATIONAL TRANSACTIONS
Export Finance
Pre Shipment
Post Shipment
Letter of Credit
Bank Guarantee
Buyers Credit
IMPORT SERVICE
NON FUND BASED BUSINESS:
Banks extend two types of credit facilities to the borrowers. They are namely
fund based facilities and non-fund based facilities. In fund based facilities the bank
actually parts with the funds i.e. actual funds are made available to the borrower
subject to terms and conditions of the borrowing arrangement. But in non-fund based
facility or limit funds are not actually lend or made available immediately.
LETTER OF CREDIT
An importer of credit (L/C) is an unconditional undertaking, given by a bank
(issuing bank) at the request of a customer (applicant) to pay a seller (beneficiary)
against stipulated documents provided all the terms and conditions of the credit are
compiled with in a letter of credit arrangement, the issuing bank can:
Authorize another bank to effect such payment or to accept and pay such Bills
of exchange.
behalf of the buyer (the importer), to the seller (exporter) to pay for goods and
services provided that the seller presents documents which comply with the terms and
conditions of the documentary credit.
Applicant :
Beneficiary:
Issuing bank:
Advising bank:
his
bank/directly
after
confirming
the
5. Negotiating bank:
6. Confirming bank:
7. Reimbursing bank:
8. Second beneficiary:
authenticity of LC document.
The bank which negotiate the documents presented by
the beneficiary/seller as per LC terms and conditions.
The bank which adds its confirmation to the LC.
The bank which reimburses the amount of bills/LC to
the negotiating bank.
The additional beneficiary in case of transferable LCs
BENEFITS
Letter of credit substitutes the credit of the issuing bank for that of the buyer.
The importer is assured that goods are shipped before payment under the letter
of credit.
Security that a payment is not made until the documents conform to the terms
and conditions of the credit.
Importer maintains control over the transactions through the letter of credit
mechanism with the seller.
: 3 Months
: 2 Months requirement
Lead time
: 1 Month
*****
Exchange Rate
$=
*****
2.
3.
4.
5.
LC Equivalent
Swift charges
*****
*****
Servicer tax
*****
*****
*****
SBLC/FBG
7. Insurance
8. Amendment
9. SWFT charges
REVOCABLE CREDIT:
A Revocable Credit is one which can be cancelled (revoked) or amended by
the issuing bank at any time without prior notice to the beneficiary. The cancellation
or amendment, however takes effect against the negotiating bank which negotiated
bills under the credit only on receipt of notice of such cancellation / amendments. The
issuing bank is liable to the negotiating bank for payment of bills negotiated in
conformity of the credit terms before the notice of revocation/amendment was
received by the negotiating bank. There is not much of a benefit to the exporter/seller
under such credit, since there is no definite undertaking by the issuing bank.
IRREVOCABLE CREDITS:
An Irrevocable Credit constitutes a definite undertaking of the issuing bank to
accept and / or to pay bills drawn on it or on another bank and make payment (without
a bill) provided the terms and conditions of the credit are complied with. An
irrevocable credit cannot be cancelled or amended without the agreement of all the
parties concerned.
TRANSFERABLE CREDIT:
A transferable credit is one under which the exporter has a right to make the
credit available to third parties. The exporter may be only an intermediary who
procures the goods from the suppliers and arranges them to be sent to the importer.
For example, M/s. Amir Handloom Exporter India Ltd may enter into an agreement
with foreign importer for various types/varieties of handloom goods to be supplied.
They will get transferable credit for total order opened in their favour and will procure
goods from manufacturers. To enable such manufactures to get banking facilities, for
the export, M/s. Amir Handloom Exporters India Ltd., may get the credit transferred
to the manufacturers.
BANK GUARANTEES
A contract of guarantee is defined as a contract to perform the promise or discharge
the liability of a third person (principal creditor) in case of his default. The parties to
the contract of guarantee are:
a. APPLICANT: The principal debtor person at whose request the guarantee is
executed.
b. BENEFICIARY: Person to whom the guarantee is given and who can enforce
it in case of default.
c. GUARANTOR: The person who undertakes to discharge the obligations of the
applicant in case of his default.
TJSB Bank issues guarantees favouring a beneficiary within India and through
branches/correspondents favouring a beneficiary outside India for various
purposes as mentioned below:
Performance guarantees
Bid-bonds
PURPOSE OF BANK GUARANTEES:Guarantees are generally issued for the following purposes:a. In lieu of security deposit / earnest money deposits for participating in tenders
b. Mobilisation advance or advance money before commencement of the project
by the contractor and for money to be received in various stages like plant
layout, design / drawings in project finance;
c. In respect of raw material supplies or for advances by the buyers;
d. In respect of due performance of specific contracts by the borrowers and for
obtaining full payment of the bills;
BANK REQUIREMENTS
The text of the guarantee should clearly specify the amount, validity (both
expiry and claim dates), purposes of issue and the specific event which could
lead to invocation of the guarantee. The guarantee should also bear the banks
standard limitation clause.
REGULATORY REQUIREMENTS
Certain type of guarantee cannot be issued, such as:
Guarantee for unlimited period and amount except for certain exceptions.
The liability of the bank under a guarantee is primary and the bank is expected
to pay for with upon demand by the beneficiary, without reference to the
customer. Banks have been specifically directed by the Reserve Bank of India
to honour claim immediately on receipt of original guarantee along with claim,
without any delay.
The original guarantees bonds should be returned to the Bank, duly discharged
by the beneficiary after the expiry or after termination/fulfilment of the
underlying contract.
BENEFITS
RS 1000/2% PA
III.
IV.
EXPORT SERVICES
Export Finance is a working capital facility provided to the exporter at concessional
rates of interest, determined by the Reserve Bank of India. This finance which is
strictly purpose oriented and need based is available both at pre-shipment and postshipment stages for the following categories of manufactures/exporters,
Manufacturing Exporters
Merchant Exporters
Deemed exports
PRE-SHIPMENT FINANCE
Exports play an import role in building the economy of country. The need for
increase in exports need not be emphasised. The exports of our country should
increase in quantitative as well as in monetary terms i.e. both in volume and value.
Simultaneously our aim should be to maintain imports at a healthy level.
Government has put in place various measures with the purpose of making
countrys exports competitive. They are with regard to incentives and subsidies. These
make export product competitive by compensating for additional costs incurred due to
countrys infrastructural deficiencies and lack of access to better technology and work
practices unlike overseas competitors.
DEFINITION
A Pre-shipment or Packing Credit Advance is any loan or Advance, granted to
an exporter for financing the purchase / Procurement processing, manufacturing and
packing of the goods meant for export or working capital expenses towards rendering
of services abroad
THE
NEED
FOR
INCREASE
IN
EXPORTS
AND
ITS
ADVANTAGES:
1. As a long term strategy to build a strong foundation for Foreign Exchange savings
through exports. Geographically smaller countries than us such as Japan, Taiwan
etc. have built significant Foreign Exchange reserves only through high level of
Export growth. The major of their reserves is earned and not borrowed.
2. Exports provide additional job opportunities to our qualified and skilled work
force.
3. Promotion of Export requires / results in upgradation of technology to remain
competitive in the international market. This development also helps domestic
markets, industries.
4. Exports need efficient production technology. This has a positive effect in
development of technology in domestic ancillary industries also which indirectly
supports export production.
5. Exports enable the country to improve the Balance of Payment and Balance of
Trade position.
Pre-shipment finance is provided to the exporter in Rupees under the Rupee Export
Credit Scheme of the Reserve Bank of India. The charges in the Government policy
are published by means of Public Notices issued by the Director General of Foreign
Trade.
The goods may be classified under any of the following categories:
i. Free Items which can be exported without any restriction ;
ii. Restricted Items which can be exported only under a licence or permission;
iii. State Trading Items, export of which can be done only through the specified
State Trading Enterprise;
iv. Prohibited Items which cannot be exported at all.
After Liberalisation policy and opening of economy since 1991, most of the items
fall under the category of free goods.
BENEFITS
Regulated interest rates, which are lower than cash credit interest rates.
Exporter can avail of forward premium on the post shipment leg of the
transaction.
Can be availed even when export orders are yet be received i.e. anticipated
orders.
DEFINITION
A Pre-shipment or Packing Credit Advance is any loan or
Advance, granted to an exporter for financing the purchase / Procurement processing,
manufacturing and packing of the goods meant for export or working capital expenses
towards rendering of services abroad (invisible exports ).
REGULATORY GUIDELINES
The pre-shipment advance granted to exporters should not exceed the FOB value
of goods or the domestic market value of goods whichever is lower. Thus the loan
amount is to be disbursed net of insurance, freight and profit margins.
In case of delay in shipment, the exporter should immediately inform the bank the
reasons for delay and apply for extension of the loan prior to the due date,
together with LC extension/order extension from the overseas buyer. Substitution
of frustrated or cancelled export order with a new export order is allowed only
for physical exports.
The loan taken against an export order which is subsequently cancelled can be
adjusted with the proceeds of an export bill of any commodity provided no
advance has been availed against this new order. This facility of substitution of
orders is not available for Deemed Exports.
The
pre-shipment
loan
availed
should
be
liquidated
by
Pre-shipment credit can also be repaid from the balances in the EEFC Indian
Rupees accounts to the extent that the exports have taken place.
In case multiple packing credits are availed under the same order, the due date of
any of the subsequent loans cannot exceed 360 days from the date of disbursal of
the first loan under that particular order.
INDIRECT EXPORTS:Indirect Exporters are those who may or may not be exporters in their own
right. It is not necessary that they should hold Importer Exporter Code. The following
conditions need to be fulfilled for financing indirect exports:1. LC in favour of indirect exporter.
2. A letter of Undertaking from the EOH and his banker that EPC would not be
availed at their end for the same order / purpose during the course of the EPC
being outstanding against the indirect exporter.
3. Where the shipment are made to the EOH and not directly exported from the
indirect exporters end (i.e. when such bills are not accompanied by Bill of
Lading etc.) then a certificate from the EOH has to be obtained that exports
have actually taken place. Such certificates should be submitted on quarterly
basis if it is an ongoing arrangement.
A stand by line of credit (SLC) for meeting genuine contingency needs of the
exporters may be sanctioned along with regular credited limit.
SLC should be a separate limit and not a sub-limit within regular limits.
If the exporter is enjoying separate peak and non peak limit, SLC should be
REGULATORY GUIDELINES
Available only for exports upto 180 days tenor and on cash basis Cost of funding
is tagged with 6 months LIBOR/EUROLIBOR/EURIBOR.
PCFC can be availed for a maximum period of 180 days for amounts not
exceeding the FOB value of goods.
Forward contracts may be booked upto the date of draw down of PCFC.
Cross currency liquidation of PCFC is also permitted and forward contracts may
also be booked for the same, but only upto the date of presentation of documents.
This facility is also available for deemed exports i.e. for supplies to projects
financed by multilateral/bilateral agencies/funds a maximum period of 30 days or
upto the date of payment by the project authorities whichever is earlier.
Other regulatory and procedural aspects are similar to those of Rupee Preshipment finance.
BANK REQUIREMENTS
RATE TYPE
RP Ready Purchase TT Buying
BB Ready Purchase Bill Buying
RS Ready Sale TT Buying
BS Ready Sale Bill Buying
FP Forward Purchase
FS Forward Sale
NP Notional purchase
NS Notional Sale
POST-SHIPMENT FINANCE
Post-shipment finance is a loan or advance granted or any other credit
provided by an institution at an exporter of goods from India from the date of
extending the credit after shipment of the good to the date of realisation of export
proceeds and includes any loan or advance granted to an exporter in consideration of
or on the security of any duty drawback or any receivables from the Government of
India. Post Shipment stage is that period, when the goods have been shipped out.
After the goods have been handed over to the shipping company, the exporter will get
documents of title to the goods exported viz. Bill of Lading, Airway Bill, Post Parcel
Receipt etc. depending on the mode of transport. Post Shipment phase refers to the
period when goods have been shipped out and the credit to Banks Nostro Account
with foreign bank is awaited. This waiting period would depend on the tenor of the
bill. The FEMA regulations stipulate that the exporter should tender the export
documents to the bank within a maximum period of 21 days from shipment of goods
from India.
TJSB bank offers Bank offers following facilities for post-shipment export finance.
Rupee post-shipment advance granted against export bills sent on collectionExport documents are handled by the bank purely on a collection basis and a postshipment loan based on notional exchange rate is granted.
Exporters can credit a portion of their export proceeds into Exchange Earners
Foreign Currency Account. In such cases the initial post-shipment finance will be
provided net of the EEFC amount. The EEFC account is to be credited only on receipt
of the export proceeds.
SCRUTINY OF BILLS DRAWN UNDER LETTERS OF CREDIT:Bills under a Letter of Credit may be received for negotiation from a customer
of the Bank. The non-customers may also submit the export bills under LC to our
Bank when either the credit is restricted to our bank or our Bank is named as the
paying banker under the LC. The bank has to adhere to the PRINCIPLE OF STRICT
COMPLIANCE while negotiating the documents under LC.
Whenever, approached by any type of customer for negotiation of documents under a
LC, the bank should verify the following:a. The credit is valid for negotiation for a further reasonable period and has not
expired.
b. It does not attach any onerous clauses on the negotiating bank i.e. the clauses
which cannot be complied with.
c. The payment from reimbursement bank is unconditional.
The common discrepancies observed are listed below. However it should be noted
that, this list is only illustrative and not exhaustive. It should not be taken as the final
list. There may be some more / different discrepancies, which should be carefully
noted.
BILL OF EXCHANGE:
The bill is drawn on the importer instead of on the issuing bank, as required in the
credit.
Reference to the Letter of Credit is missing.
Tenor of the bill (usuance period) is different than that required under the credit.
BILL OF LADING: The full set of negotiable copies and required number of nonnegotiable copies
are not submitted. The bill of lading would mention total number of negotiable
copies issued. All negotiable copies are to be submitted.
Bill of lading is claused.
Bill of lading is not manually signed by the master or an authorised agent of
the shipping company
The number of packages / weight differs from that in invoice.
Bill of lading is issued by forwarding agent.
It is not endorsed in blank or in the name of the bank as required.
BENEFITS
Exporters are provided with upfront payment for the goods exported.
Exporter can avail of forward premium on the post shipment leg of the
transaction.
In the case of rupee post-shipment loan availed against collection bills, the
exporter retains the right to take advantage of any foreign currency
appreciation vis-a-vis the rupee.
BANK REQUIREMENTS
REGULATORY GUIDELINES
Exporter should submit export documents within 21 days from the date of
shipment.
Advance can be provided uptp100% of the invoice value at interest rate as per
RBI policy.
If a negotiated/purchased bill is not paid upto the 30* day from the due date,
the bill is crystallized into Indian rupees by applicable TT selling rate on that
day. The exchange risk is to be borne by the exporter.
All negotiations are subject to the Uniform Customs and Practices for
Documentary Credits (UCPDC 600) 2007 and all purchase and discounting is
subject to Uniform rules for collection (URC 522).
EXEMPTIONS:
Regulation of Foreign Exchange Management Regulations, 2000, grants exemption in
the following cases for export declaration forms:
a)Trade sample of goods and publicity material supplied free of payment.
b)
Personal effect of travellers, whether accompanied or unaccompanied.
c)Ships stores, transhipment cargo and goods supplied under orders of Central
Government for deference requirements.
d)
Goods or software accompanied by a declaration by the exporters that
they are not more than USD 25000 in value
e)Gift of goods not more than Rs.5 Lakh in value.
f)Aircrafts or its parts for overhauling or repairs abroad.
g)
Goods imported free of cost on re-export basis.
h)
Goods not exceeding USD 1000 per transaction to Myanmar under
barter trade agreement.
i) Re-export of following from Export Processing Zones / Special Economic
Zones (EPZ / SEZ)
j) Replacement goods exported free of charge in accordance with the provision
of EXIM policy in force from time to time.
k)
Goods sent outside India for testing subject to re-import into India.
l) Defective goods sent outside India for repair and re-import, certified by the
authorised dealer that the export does not involve foreign exchange.
m)
Exports without declaration form permitted by RBI.
BENEFITS
REGULATORY GUIDELINES
PSCFC can be availed of in all currencies viz USD, GBP, JPY and EURO.
PSCFC can be availed upto 100% of the invoice value upto a maximum of 180 days
from date of shipment.
BUYERS CREDIT
Buyers credit is a short term foreign currency loan arranged by the buyer
through his bankers for the purposes of financing imports at internationally
competitive rate, with the risk of payment being on the buyer or on his bankers. It is a
method of financing the buyers when the supplier is not willing to extend credit or is
willing to extend credit a comparatively higher rate of interest. Authorised Dealers are
permitted by reserve bank of India to approve proposals received for buyers credit
subject certain conditions. TJSB Bank has correspondent relationships with overseas
banks in some of the worlds largest financial markets through branches of
correspondent banks and is able to arrange offshore finance to importers at very
competitive rate
Buyers Credit refers to loans for payment of imports into India arranged on
behalf of the importer through an overseas bank. The overseas branch credits the
nostro account of the Indian bank, which uses the funds to make the payment to the
exporter bank on respective due date. The importer reflects the buyers credit as a loan
on the balance sheet.
SCOPE
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
PURPOSE
a. To formulate, implement, monitor and to review strategies related to Buyers
Credit.
b. To put in place best Risk Management practices through timely and proper
Identification, measurement, monitoring and mitigation of Foreign Exchange risk.
c. To adhere to the regulatory framework and norms laid by Regulator.
BANKS REQUIREMENTs
FOR OBTAINING A QUOTE
To obtain a quote/offer from the offshore point, the importer needs to provide
details of value of the contract, number of shipments, port of the shipment,
supplier country, average value of each shipment, expected date of shipments,
period of suppliers credit if applicable,
FOR GRANTING THE APPROVAL
ECB application duly filled in by the importer.
Copy of the contract between supplier & buyer or a copy of the LC/confirmed
purchase order.
Copy of the invoice, transport document and bill of entry wherever applicable
POST APPROVAL
Letter requesting the bank to raise a loan.
Undertaking to pay principal plus interest on due date.
Undertaking to submit evidence of payment of withholding tax a applicable
REGULATORY GUIDELINES
Buyers credit can be availed only for to import of raw materials or capital
goods
Authorized dealers may approve proposal in form ECCB for buyers credit
provided : The credit is being extended for a period less than three years
The amount of the credit does not exceed USD 20 million per transaction.
The all in cost per annum payable for the credit does not exceed LIBOR
plus 350 basis points for credits beyond three years but less than five years.
For amounts in excess of USD 20 million an application in for ECB to be
forwarded to RBI for approval through authorised dealer.
The approval is valid only for three months from the date of its issue and he
draw under the facility must take place within this period
ALL-IN-COST
The existing all-in-cost ceilings are as under:
Maturity period
Up to one year
More than one year and upto three years
More than three years and upto five years
PREREQUISITES
a) Applicant should have a sanctioned limit for Buyers Credit under LC / Buyers
Credit Collection Bills with specific fund based limits in the form of Cash
Credit or Term Loan.
b) Applicant must have executed documents for Buyers Credit Limit.
c) Applicant must have a definite cash generation to honour the obligations under
the Buyers Credit for payment at scheduled maturity date for payment of
Buyers Credit.
d) Applicant must have a hedging option to cover Buyers Credit by way of normal
receipts in Foreign Currency (FC) by way of Export realization or balances held
in EEFC account or the exposure may be hedged by way of undertaking
Forward Contract or any sum equivalent to exchange rate fluctuation (normally
the premium between spot rate and future rate) to cover the additional cost in
INR determined at the time of taking up Buyers Credit transaction.
e) Applicant must fulfil the obligations pertaining to import at the time of entering
Buyers Credit transaction like submission of FEMA declaration, A1 form, OGL
declaration or Import License copy and undertaking for submission of Bill of
Entry within stipulated time as per FEMA.
f) Also at the time of Buyers credit transaction the applicant must submit form A2
(for payment of Buyers credit plus interest), Form 15 CA and 15 CB towards
TDS deduction and payment to Income Tax Dpt., Govt. of India.
AMOUNT
AD banks are permitted to approve trade credits for imports into India up to
USD 20 million per import transaction for imports permissible under the current
Foreign Trade Policy of the DGFT with a maturity period up to one year (from the
date of shipment). For import of capital goods as classified by DGFT, AD banks may
approve trade credits up to USD 20 million per import transaction with a maturity
period of more than one year and less than three years (from the date of shipment). No
roll-over/extension will be permitted beyond the permissible period.
DOCUMENTATI1N
The applicant must have executed documents for Buyers Credit Limit as per list of
documents namely
2% PA
0.07% PM
RS 1000/-
6. The tenor of loan should not exceed 1 year for non capital goods from the date of
shipment whereas the tenor for capital goods should be less than 3 years from the
date of shipment and 90 days for import of gold from the date of shipment. Thus
to check the earliest shipment date in case of multiple shipment dates and date of
shipment in case of single shipment to calculate the tenor of buyers credit. If the
tenor of buyers credit is 3 years or exceeds 3 years it shall be an ECB and the
relevant guidelines of ECB need to be adhered.
7. The all in cost should not exceed 6 months LIBOR + 350 bps for Trade credit up
to 3 years or as per extant RBI guidelines and is subject to change as per the
change in the guidelines. The all in cost includes arranger fee, upfront fee and
management fee, handling /processing charges, out-of pocket expense and legal
expenses. This limit is all what can be charged in foreign currency and no
handling charges, upfront fees or processing fees are allowed over and above this
limit to be remitted to the overseas lender. The above-mentioned all in cost
ceiling is subject to RBI guidelines issued from time to time.
Incoming note
2. Process note
3. Outgoing note
4. Request Application From client
a) Documentary remittance
b) Commercial Invoice
c) Transport bill of ladding
d) Cargo transport insurance Policy
e) Certificate of Origin
f) Packing list