Académique Documents
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ANDHERI
(2009-10)
ROLE OF FINANCIAL
INSTITUTION
IN EXPORT
• INTRODUCTION
• INSTITUTION PROFILE
o HISTORICAL PERSPECTIVE
o QUICK FACTS
o CASH INCENTIVES
o LETTER OF CREDIT
o GUARANTEES
o FORWARD COVER
• PROCEDURE FOR LOANS AND FORMALITIES
• DOCUMENTS REQUIRED
o INTEREST RATE
o DURATION OF CREDIT
• COMPETITORS
• CONCLUSION
INTRODUCTION
Exports play a pivotal role in the economic growth of the country in general
and augmenting its foreign exchange resources in particular. Exports are,
therefore, given utmost priority in foreign trade policy of the country. As a
part of exports promotion measures, the Government has taken several
steps to simplify the procedures and reduce the bureaucratic control in the
matters related to exports. Exports are major source of foreign exchange
business for banks. Officials of the Bank dealing with exports should
acquaint themselves with the regulatory framework, major guidelines and
procedures related to exports and other major developments in the area.
DCB Financial is the holding company for the Delaware County Bank and
Trust Company. The bank mainly targets customers around Lewis, Ohio. It
offers a range of traditional financial products including checking accounts,
money market accounts, and individual retirement accounts. It primarily
invests in U.S. treasury securities. The bank also offers trust and other
wealth management services, cash management, bond registrar, and paying
agent services.
INSTITUTION PROFILE
ABOUT THE ORGANISATION
Development Credit Bank (DCB) is one of the emerging Private Sector
bank in India and provides to its customers, access to over 18,000 ATMs
(in shared networks) and 80 State of the art branches and extension
counters spread over 10 states and 2 union territories. The bank has recently
launched several value added initiatives and intends to be known as one of
the countries preferred and profitable retail bank. Development Credit Bank
aims to provide a comprehensive suite of best in class products for specific
market segments in chosen locations. Development Credit Bank has
initiated a liability and select asset product led strategy through a mix of
owned and outsourced products and multi channel capability. The wheels
of change that started turning the year before have started to turn more
rapidly as time goes by. If the Oversubscribed IPO and the stunning new
33,000 square feet corporate office are any indication, Development Credit
Bank is already making its presence felt and everyone feels the difference.
DCB is just a mini financial market it offers different range of products to
its customers. Basic products like the savings account and currents accounts
and also innovative products like DCB trio and easy business schemes are
unique products which are the leading the success. The product offering is
complete with Demat account, LIC, mutual funds, and Bonds. The banks
has given its employees 100% work satisfaction by introducing
performance based incentives and rewards for the already existing human
force . It has the choice of many young aspiring banking professionals. The
bank has enough liquidity to maintain the flow of funds. Overall this a bank
for both customers and employees.
HISTORICAL PERSPECTIVE
Development Credit Bank is a 79 year old bank which has established itself
on the platform of trust, oneness and tradition. Development Credit Bank
was formed by the merger of MCB and ICB in 1981 as Development Co-Op
Bank. It was converted into a Limited Company in 1995 and is ever since
known as Development Credit Bank. The Chief Promoter of DCB is Aga
khan Fund for Economic Development (AKFED). During India’s economic
liberalization, the bank was converted into standard commercial bank. This
was the only cooperative bank which crossed over such challenge. It is one
of the emerging private sector banks which have over 30000 ATM centers
and over 80 branches in 10 states and union territories. The bank has
dedicated staff of over 1800 and may expand in future. Recently the bank
has developed value added services and aims to be one of the profitable and
the country’s most preferred bank. It initiated the best –in class products for
specific market in specific locations. Under the efficient management of
highly qualified directors, and the leadership of dynamic senior management
and dedicated staff, it substantially expanded its network by 2008. Since its
establishment 77 years ago the bank has provided various low cost products
for customer deposits and meeting the needs of small scale business people
in selected regions. The bank has also equipped the new versions of finacle
from the software gains like the Infosys and Oracle which provide high
standard service to its customers.
Vision
Mission
• Integrity
• Transparency
QUICK FACTS
Exportable Goods
Export-Import policy regulates the physical aspect export of commodities.
Thus the Exim policy may prohibit export of certain commodities, stipulate
that export of certain other commodities would be subject to license or
prescribe minimum export prices for some commodities. Export of certain
items might be subject to restrictions placed in other statutes also. Exporters
have to ensure that the goods covered under exports are freely exportable or
those under allocable quotas or those covered by specific export licenses and
the stipulated conditions are fulfilled and/or supporting licenses are
obtained.
Types of Export Facilities
Export finance is mainly a short term working capital finance extended to an
exporter for execution of an export order from the date of receipt of such
order till the date of realization of the export proceeds.
Export finance is broadly classified in two categories:
I) Pre-shipment Facilities Financial assistance and other facilities from
receipt of export order till the shipment of goods.
II) Post-shipment Facilities Financial assistance and other facilities after
shipment of goods till the receipt of the proceeds.
Pre-shipment facilities/finance can be granted by extending one of the
following facilities:
I) Packing credit in rupees.
II) Packing credit in foreign currency (PCFC).
III) Advance against incentives receivable from Government like duty
drawback.
IV) Advance against cheques / drafts representing Advance Payment.
Application of RBI, FEDAI and the Banks Guidelines
Export finance and other facilities, both pre-shipment and post-shipment, are
governed by the directives of the Reserve Bank of India, FEDAI Rules and
the Banks internal guidelines.
Time Frame for Considering Credit Requests
Export finance proposals should be expeditiously disposed of, so that, timely
and adequate credit is made available to exporters. The time frame
prescribed for disposal of the applications for credit limits for export sector
is given below:
I) Sanction of fresh/enhanced credit limits Maximum 45 days
II) Renewal of existing limits Maximum 30 days
III) Sanction of ad-hoc limits Maximum 15 days
Overall Approach to Lending
A flexible approach should be adopted to export finance and norms of
lending. At the same time, it should be ensured that exporters do not misuse
this concessive and liberal finance. The finance should be strictly purpose-
oriented and need- based.
While considering export finance facilities, a holistic view of export activity
transaction should be taken and adequate facilities as required, both at pre
and post shipment stages, should be sanctioned. Preferably, all requisite
facilities should be considered at the same time, as a package deal. The past
performance of exporters and future potential should be kept in view while
assessing the credit proposals. In the case of new exporters, their experience
in domestic market in dealing with the relative commodities and other
background factors must be taken into consideration. A close watch should
be kept on the end-use of finance and timely fulfillment of export orders.
Flexibility of Credit Norms
In the proposals for export facilities, while computing the overall working
capital gap/ maximum permissible bank finance, export receivables can be
excluded out of such computation process and export sales finance limits
can be assessed and sanctioned separately, over and above the permissible
bank finance.
Whenever exporters are unable to bring in additional contribution (margin)
in respect of additional credit facilities required for specific export
transactions, such additional contribution required from exporters can be
waived.
POST-SHIPMENT CREDIT
In exports, post-shipment finance is extended to the actual bonafide
exporter who has exported the goods or to an exporter in whose name the
export documents are transferred. In case of deemed exports, finance is
extended to the suppliers of goods who supply goods to the designated
agencies.
Types of Facilities
Post-shipment finance can be any of the following types.
I) Purchase/discount of export documents under confirmed orders/ export
contracts etc.
II) Negotiation/payment/acceptance of export documents under letters of
credit.
III) Rupee Advance against export bills sent on collection basis.
IV) Advance against exports on consignment basis.
V) Advance against undrawn balance on exports.
VI) Advance against receivables from Government of India.
VII) Advance against retention money relating to exports.
VIII) Export bills rediscounted in foreign currency.
Quantum of Finance
Post-shipment advance can be extended upto 100% of the value of goods
exported as evidenced by the relative bill of exchange (draft/invoice).
Suitable margin can also be stipulated in appropriate cases.
Period of Finance
The period of finance depends upon whether the bill (accompanied by
shipping documents) is drawn on sight D/P basis or on usance basis.
Export bills on usance basis can be drawn for a period upto 1 year from
the date of shipment. However the concessional rate will be applicable
upto 180 days. In the case of gold card holders the finance at concessional
rate can be upto 365 days from the date of export.
Rates of Interest
Interest on post-shipment export credit should be recovered up-front upto
the due date of the bill the rates stipulated by Reserve Bank of India/our
bank from time to time. In case of overdue bills, the difference should be
recovered at the appropriate rate at the time of realization.
Rates of Exchange
The rupee equivalent of a bill expressed in foreign currency should be
calculated at the Bill buying rate ruling on the day of purchase or the
contracted rate, if under a forward contract. Appropriate rates of exchange
should be obtained from the Treasury.
• Willful misconduct
• Improper packing
• Delay
• Non seaworthiness
• War
• Strikes
• Radioactive contamination
• Nuclear perils
Types of policies
• Specific Policy
• Open Policy
• Open Cover
Basis of Valuation
• Cost of Cargo.
• Freight.
• Insurance.
Benefits
• DGTD registration.
COMPETITORS
CONCLUSION