Trade Services Presentation
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Transcript of Trade Services Presentation
8/8/2019 Trade Services Presentation
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Trade Finance is the science that describes themanagement of money, banking, credit,
investments and assets for international trade
transactions.
Trade Finance Services by Banks are the
services offered to traders when bank
executes payment on behalf of its client to
the sellers bank, to pay seller forGoods/Services received or to be received.
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International trade
Flow of Productive
Factors eg. ServicesFlow Of Commodity
International Trade
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...... For providing financial assistance to exporters and importers, and
for functioning as the principal financial institution for coordinating the
working of institutions engaged in financing export and import of goods
and services with a view to promoting the countrys international
trade
shall act on business principles with due regard to public
interest
EXPORT-IMPORT BANK OF INDIA
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Project & Services Exports
Exports of projects and services, broadly categorised into Civil engineering construction
projects, Turnkey projects, Consultancy services.
Over the past two decades, increasing number of contracts have been secured by Indian
companies in West Asia, North Africa, Sub Saharan Africa, South & South East Asia, CIS
and Latin America.
Such projects have supplemented the efforts of the host country governments in
achieving their developmental objectives.
Promoting Project Exports
Projects Currently Under Execution with Exim Bank Support
No. of Contracts : 211 Value of Contracts : US$ 12.8 bn
No. of Countries : 38 No of Indian companies : 43
EXIM BANK
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IMPORTS
Oversees exporter may require a client to pay
some of full amount in advance for goods to
be exported.
This might be in Foreign Currency
Exporter would dispatch goods only after he
receives payment.
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Services by Banks
Advance Remittance
Full Payment in advance
Dispatch of goods only after payment
Proof indicating cost of goods & insistence of paymentby Oversees Seller
If cost is more than USD 100,000 then guarantee frominternational bank or unconditional LOC is required
Delivery within 6 months, if extended must furnishdocumentary support with extended bank guarantee.
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Direct Remittance
Dispatch of goods done first and then remit
payment for goods Once documents regarding shipping of goods
submitted to bank, payment is made.
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Import Collection
Goods exporter sends shipment documents to
bank. Bank intimates client about this & takesauthorization for payment.
Sight Bill :- Documents against Payment
See documents, give permission
for payment, take documents
Usance Bill :- Documents against Payment
Acceptance letter from client is
taken & documents are released.Payment is made on due date.
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EXPORTS
Pre-shipment finance
Post-shipment finance
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Definition:
Financial assistance extended to the exporter fromthe date of receipt of the export order till the date of shipment is known as pre-shipment credit .
Such finance is extended to an exporter for the purpose of procuring raw materials, processing, packing, transporting,warehousing of goods meant for exports.
Maximum period of 180 days
Exporter can obtain 90% of the FOB value of the order or 75% of the CIF value of theorder.
PRE-SHIPMENT FINANCE
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o Purchase raw material, and other inputs
o Assemble the goods in the case of merchant exporters.
o Store the goods in suitable warehousestill the goods are shipped.
o Packing, marking and labeling of goods.
o Pre-shipment inspection charges.
o Purchase of heavy machinery and other capital goods
o Consultancy services.
o Export documentation expenses.
IMPORTANCE OF PRE-SHIPMENT
FINANCE
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Packing Credit ± Packing Credit in Indian R u pee
± Packing Credit in Foreign Currency (PCFC)
Advance Against Hypothecation
Advance Against Pledge
Advance Against Red L/C
Advance Against Back-To-Back L/C
Advance Against Exports Through ExportHouses
Advance Against Duty Draw Back (DBK)
FORMS OR METHODS OF
PRE-SHIPMENT FINANCE
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This facility is provided to an exporter who satisfies thefollowing criteria:
A ten digit Importer - Exporter Code ( IE Code )number allotted by DGFT.
Exporter should not be in the caution list of RBI.
If the goods to be exported are not under OGL (OpenGeneral License), the exporter should have the requiredlicense /quota permit to export the goods.
REQUIREMENTS FOR GETTING
PACKING CREDIT
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Definition:
Post Shipment Finance is a kind of loan provided by a
financial institution to an exporter or seller against a shipment that has already been made.
Export finance is granted from the date of extending
the credit after shipment of the goods to therealization date of the exporter proceeds. Exportersdon¶t wait for the importer to deposit the f unds.
POST SHIPMENT FINANCE
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Export Bills Purchased / Discounted
Export Bills Negotiated
Advance Against
± Export Bills Sent On Collection Basis
± Export On Consignments Basis
± Un-drawn Balance
± Claims Of Duty Drawback
TYPES OF POST SHIPMENT
FINANCE
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Competitiveness ± Exporter able to offer creditterms to buyer
Energized Cash flows ± Producer receives cashfrom export proceeds u pfront and can continue
production activities.
Expansion Of Client Base ± Exporter able toexpand client base due to availability of financing
BENEFITS TO EXPORTERS
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Definition:
A formal document issued by a bank on behalf of customer, stating the conditions under which thebank will honour the commitment of the customer
The letter of credit is also known as banker¶s commercial credit or documentary letter of credit.
L/C used in domestic trade are calledinland L/C¶s.
LETTER OF CREDIT
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Importer or Applicant
Issuing Bank
Beneficiary
Advising Bank
Negotiating/ The Paying Bank.
PARTIES TO ALETTER OF CREDIT
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1. ContractSeller
(Beneficiary)Buyer
Applicant
2. Documentary
credit Application
ISSUING
BANK.
3. Documentary creditAdvising Bank
4. Advice of
Documentay
credit
LETTER OF CREDIT THE
PROCESS
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Irrevocable L/C
Revocable L/C
Negotiation Credit
Confirmed or Unconfirmed credit
Revolving credits
Back To Back Credits
Red Clause L/C
Transferable Credits
Traveller¶s L/C
S pecial Credits
TYPES OF LETTER OF CREDIT
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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.
Financial option for the management of
receivables
FACTORING
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Customer Client
Factor
(1) Credit Sale
of Goods
(2) Invoice
(3)
Su bmit
InvoiceCopy
(4)Payment
u pto 80%
initially
(6) Pays
the
balance
(5) Pays the amount
(In recourse type
customer pays
through client)
FLOW CHART OF FACTORING