Buyers Credit

Excellent Buyers Credit Services Provider.

By:

NumeroUno

Contact:

Email: info@numerouno.net.in

Website: Click Buyers Credit

Num

ero

Uno B

usin

ess C

onsu

ltants

Buyers Credit Content

Introduction of Buyers Credit

Discrimination

Importance of Buyers Credit

Buyers Credit on Bank Lines

Salient Features of Buyers Credit

Procedural Flow of Buyers Credit

Thanking You

Num

ero

Uno B

usin

ess C

onsu

ltants

Introduction of Buyers CreditBrief of Buyers Credit:

Buyers Credit is short term credit availed to an importer (buyer) from overseas

lenders such as banks and other financial institution for goods they are importing.

The overseas banks usually lend the importer (buyer) based on the letter of

comfort (a Bank Guarantee) issued by the importer's bank. For this service the

importer's bank or buyer's credit consultant charges a fee called an arrangement

fee.

Buyers Credit helps local importers gain access to cheaper foreign funds that may

be closer to LIBOR rates as against local sources of funding which are more costly.

The duration of buyer's credit may vary from country to country, as per the local

regulations. For example in India, buyer's credit can be availed for one year in case

the import is for tradable goods and for three years if the import is for capital

goods. Every six months, the interest on buyer's credit may get reset.

Num

ero

Uno B

usin

ess C

onsu

ltants

Discrimination of Buyers CreditBuyers Credit may be a program of Bank or Business Consultants,

underneath that the Bank facilitates Indian exports by process of

extending credit facility to the overseas buyers for finance their imports

from India. Underneath Buyers Credit Program, Bank makes payment of

eligible price to Indian exporters, while not recourse to them. Buyer’s

Credit may be a safe and non-recourse mode of finance choice out

there to Indian exporters, particularly to little and medium enterprises

(SMEs), and motivates them to enter overseas markets. Buyers Credit

program seeks to the necessity of gap of ‘Letter of Credit’ by overseas

patrons in favor of Indian exporters, thereby reducing the group action

value and additionally the complexities concerned in finance

international trade transactions. The Program allows Indian exporters to

enter into the competitive international market with the merchandise

and finance to alter the client import identical from India. It additionally

frees Indian exporter’s assets thereby enabling them to extend their

scale of operations.

Num

ero

Uno B

usin

ess C

onsu

ltants

Importance of Buyers Credit

The benefits of Buyers Credit for the importer are as follows:

The exporter gets paid on due date; whereas importer gets extended datefor creating an import payment as per the money flows.

The importer will alter exporter on sight basis, negotiate a more robustdiscount and use the consumer credit route to avail funding.

The funding currency will be in any FCY (INR, USD, GBP, EURO, JPY etc.)counting on the selection of the client.

The importer will use this funding for any style of trade viz. open account,collections, or LCs.

The currency of imports will be completely different from the fundingcurrency and Buyers Credit, which allows importers to require a favorableread of a specific currency.

The length of buyer’s credit might vary from country to country,as per the native rules. for instance in India, Buyers Credit may be availedfor one year just in case the import is for tradable product and for threeyears if the import is for capital product. Each six months, the interest onbuyer’s credit might get reset.

Num

ero

Uno B

usin

ess C

onsu

ltants

Buyers Credit on Bank LinesProcess Flow for Buyers Credit on Bank Lines:

The Indian client can import the products either underneath DC, Collectionsor open account.

The Indian client request Bank in India before the date of the bill to availBuyers Credit finance.

Importer arranges to send a co-acceptance (indemnity) from his existing bankerto Bank in Indian nation.

Importer’s existing banker marks his import limits and sends the co-acceptance(indemnity) to Bank in Indian nation.

Supported this Bank in Indian nation can prepare funding by causing a co-acceptance to the funding bank.

The funding bank can credit the importer’s bank Nostro account for the desiredquantity.

Importer’s existing banker can retire the import bill by utilizing the quantityattributable.

Bank in Indian nation to recover the principal and interest quantity from theimporter’s bank and remit an equivalent to funding bank on date.

The importer desirous to avail Buyers Credit from Bank in Indiannation should to be an existing client of the Bank holding an accounting withthem. Some banks supply this on dealings basis even while not an accounting. Theon top of our general tips, each Bank can have their own procedures and policieswhich could vary from Bank to Bank.

Num

ero

Uno B

usin

ess C

onsu

ltants

Salient Features of Buyers Credit

Salient Features of Buyers Credit

Facilitates exports from little and medium sized Indian corporations byproviding Buyers Credit to overseas purchaser to import product from India.

Can even be offered for finance capital product or services on credit terms.

Provides non-recourse finance to Indian Exporter by changing the postponedcredit contract into money contract.

Can even be extended by process of advance payments to Indian Exporters onbehalf of the overseas purchaser.

Can be a group action specific finance or a revolving/renewable limit.

Can be extended to quite one overseas subsidiaries of any Indian company.

Non-LC transactions resulting in saving of LC charges.

Credit amount of Buyers Credit extended for assets depends upon theassets cycle of the purchaser. It’s going to vary from month to year for assetslimits relying upon the purchaser. Credit amount of Buyers Credit extended forCapital product could vary from quite one year to ten years, relying upon themoney generation capability of the overseas purchaser.

Num

ero

Uno B

usin

ess C

onsu

ltants

Procedural Flow of Buyers CreditDetailed steps concerned in Procedural Flow are:

Contract for export of products or services is signed between Overseas Buyer(Importer) and Indian bourgeois.

Overseas purchaser requests Bank for sanction of Buyers Credit facility to finance theimport of products or services beneath the contract.

Bank when due diligence, sanctions Buyers Credit facility to the Overseas Importer(Borrower) on reciprocally in agreement terms that embrace security, rate of interest,credit tenure and compensation schedule etc.

Bank and Overseas purchaser documents as well as Buyers Credit Agreement (BCA) andmake security as per the BCA.

Indian exporter ships the products and dispatches export documents; a) either on tobuyer’s banker or b) through its own banker in India.

Indian exporter submits two sets of non-negotiable copies of export documents to Banktogether with missive of invitation letter for disbursement specifying the remittanceinstructions.

Overseas receiver accepts the documents bestowed by its banker and makes arrangementfor payment by manner of disbursement beneath Buyers Credit that, it forwards paymentauthorization, certificate of indebtedness, trust receipt together with payment directionsrequesting Bank to create disbursement beneath the credit facility.

Bank disburses the eligible quantity beneath the Buyers Credit and remits the quantity toNostro account of Indian Exporter’s Bank for onward credit to Indian Exporters account.

Indian exporter’s banker receives payment in its NOSTRO Account, offers credit to theexporter and problems advice / FIRC thereto impact.

Overseas receiver services the Buyers Credit extended by Bank, as per the terms &conditions of the sanction.

Num

ero

Uno B

usin

ess C

onsu

ltants

Thank You

By:

NumeroUno

Contact:

Email: info@numerouno.net.in

Website: Click Buyers Credit

Num

ero

Uno B

usin

ess C

onsu

ltants