The buyer’s credit facility is available for those people who are in the Indian region, specifically Indian importers borrow currency from foreign country against import liability. The import is against the LC or document sight or usage under the payment policies. Same may use about 360 days of raw material as well 3 years of capital goods from the bill of lading date. Besides, the lender can be overseas branches of Indian bank or foreign bank accepts to lend Libor based interest rate along with LOU (Letter of Undertaking) delivered by the importers bank. In both the LOU and LOC, the importer’s bank will take responsibility to repay the borrowed funds with the interest rates to the appropriate lending bank.
Benefits of buyer’s credit:-
The Buyers Credit Consultant provides the assistance to all the clients and guides to know everything and how to manage critical situation. The importers get enough time for the repayment option so the cash flow won’t get affected. The importer also receives the repayment on the deadline. Because, the exporter get early payment and the importer negotiate the rules. The funding currency includes GBP, JPY, USD, EURO and is based on the customer choice. The importer can utilize the financing for various forms of open account, LCs, collections or trade viz. In difficult situations, the market crusade can grab the time getting the buyer’s credit as well wait for the valuable currency rate to enclose the same.
Process flow of buyer’s credit:-
The import currency varies from the funding currency, and facilitates the importers to get a good view of the specific currency. The Indian clientele import the goods under DA or DP, LC or DC or direct documents. The Indian client will request for the experienced and trustworthy Buyers Credit Consultant prior due date of payment to make use of the buyer’s credit capital. The consultant approaches the foreign banks for pricing which is quoted to the importer. If the pricing is acceptable to the importer, the foreign banks provide the offer letter with the importer’s name. The importer also gets advance with the existing bank to receive the letter for the comfort and undertaking the LOC or LOU provided in favor of foreign bank through swift. On receipt, the LOC or LOU foreign bank based on the LOU provided details and capital to the existing bank’s Nostro account or else make payment directly to the supplier’s bank. The existing bank makes import bills for the payment by use of the credited amount. If the borrowed currency varies from the import currency,the cross-currency deal may be used to achieve the import payment. On the due date, the existing bank has to recover the fund as well as interest amount directly from the importer and pay the same to the foreign bank on the due date. Whatever you need to know, stay connected with the professional consultants to clarify all your doubts related to the buyer’s credit instantly.
As per RBI Directives on LoU based funding , Buyers Credit is currently not available at the moment.