Trade Finance
Introduction:
Trade Finance in India comprises of financing against imports into India, export from India and inland trade transactions. While doing this study, it is important to know about the regulations governing such transactions in India.
Import and Export trade is regulated by the Directorate General of Foreign Trade (DGFT) under Ministry of Commerce & Industry, Department of Commerce, Government of India. Banks in India, authorized by Reserve Bank of India to deal in Foreign Exchange are known as Authorised Dealers. Authorised dealers, while undertaking import and export transactions, should ensure that the imports into India and export from India are in conformity with the Export Import Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government and the directions issued by Reserve Bank under Foreign Exchange Management Act from time to time. Banks also have to follow credit policy announced by Reserve Bank of India from time to time to ensure compliance while dealing with financing of Inland Trade transactions.
Authorised dealers have to follow normal banking procedures and adhere to the provisions of various rules framed by International Chamber of Commerce, Paris and onshore credit policy of the country.
Banks in India use the following trade products to meet financing requirements of the clients:
Imports:
1. Opening of Letter of Credit and Follow up Financing
2. Buyer’s Credit / Supper’s Credit in the form of short term credit for Imports into India
3. Trust Receipt Financing
4. Simple Overdraft Facility
5. Issuance of some of the guarantees to facilitate imports related activities
Exports:
1. Pre-shipment Credit in Indian Rupees
2. Pre-shipment Credit in Foreign Currency
3. Post-shipment Credit in Indian Rupees
4. Post-shipment Credit in Foreign Currency
5. Forfaiting of Export Receivables
6. Factoring of Export Receivables
7. Simple Overdraft Facility
8. Issuance of some of the
Trade Finance in India comprises of financing against imports into India, export from India and inland trade transactions. While doing this study, it is important to know about the regulations governing such transactions in India.
Import and Export trade is regulated by the Directorate General of Foreign Trade (DGFT) under Ministry of Commerce & Industry, Department of Commerce, Government of India. Banks in India, authorized by Reserve Bank of India to deal in Foreign Exchange are known as Authorised Dealers. Authorised dealers, while undertaking import and export transactions, should ensure that the imports into India and export from India are in conformity with the Export Import Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government and the directions issued by Reserve Bank under Foreign Exchange Management Act from time to time. Banks also have to follow credit policy announced by Reserve Bank of India from time to time to ensure compliance while dealing with financing of Inland Trade transactions.
Authorised dealers have to follow normal banking procedures and adhere to the provisions of various rules framed by International Chamber of Commerce, Paris and onshore credit policy of the country.
Banks in India use the following trade products to meet financing requirements of the clients:
Imports:
1. Opening of Letter of Credit and Follow up Financing
2. Buyer’s Credit / Supper’s Credit in the form of short term credit for Imports into India
3. Trust Receipt Financing
4. Simple Overdraft Facility
5. Issuance of some of the guarantees to facilitate imports related activities
Exports:
1. Pre-shipment Credit in Indian Rupees
2. Pre-shipment Credit in Foreign Currency
3. Post-shipment Credit in Indian Rupees
4. Post-shipment Credit in Foreign Currency
5. Forfaiting of Export Receivables
6. Factoring of Export Receivables
7. Simple Overdraft Facility
8. Issuance of some of the