What Types of Import Finances are Arranged by Banks

Commercial bank undertakes Import Finance in the form of both pre-import and post-import finance. These two categories of import finances include:

  

Letter of Credit: This is a pre-import finance, which is made in the form of commitment on behalf of the client to pay an agreed sum of money to the beneficiary of the Letter of Credit upon fulfillment of terms & conditions of the Credit. 

Performance Bonds & Other Gua­rantees: Commercial bank offers excellent solution to meet all performance bonds & guarantees required by its valued clients. 

Loan against Trust Receipt (LTR): In this category of finance, possession of the goods remains with the borrower and the borrower executes ‘Letter of Trust Receipt’ in acknowledgement of debt and its repayment along with interest within agreed period of time. 

Back to Back Letter of Credit: Back to back L/C is a type of pre shipment finance by way of opening L/C in favor of a local or foreign supplier for purchase of raw materials or the finished merchandise, as the case may be, to execute export order.

Export Bills for Collection: Export Bills for Collection are documents which are presented to the bank by the seller/exporter to collect payment from the buyer through the buyer’s bank.