Import Finance
INTRODUCTION IMPORT FINANCE
Banks authorized to deal in foreign exchange play an important role for issue of letters of credit finance / payment for imports issue of guarantees etc. in matters relating to the finance for import banks are governed by the instructions issued by their head offices . with regard to remittance of foreign exchange they are regulated by RBI regulation under FEMA as amended from time and the rules framed by the foreign exchange dealer association of India {FEDAI rules}
There are three methods of arranging finance for import. * ARRANGING FINANCE THROUGH BANK FINANCE * ARRANGING FINANCE FROM EXIM BANK * ARRANGING FINANCE THROUGH TRADE CREDIT FROM ABROAD
* BANK FINANCE
Banks normally do not extend any fund based finance to meet import needs of their customers, barring few exceptions.
Letter of credit is a non fund credit facility offered by banks to their constituents of integrity and proven track record in meeting their commitments promptly, without need for any post import finance.
Banks establish LCs only on account of their customers, who hold a valid importer – exporter code number from the regional licensing authorities and produce underlying sales contract between the Indian importer and the oversees sellers , accompanied by valid import license in the name of the importers , wherever necessary . Banks take into accounts the norms for holding imported inventory , make an appraisal of the request for opening an LC like any other fund based working capital facility , prescribe suitable margin/ securities and then decide to establish the LC .
* ARRANGING FINANCE FROM EXIM BANK – an importer in india may arrange finance by way of borrowings in Indian rupees or foreign exchange through the exim bank in the following two ways:
A) Bulk import finance program-short term working capital FINANCE IS PROVIDED under this scheme to manufacturing companies for import of consumables inputs with the
Banks authorized to deal in foreign exchange play an important role for issue of letters of credit finance / payment for imports issue of guarantees etc. in matters relating to the finance for import banks are governed by the instructions issued by their head offices . with regard to remittance of foreign exchange they are regulated by RBI regulation under FEMA as amended from time and the rules framed by the foreign exchange dealer association of India {FEDAI rules}
There are three methods of arranging finance for import. * ARRANGING FINANCE THROUGH BANK FINANCE * ARRANGING FINANCE FROM EXIM BANK * ARRANGING FINANCE THROUGH TRADE CREDIT FROM ABROAD
* BANK FINANCE
Banks normally do not extend any fund based finance to meet import needs of their customers, barring few exceptions.
Letter of credit is a non fund credit facility offered by banks to their constituents of integrity and proven track record in meeting their commitments promptly, without need for any post import finance.
Banks establish LCs only on account of their customers, who hold a valid importer – exporter code number from the regional licensing authorities and produce underlying sales contract between the Indian importer and the oversees sellers , accompanied by valid import license in the name of the importers , wherever necessary . Banks take into accounts the norms for holding imported inventory , make an appraisal of the request for opening an LC like any other fund based working capital facility , prescribe suitable margin/ securities and then decide to establish the LC .
* ARRANGING FINANCE FROM EXIM BANK – an importer in india may arrange finance by way of borrowings in Indian rupees or foreign exchange through the exim bank in the following two ways:
A) Bulk import finance program-short term working capital FINANCE IS PROVIDED under this scheme to manufacturing companies for import of consumables inputs with the