Buyer's credit
This query is : Resolved
13 November 2014
Dear Professionals !
Please guide to me understand about Buyer's Credit.
1- What is Buyer's Credit
2- Process and controls
3- checking points
4- cordination with financers
in the simple words i want to to understand all the transaction from step 1 to last step.
Please help me.
Regards,
Sanjay Chauhan
Please guide to me understand about Buyer's Credit.
1- What is Buyer's Credit
2- Process and controls
3- checking points
4- cordination with financers
in the simple words i want to to understand all the transaction from step 1 to last step.
Please help me.
Regards,
Sanjay Chauhan
14 November 2014
Buyer's 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.
In Simplest terms, A Buyers Credit is a foreign fund made available to an importer by a Bank to meet the payment of the importer to his exporter.
Steps Involved in a Buyers Credit (Buyers Credit Process) :
1. Importer imports the goods using either LC(Letter of Credit), collections or open account
2. Importer approaches the LOU(Letter of Undertaking)issuing bank or the Buyers Credit arranger to arrange for a Buyers Credit quote
3. LOU issuing Bank or the arranger of the quote arranges for a Buyers Credit offer letter at the best possible rates from the funding bank
4. LOU issuing bank issues the LOU in the favour of the funding bank
5. Funding bank on receipt of the LOU, credits the NOSTRO account of LOU issuing bank with the funds
6. LOU issuing bank makes the payment to the exporter and thus settles the liability of the importer towards the exporter
7. On the due date, the importer either requests for the rollover of the buyers credit or recovers the funds from the importer and retires the liability of the importer towards the bank against the LOU.
In Simplest terms, A Buyers Credit is a foreign fund made available to an importer by a Bank to meet the payment of the importer to his exporter.
Steps Involved in a Buyers Credit (Buyers Credit Process) :
1. Importer imports the goods using either LC(Letter of Credit), collections or open account
2. Importer approaches the LOU(Letter of Undertaking)issuing bank or the Buyers Credit arranger to arrange for a Buyers Credit quote
3. LOU issuing Bank or the arranger of the quote arranges for a Buyers Credit offer letter at the best possible rates from the funding bank
4. LOU issuing bank issues the LOU in the favour of the funding bank
5. Funding bank on receipt of the LOU, credits the NOSTRO account of LOU issuing bank with the funds
6. LOU issuing bank makes the payment to the exporter and thus settles the liability of the importer towards the exporter
7. On the due date, the importer either requests for the rollover of the buyers credit or recovers the funds from the importer and retires the liability of the importer towards the bank against the LOU.
16 November 2014
Dear Mr. Mehta,
Thank your very much sir. one more query how many times we can roll over the transaction of buyers credit.
Regards,
Sanjey Chauhan
Thank your very much sir. one more query how many times we can roll over the transaction of buyers credit.
Regards,
Sanjey Chauhan
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