BANKING & INSURANCE BANKING & INSURANCE FOR EXPORTSFOR EXPORTS

INSTITUTIONAL FRAMEWORKINSTITUTIONAL FRAMEWORK

Ministry of FinanceMinistry of Finance RBI (Act of 1934)RBI (Act of 1934) Scheduled Commercial Bank (2Scheduled Commercial Bank (2ndnd

Status of RBI Act, 1934)Status of RBI Act, 1934) ECGC (Set up in 1957)ECGC (Set up in 1957) Exim Bank (Exim Bank Act, 1981)Exim Bank (Exim Bank Act, 1981) FEDAI, BSCBI, IBA etc.FEDAI, BSCBI, IBA etc.

LEGAL FRAMEWORKLEGAL FRAMEWORK

Umbrella Acts Umbrella Acts

Reserve Bank of India Act, 1934: governs the Reserve Bank functions

Banking Regulation Act, 1949Banking Regulation Act, 1949: :

governs the financial sectorgoverns the financial sector

LEGAL FRAMEWORKLEGAL FRAMEWORK

Export trade is regulated by DGFTExport trade is regulated by DGFT and and Banks may conduct export Banks may conduct export transactions in conformity with - FTP transactions in conformity with - FTP in vogue & rules of GOI/RBI and in vogue & rules of GOI/RBI and powers sub-section (3)of sec 7 & sub-powers sub-section (3)of sec 7 & sub-section(2) of sec 47 of FEMA as section(2) of sec 47 of FEMA as notified in FEMA 23/2000-RB dated notified in FEMA 23/2000-RB dated May 3, 2000 May 3, 2000

LEGAL FRAMEWORKLEGAL FRAMEWORK Acts governing specific functions Acts governing specific functions Public Debt Act, 1944/Government Securities Act Public Debt Act, 1944/Government Securities Act

(Proposed): Governs government debt market (Proposed): Governs government debt market Securities Contract (Regulation) Act, 1956: Securities Contract (Regulation) Act, 1956:

Regulates government securities market Regulates government securities market Indian Coinage Act, 1906 : Governs currency and Indian Coinage Act, 1906 : Governs currency and

coins coins Foreign Exchange Regulation Act, 1973/Foreign Exchange Regulation Act, 1973/

Foreign Exchange Management Act, 1999: Governs trade and foreign exchange market

"Payment and Settlement Systems Act, 2007: Provides for regulation and supervision of payment systems in India”

LEGAL FRAMEWORKLEGAL FRAMEWORK

Acts governing Banking Operations Acts governing Banking Operations

Companies Act, 1956:Governs banks as Companies Act, 1956:Governs banks as companies companies

Banking Companies (Acquisition and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980: Transfer of Undertakings) Act, 1970/1980: Relates to nationalisation of banks Relates to nationalisation of banks

Bankers' Books Evidence Act Bankers' Books Evidence Act Banking Secrecy Act Banking Secrecy Act Negotiable Instruments Act, 1881Negotiable Instruments Act, 1881

LEGAL FRAMEWORKLEGAL FRAMEWORK

Acts governing Individual InstitutionsActs governing Individual Institutions

State Bank of India Act, 1954 State Bank of India Act, 1954 The Industrial Development Bank (Transfer of The Industrial Development Bank (Transfer of

Undertaking and Repeal) Act, 2003 Undertaking and Repeal) Act, 2003 The Industrial Finance Corporation (Transfer of The Industrial Finance Corporation (Transfer of

Undertaking and Repeal) Act, 1993 Undertaking and Repeal) Act, 1993 National Bank for Agriculture and Rural National Bank for Agriculture and Rural

Development Act Development Act National Housing Bank Act National Housing Bank Act Deposit Insurance and Credit Guarantee Deposit Insurance and Credit Guarantee

Corporation ActCorporation Act

EXPORT FINANCEEXPORT FINANCE Pre-shipment Finance Pre-shipment Finance Documents required :Documents required :

Confirmed export order or L/CConfirmed export order or L/C Undertaking that advance will be utilised Undertaking that advance will be utilised

for procuring / manufacturing / shipping of for procuring / manufacturing / shipping of goodsgoods

If sub-supplier undertaking from exporters If sub-supplier undertaking from exporters that packing credit would not be taken that packing credit would not be taken unless packing credit is liquidated.unless packing credit is liquidated.

Copy of IEC Code / RCMC etc., ECGC Copy of IEC Code / RCMC etc., ECGC document, if anydocument, if any

EXPORT FINANCEEXPORT FINANCE Post Shipment Finance (provided on Post Shipment Finance (provided on

presenting shipping documents to the bank)presenting shipping documents to the bank)

The post shipment finance can be classified as :The post shipment finance can be classified as :

Export Bills purchased/discounted (under DP or Export Bills purchased/discounted (under DP or DA basis)DA basis)

Export Bills negotiated (under L/C)Export Bills negotiated (under L/C) Advance against export bills sent on collection Advance against export bills sent on collection

basis.basis. Advance against export on consignment basisAdvance against export on consignment basis Advance against undrawn balance on exportsAdvance against undrawn balance on exports Advance against claims of Duty Drawback.Advance against claims of Duty Drawback.

EXPORT FINANCEEXPORT FINANCE Handling of documents Handling of documents (i) Checklist of documents to be submitted (i) Checklist of documents to be submitted to banks for negotiation or collection ofto banks for negotiation or collection of export bills:export bills:

-- Shipping B/L or AWB Shipping B/L or AWB -- Insurance PolicyInsurance Policy -- Invoice Invoice -- Packing ListPacking List -- Certificate of OriginCertificate of Origin -- GR/SDF FormGR/SDF Form -- Bill of ExchangeBill of Exchange

EXPORT FINANCEEXPORT FINANCE

(ii) Scrutiny of documents by banks and(ii) Scrutiny of documents by banks and

transmitting to foreign correspondenttransmitting to foreign correspondent

bank abroad for presentation to thebank abroad for presentation to the

drawee.drawee.

(iii)(iii) On receipt of payment advice, banks On receipt of payment advice, banks credit exporters’ account with rupee credit exporters’ account with rupee equivalent to the foreign currency equivalent to the foreign currency

amount at market TT buying rates.amount at market TT buying rates.

EXPORT FINANCEEXPORT FINANCE(iv)(iv) On payment / retirement of On payment / retirement of Export Export

Bill, the relative GR Form has to beBill, the relative GR Form has to be

submitted to the RBI by the bank.submitted to the RBI by the bank.

(v) (v) In case the payment is not received In case the payment is not received on on due date (credit advice from the due date (credit advice from the overseas correspondent branch then overseas correspondent branch then the liability of the exporter is converted the liability of the exporter is converted into rupee liability known as into rupee liability known as crystallization of the bill. crystallization of the bill.

Salient pointsSalient points

((i) No restriction on invoicing in Indian rupeesi) No restriction on invoicing in Indian rupees There is no restriction on invoicing of export contracts There is no restriction on invoicing of export contracts

in Indian Rupees in terms of the Rules, Regulations, in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Exchange Management Act 1999. Further, in terms of Para 2.40 of the Foreign Trade Policy:Para 2.40 of the Foreign Trade Policy:

"All export contracts and invoices shall be "All export contracts and invoices shall be denominated either in freely convertible currency or in denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realised in Indian Rupees but export proceeds shall be realised in freely convertible currency. However, export proceeds freely convertible currency. However, export proceeds against specific exports may also be realised in rupees against specific exports may also be realised in rupees provided it is through a freely convertible Vostro provided it is through a freely convertible Vostro account of a non-resident bank situated in any account of a non-resident bank situated in any country, other than a member of the ACU or Nepal or country, other than a member of the ACU or Nepal or Bhutan".Bhutan".

Master Circular on Export of Master Circular on Export of Goods and Services – 1.7.2010Goods and Services – 1.7.2010

Master Circular on Export of Goods and Master Circular on Export of Goods and Services – 1.7.2010Services – 1.7.2010

((ii) Declaration for Exportsii) Declaration for Exports

Declaration as regards Declaration as regards export of goods & services export of goods & services (Section 7 Regulation 3 of FEMA except in the case (Section 7 Regulation 3 of FEMA except in the case of Nepal and Bhutan) of Nepal and Bhutan)

(iii) Exemption From Export Declaration (Reg 4)(iii) Exemption From Export Declaration (Reg 4)- Trade samples Trade samples - Goods or S/W not exceeding US $25,000Goods or S/W not exceeding US $25,000- Gifts not exceeding Rs.5 lakhs.Gifts not exceeding Rs.5 lakhs.- Upto 2% of avr. annual exports for preceding 3 Upto 2% of avr. annual exports for preceding 3

years subject to ceiling of Rs.5 lakhs for Non status years subject to ceiling of Rs.5 lakhs for Non status holders and Rs.10 lakhs in case of status holders.holders and Rs.10 lakhs in case of status holders.

- Re-export of imported items to EHTP/STP/EOUs/ - Re-export of imported items to EHTP/STP/EOUs/ SEZs etc.SEZs etc.

1. Bank draft, pay order, banker's or personal cheques.

2. Foreign currency notes/foreign currency travellers’ cheques from the buyer during his visit to India.

3. Payments out of FCNR/NRE account maintained by the buyer

4. International Credit Cards of the buyer.

Manner of Receipt & PaymentManner of Receipt & Payment

Trade transactions can also be settled in the following manner:

1. Indian Rupees

2. Routed through the ACU mechanism

Manner of Receipt & PaymentManner of Receipt & Payment

1. Account opened by resident of India in foreign currency

2. Credit 100% of their foreign exchange earnings in EEFC account

3. Non- interest bearing current account4. No credit facility against security balances

Exchange Earner’s Foreign Currency Exchange Earner’s Foreign Currency (EEFC) Account(EEFC) Account

The eligible credit represents:a.Inward remittance received through normal

banking channelb.Payment received in foreign exchange by a

unit in Domestic Tariff Area for supplying goods to a unit in SEZ

The exporter constituents may extend trade related loan/advances to overseas importers without any ceiling

Exporters may repay packing credit advances in their EEFC account

EEFC Contd…EEFC Contd…

1.1. Remittance towards initial expense upto 15% of Remittance towards initial expense upto 15% of average annual sales/income or turnover during last average annual sales/income or turnover during last two financial yearstwo financial years

2.2. Remittance towards recurring expense upto 10% of Remittance towards recurring expense upto 10% of average annual sales/income or turnover during last average annual sales/income or turnover during last two financial years subject to following conditionstwo financial years subject to following conditions

a.a. Overseas branch has been set upOverseas branch has been set upb.b. Overseas branch shall not enter into contract or Overseas branch shall not enter into contract or

agreement in contravention of the act, rules made there agreement in contravention of the act, rules made there underunder

c.c. Overseas office should not create any financial liabilities Overseas office should not create any financial liabilities for HO in Indiafor HO in India

d.d. Overseas office shall also not invest surplus funds abroadOverseas office shall also not invest surplus funds abroad

Setting up offices abroadSetting up offices abroad

Company may be allowed to acquire immovable Company may be allowed to acquire immovable property outside India for business & residential property outside India for business & residential purposepurpose

Overseas branch of software exporter may Overseas branch of software exporter may repatriate to India 100% of the contract value of repatriate to India 100% of the contract value of each ‘off-site’ contracteach ‘off-site’ contract

Companies taking up onsite contract should Companies taking up onsite contract should repatriate profits after completion of contractrepatriate profits after completion of contract

Audited yearly statement for the overseas office Audited yearly statement for the overseas office may be sent to AD Category-I Banks with details may be sent to AD Category-I Banks with details of expenses and repatriationof expenses and repatriation

Setting up offices abroad contd..Setting up offices abroad contd..

Exporter receiving advance payment from buyer outside Exporter receiving advance payment from buyer outside India is under obligation to ensure that:India is under obligation to ensure that:• Ship goods made within one year from date of receipt of Ship goods made within one year from date of receipt of

advance paymentadvance payment• ROI payable does not exceed London Inter Bank Offered ROI payable does not exceed London Inter Bank Offered

Rate + 100 basis pointsRate + 100 basis points• Documents covering shipment are routed through bankDocuments covering shipment are routed through bank

If exporter is unable to make shipment, no remittance If exporter is unable to make shipment, no remittance towards refund of unutilized portion of advance would be towards refund of unutilized portion of advance would be made after expiry of one year without prior approval of RBImade after expiry of one year without prior approval of RBI

Prior approval of RBI required for export agreements for Prior approval of RBI required for export agreements for shipment of Goods extending beyond one yearshipment of Goods extending beyond one year

Banks may allow purchasing Foreign Exchange from market Banks may allow purchasing Foreign Exchange from market for refunding advance paymentfor refunding advance payment

Advance payment against exportsAdvance payment against exports

For goods exported on consignment basis:For goods exported on consignment basis:• AD Category-I banks should instruct its overseas branch AD Category-I banks should instruct its overseas branch

to deliver shipping documents only against trust to deliver shipping documents only against trust receipt/undertakingreceipt/undertaking

• The consignees may deduct from sale proceeds The consignees may deduct from sale proceeds expenses towards receipt, storage and sale of goods and expenses towards receipt, storage and sale of goods and remit the net proceeds to exporterremit the net proceeds to exporter

• Deduction in account sales should be supported by Deduction in account sales should be supported by bills/receipts in originalbills/receipts in original

• For consignment exports, freight and marine insurance For consignment exports, freight and marine insurance must be arranged in Indiamust be arranged in India

Consignment ExportsConsignment Exports

Permission for opening/hiring warehouses abroad may be given Permission for opening/hiring warehouses abroad may be given

subject to following conditions:subject to following conditions:

• Export outstanding does not exceed 5% of exports during Export outstanding does not exceed 5% of exports during

previous financial yearprevious financial year

• Minimum export turnover of USD 1 lakh during last Minimum export turnover of USD 1 lakh during last

Financial yearFinancial year

• All assignment should be routed through designated branchAll assignment should be routed through designated branch

• Permission may be granted initially for one year and if Permission may be granted initially for one year and if

applicant satisfies all requirements, renewal may be givenapplicant satisfies all requirements, renewal may be given

• Banks should maintain records of permissions/approvalsBanks should maintain records of permissions/approvals

Opening/ Hiring warehouse abroadOpening/ Hiring warehouse abroad

Banks may dispatch shipping documents to consignee directly in cases where:Banks may dispatch shipping documents to consignee directly in cases where:

• Advance payment or irrevocable letter of credit has been received for full value Advance payment or irrevocable letter of credit has been received for full value of export shipment and sale contract provides for dispatch of documents direct of export shipment and sale contract provides for dispatch of documents direct to consignee or his agent in the country of final destination of goodsto consignee or his agent in the country of final destination of goods

• The exporter is a regular customer with good track record and arrangement has The exporter is a regular customer with good track record and arrangement has been made for realization of export proceedsbeen made for realization of export proceeds

• Documents are accompanied with declaration by exporter that they are more Documents are accompanied with declaration by exporter that they are more than Rs 25000/- in value and not declared on GR/SDF/PP/SOFTEX formthan Rs 25000/- in value and not declared on GR/SDF/PP/SOFTEX form

Banks may also permit “Status Holder Exporters and units in SEZ to dispatch export Banks may also permit “Status Holder Exporters and units in SEZ to dispatch export documents to consignee outside India with condition that: documents to consignee outside India with condition that:

• Export proceeds are repatriated through AD banks named in GR formsExport proceeds are repatriated through AD banks named in GR forms

• Exporter has to submit duplicate copy of GR form within 21 days from date of Exporter has to submit duplicate copy of GR form within 21 days from date of shipmentshipment

Banks may regularize dispatching shipping documents direct to consignee for cases Banks may regularize dispatching shipping documents direct to consignee for cases upto USD 1 million or equivalent, per export shipment if:upto USD 1 million or equivalent, per export shipment if:

• Export proceeds have been realised in fullExport proceeds have been realised in full

• Exporter is regular customer of AD bank for atleast 6 monthsExporter is regular customer of AD bank for atleast 6 months

• Exporter’s account is fully compliant with RBI’s exant KYC/AML guidelineExporter’s account is fully compliant with RBI’s exant KYC/AML guideline

• AD bank is satisfied about bonafides of transactionAD bank is satisfied about bonafides of transaction

Direct dispatch of documents by exporterDirect dispatch of documents by exporter

For long duration contracts exporter should bill overseas client periodicallyFor long duration contracts exporter should bill overseas client periodically Last invoice should be raised not later than 15 days from date of Last invoice should be raised not later than 15 days from date of

completion of contractcompletion of contract Exporter should submit combined SOFTEX form for all invoices raised for Exporter should submit combined SOFTEX form for all invoices raised for

particular client, including advance remittances received in a monthparticular client, including advance remittances received in a month Contracts involving ‘one shot’ operation should be billed within 15 days Contracts involving ‘one shot’ operation should be billed within 15 days

from transmission datefrom transmission date Exporter should submit declaration in Form SOFTEX in triplicate in respect Exporter should submit declaration in Form SOFTEX in triplicate in respect

of export of computer software and audio/video/TV software for valuation of export of computer software and audio/video/TV software for valuation not later than 30 days from date of invoicenot later than 30 days from date of invoice

Invoicing of Software ExportsInvoicing of Software Exports

Short shipmentsShort shipments• When part of a shipment covered by a GR form is short When part of a shipment covered by a GR form is short

shipped, exporter must give notice to customs in shipped, exporter must give notice to customs in prescribed mannerprescribed manner

• Incase of delay in obtaining certified short-shipment Incase of delay in obtaining certified short-shipment from customs, exporter should give undertaking to the from customs, exporter should give undertaking to the AD banks that notice has been filed and will be furnished AD banks that notice has been filed and will be furnished as soon as it is obtainedas soon as it is obtained

Shut out shipmentsShut out shipments• For entirely shut out shipment, exporter will give notice For entirely shut out shipment, exporter will give notice

in duplicate to customs, with unused copy of GR form in duplicate to customs, with unused copy of GR form attachedattached

• Customs will verify the facts and certify the copy of Customs will verify the facts and certify the copy of notice as correct and forward to RBI with unused notice as correct and forward to RBI with unused duplicate copy of GR form. Original GR form received duplicate copy of GR form. Original GR form received earlier from customs will be cancelled and if shipment is earlier from customs will be cancelled and if shipment is subsequently made, a fresh set of GR form should be subsequently made, a fresh set of GR form should be completedcompleted

RBI will consider those counter trade proposal, which involve adjustment of RBI will consider those counter trade proposal, which involve adjustment of

value of goods imported into India against value of Goods exported from India value of goods imported into India against value of Goods exported from India

in an arrangement voluntarily entered into between Indian Party and overseas in an arrangement voluntarily entered into between Indian Party and overseas

party through an Escrow account opened in India in US dollarparty through an Escrow account opened in India in US dollar

All imports and exports under arrangement should be at international prices in All imports and exports under arrangement should be at international prices in

conformity with FTP and FEMAconformity with FTP and FEMA

No interest will be payable on balances standing to credit of Escrow account, No interest will be payable on balances standing to credit of Escrow account,

funds rendered surplus maybe held in short term deposit for total of 3 months funds rendered surplus maybe held in short term deposit for total of 3 months

in a year and bank may pay interest at applicable ratein a year and bank may pay interest at applicable rate

No fund based/or non-fund based facilities would be permitted against the No fund based/or non-fund based facilities would be permitted against the

balances in the Escrow accountbalances in the Escrow account

Application for opening Escrow account can be routed through AD category-I Application for opening Escrow account can be routed through AD category-I

bank to regional office concerned of RBIbank to regional office concerned of RBI

Counter Trade ArrangementCounter Trade Arrangement

Units in SEZ are permitted to undertake jobUnits in SEZ are permitted to undertake job work abroad and export goods from that country work abroad and export goods from that country subject to conditions that:subject to conditions that:

• Processing/manufacturing charges are suitably Processing/manufacturing charges are suitably

loaded in export price and are borne by the loaded in export price and are borne by the

ultimate buyerultimate buyer

• Exporter has made satisfactory arrangements for Exporter has made satisfactory arrangements for

realisation of full export proceeds subject to usual realisation of full export proceeds subject to usual

GR procedureGR procedure

Export of Goods by SEZsExport of Goods by SEZs

Project exports are export of engineering goods on Project exports are export of engineering goods on deferred payment terms, execution of turnkey projects deferred payment terms, execution of turnkey projects and civil construction contracts abroad are collectively and civil construction contracts abroad are collectively called ‘Projects Exports’.called ‘Projects Exports’.

Such projects need approval of AD category-I banks/EXIM Such projects need approval of AD category-I banks/EXIM Bank/Working Group at post- award stage before Bank/Working Group at post- award stage before execution of contractsexecution of contracts

These contracts are governed by Memorandum of These contracts are governed by Memorandum of instructions on Project and Service Exports (PEM-October instructions on Project and Service Exports (PEM-October 2003)2003)

To provide greater flexibility to these projects, following To provide greater flexibility to these projects, following guidelines have been modified:guidelines have been modified:• Inter-project transfer of machineryInter-project transfer of machinery• Inter project transfer of fundsInter project transfer of funds• Deployment of temporary cash surplusesDeployment of temporary cash surpluses• Repatriation of funds in case of On -site software Repatriation of funds in case of On -site software

contractscontracts

Project Exports & Service ExportsProject Exports & Service Exports

Follow up of overdue billsFollow up of overdue bills

Ads to closely watch realisationof Ads to closely watch realisationof billsbills

Extension requests should be Extension requests should be reported to RBIreported to RBI

To submit XOS statement to RBI on To submit XOS statement to RBI on half yearly basishalf yearly basis

Reduction in invoice valueReduction in invoice value Ads can approve reduction in invoice value after Ads can approve reduction in invoice value after

the bills is negotiated or sent for collectionthe bills is negotiated or sent for collection Reduction should not exceed 25% of invoice valueReduction should not exceed 25% of invoice value Exporter is not caution listedExporter is not caution listed Exporter to be advised to surrender proportionate Exporter to be advised to surrender proportionate

export incentivesexport incentives Exporters of over 3 years of export business may Exporters of over 3 years of export business may

be permitted for write of without ceiling provided be permitted for write of without ceiling provided the export outstanding does not exceed 5% of the the export outstanding does not exceed 5% of the average annual realisation during the preceding 3 average annual realisation during the preceding 3 yearsyears

Self Write OffSelf Write Off

All exporters permitted write off and All exporters permitted write off and reduction of invoice value and extend the reduction of invoice value and extend the period of realisation beyond 180 days period of realisation beyond 180 days providedprovided

The aggregate value of such export bills The aggregate value of such export bills written off does not exceed 10% of the written off does not exceed 10% of the export proceeds due during the calendar export proceeds due during the calendar year and such export bills are not a subject year and such export bills are not a subject of investigation by ED/CBI or any other of investigation by ED/CBI or any other agenciesagencies

Extension of TimeExtension of Time

Exporters to submit the application through the Exporters to submit the application through the Authorised Dealer (Form ETX)Authorised Dealer (Form ETX)

Ads are permitted to extend the period beyond 6 Ads are permitted to extend the period beyond 6 months where the invoice value does not exceed months where the invoice value does not exceed $1,00,000$1,00,000

Such extension may be grated for a period of 3 Such extension may be grated for a period of 3 months at a timemonths at a time

When extension granted more than one year, the When extension granted more than one year, the total export outstanding should not be more than total export outstanding should not be more than 10% of the average of export realisations during the 10% of the average of export realisations during the preceding 3 financial yearspreceding 3 financial years

ISSUES RELATED TO EXPORT ISSUES RELATED TO EXPORT FINANCEFINANCE

Cost of Export Credit: India Double Digit, competing countries of the order of 6% p.a.

ISSUES RELATED TO EXPORT ISSUES RELATED TO EXPORT FINANCEFINANCE

- - High Bank service chargesHigh Bank service charges- Insurance cover (Whole Turnover - Insurance cover (Whole Turnover

Packing Credit Premium also adding Packing Credit Premium also adding to the cost of Credit)to the cost of Credit)

- Collateral vs. Exposure Norms- Collateral vs. Exposure Norms- Crystallization of Bills - Crystallization of Bills - Penalty on Overdue Bills- Penalty on Overdue Bills

Rupee AppreciationRupee Appreciation

ECGC’s Policies

1. Standard Policies -Not exceeding 180 days

-For turnovers less than 50 lacs in the next 12 months

-Approval needs to be sought for credit limit of each buyer

-Specific approval of ECGC incase of restricted cover countries

[Shipment Comprehensive Risk Policy ; Small Exporter Policy ; Exporter Turnover Policy]

ECGC’s Policies

2. Specific Policies -Buyer Specific Policy

-Specific Shipment Policy

3. Exposure Policy -Buyer Exposure Policy

-Multi-Buyer Exposure Policy

Consignment Policy

Country Grouping

For covering commercial & political risks Buyer / Bank

For covering

only political risks

A1 140 30

A2 190 70

B1 240 120

B2 290 170

C1 320 190

C2 340 210

D 360 230Premium rate Paise per Rs.100/- of loss limit

Guarantees to Banks

Packing Credit Guarantee Export production finance guarantee Post-Shipment export credit

guarantee Export finance guarantee Export performance guarantee

Letter of Credit

A credit is a letter written by the buyer’s bank to the seller advising him that he may draw a bill of exchange up to a particular amount for the shipment of certain goods and assuring him of paymenton his submitting certain specified documents. (Always irrevocable Art.3UCPDC 600)

Parties to the Letter of Credit

I. BuyerII. SellerIII. Buyer’s BankIV. Intermediary /Advising/Notifying BankV. Correspondent BankVI. Confirming BankVII. Nominated BankVIII. Negotiated BankIX. Paying Bank