Wednesday, April 10, 2019
Introduction to Export Finance Essay Example for Free
Introduction to Export pay Essay quotation and pay is the life and blood of whatever business whether domestic or international. It is much important in the case of exporting transactions due to the prevalence of novel non-price competitive techniques encountered by exporters in various nations to enlarge their shargon of world markets. The selling techniques are no foresightfuler contain to mere quality price or delivery schedules of the products but are extended to payment damage offered by exporters. Liberal payment depots usually score over the competitors non only of groovy equipment but as well as of consumer goods. The payment terms however depend upon the availability of finance to exporters in singing to its quantum, cost and the period at pre-shipment and post-shipment stage. Production and manufacturing for substantial supplies for exports take time, in case finance is not getable to exporter for production.They will not be in a position to book large exp ort order if they dont have sufficient financial funds. Even merchandise exporters require finance for obtaining products from their suppliers. This project is an attempt to throw light on the various sources of export finance available to exporters, the schemes apply by ECGC and EXIM for export promotion and the recent developments in the form of tie-EXIM tie-ups, credit policy announced by RBI in Oct 2001 and TRIMS.Concept of Export FinanceThe exporter may require short term, medium term or long term finance depending upon the types of goods to be exported and the terms of statement offered to overseas buyer. The short-term finance is required to meet work capital needs. The working capital is used to meet regular and fall out needs of a business firm. The regular and recurring needs of a business firm quote to purchase of raw material, payment of wages and salaries, expenses like payment of rent, advertising etc. The exporter may also require term finance. The term finance or term loans, which is required for medium and long term financial needs such as purchase of fixed assets and long term working capital. Export finance is short-term working capital finance allowed to an exporter. Finance and credit are available not only to help export production but also to sell to overseas customers on credit.Objectives of Export Finance* To cover commercial Non-commercial or political risks attendant on granting credit to a foreign buyer. * To cover natural risks like an earthquake, floods etc.An exporter may avail financial assistance from any bank, which considers the ensuing factors a) Availability of the funds at the required time to the exporter. b) Affordability of the cost of funds.AppraisalAppraisal heart and soul an approval of an export credit proposal of an exporter. While appraising an export credit proposal as a commercial banker, obligation to the following institutions or regulations needs to be adhered to. Obligations to the RBI under the chang e Control Regulations are* mensurate to be the banks customer.* Appraise should have the Exim code tally allotted by the Director General of Foreign Trade. * Partys name should not face under the caution list of the RBI. Obligations to the Trade Control Authority under the EXIM policy are* Appraise should have IEC number allotted by the DGFT.* Goods must be freely exportable i.e. not locomote under the negative list. If it falls under the negative list, then a valid license should be there which allows the goods to be exported. * Country with whom the Appraise wants to trade should not be under trade barrier.Obligations to ECGC are* Verification that Appraise is not under the Specific Approval list (SAL).* Sanction of Packing Credit Advances.Guidelines for banks dealing in Export FinanceWhen a commercial bank deals in export finance it is bound by the ensuing guidelines a) Exchange control regulations.b) Trade control regulations.c) Reserve Banks directives issued through IECD.d ) Export Credit Guarantee Corporation guidelines.e) Guidelines of Foreign Exchange Dealers Association of India.
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