Buyers Credit is a short period credit accessible to an buyer/purchaser from abroad loan providing institution or banks, for example, banks and other money related foundation for consignment or products they are importing.
It is important method of financing in worldwide trade since foreign purchasers/buyer from time to time pay money for massive or huge purchase while few exporters have the ability to grow significant measure of long period credit facilities to their buyer or purchaser.
Buyer’s Credit is the exclusive credit facility programme that motivates exporters/suppliers to explore new areas of business. Through this programme, the overseas buyer can open a “letter of credit” in favour of the supplier or exporter and can import goods and services from overseas on deferred payment terms. In this process, the exporter enjoys reduced transaction costs and complexities of international trade transactions as well as can continue to put his working capital to good use to scale up operations. Importer avail buyers credit facility from other international financial institutions in order to finance their imports at competitive LIBOR rates.
Buyers Credit Features
Assists in export formalities for SMEs by providing credit to foreign buyers to import goods
It provides opportunity to importer for financing in import of capital goods or services on deferred payment basis
Provides non-recourse finance to exporters by converting deferred credit contract into cash contract
Ensure advance payments to exporters on behalf of the overseas buyer
List of documents required for Buyers Credit:
Request letter from exporter, Shipping Documents (Non-Negotiable Copy), Promissory Note and Trust Receipt, Authorization letter from borrower to disburse the eligible value under the Buyer’s Credit facility and remit it to the Indian exporter.