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Forfaiting


 

Introduction

Customer (exporter) has contracted to sell goods to buyer (importer) on credit terms. Under this contract, the importer has requested its banker to issue a documentary credit to the exporter and the tenor of the credit is payable at a future determinable date (eg. 30 days after B/L date or 60 days after sight). Upon receipt of the documentary credit, exporter may first arrange with us for the possibility of financing them on a without recourse basis.

If agreeable and subject to management approval, the exporter shall submit documents under the credit to us for processing and dispatch to the issuing bank. Upon acceptance by the issuing bank, we shall credit the export proceeds to its account with us after deducting all our charges and discount interest.

Benefits to exporter

1) Improve liquidity and cash flow position.

2) Faster business turnover facilitating business expansion.

3) No more liability on the part of exporter as payment received is final.

Application Requirements

1) Exporter maintains a banking account with us.

2) Exporter must obtain our consent for without recourse financing.

3) The issuing bank is a reputable international bank with bank line available from Head Office.

4) The bill has been accepted by the issuing bank.

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· Export Bills Processing under Documentary Credits

Trade Finance

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