Buyer’s Credit For Deferred Payment Export
- The credit is extended by the Exim Bank to the buyer abroad to enable them to import engineering goods & project from India on deferred payment terms.
- Similar to direct lending to the exporters, this facility has to be secured by the letter of credit or bank guarantee.
How Buyer’s Credit For Deferred Payment Export Works?
- Foreign buyers approach the Exim bank along with the bank guarantee for the given project.
- On the basis of Bank Guarantee, the Exim bank approves to finance the project.
- On the approval of the Exim bank, exporter exports the goods & get’s the payment from the Exim bank.
- After every six months, the foreign bank makes payment to the Exim bank as an installment.
Generally, AVIL Bill of exchange is used as a bank guarantee.
Avil is a bill of exchange drawn by the exporter on which acceptance of the foreign buyer & his banker is taken. AVIL is a guarantee payment.