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?

  1. Foreign buyers approach the Exim bank along with the bank guarantee for the given project.
  2. On the basis of Bank Guarantee, the Exim bank approves to finance the project.
  3. On the approval of the Exim bank, exporter exports the goods & get’s the payment from the Exim bank.
  4. 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.