Line Of Credit
- The Exim bank extends the line of credit to the overseas government in the form of the soft loan or to their nominated agencies or financial institutions.
- It enables buyers in these countries to import capital goods / project on deferred payment terms.
- The buyer follows the terms & conditions negotiated between the Exim bank & the overseas government.
- The exporter can obtain payment from the Exim bank against negotiation of shipping documents without recourse to the exporter.
- The line of credit are nominated in convertible foreign currency or in INR.
- The foreign bank obtains the allocation of funds from their government / agencies which are given by the EXIM bank.
- The exporter then enters into a contract with the foreign bank for the items covered under the line of credit.
- The foreign buyer submits the contract to his bank for approval.
- The foreign buyer’s bank forward the copies of the contract to his government for approval.
- On shipment, the exporter submits the documents to the designated bank for negotiation.
- Exporter bank forwards the documents to the buyers & copies of the documents to the Exim bank
- The Exim bank reimburses the eligible amount to the negotiating bank for onward payment to the exporter.
- The Exim bank in turn, debit the borrower’s account & arranges to collect principal & the interest receivable on the due date as per the terms of lines of credit.