Post shipment finance to exporters without packing credit facility

Banks in India offer various credit facilities to exporters both at pre-shipment stage (Packing Credit) and Post-shipment stage viz. Purchase of export bills, Discount of Export Bills, Negotiation of Export bills, Advance against Undrawn Balances on Export Bills, Advance against Retention Money, Advance against Duty Draw Back, Advance against Deemed Exports, Advance against the export of Goods for…

Crystallisation of overdue export bills

In simple words, the process of converting foreign currency liability of the exporter into Indian Rupee liability is called ‘crystallization of foreign currency export bills’. The purpose of crystallization is to transfer the exchange risk involved in a belated receipt of export bill payment to the exporter. The export bills negotiated/purchased/discounted by a bank are…

External Commercial Borrowings (ECB) – Clarifications on hedging

Further to its earlier circulars, Reserve Bank of India has clarified on the provisions of hedging in the ECB framework vide its circular (A.P. (DIR Series) Circular No. 15) dated 07.11.2016.  The circular provides clarity on hedging ‘External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency to bring uniformity in hedging practice in…

What is the difference between devaluation and depreciation of a currency?

(This article offers detailed explanation on fixed and floating exchange rates/ Real Effective Exchange Rate (REER) and effects on our Foreign Trade and Internal Economy on devaluation or depreciation of Rupee. The article also elucidates on advantage and disadvantage of devaluation or depreciation of a currency.) You might have heard that the exporter lobby in India…

What is Uniform Customs and Practice (UCP) for Documentary Credits?

We all know that in the international trade of goods and services transactions takes place between the people belonging to different continents, languages, culture, and laws. Since the language used for communication of terms and conditions of LC may suggest different meaning in different parts of the world, people across the world realised the need…