Suppliers Credit

Supplier’s Credit refers to loan which can be availed by the importers where the Exporter demands sight payment wherein the Importer requires credit .Usance bills under LC is being issued by importer’s bank which they undertake to pay overseas bank after the usance period as agreed in the LC terms. By this means the importer is able to meet the exporter’s expectation of sight payment and benefits by competitive rates

​​Importer enter into contract with supplier for import.

• With transaction details importer approaches Deutsche Bank/ arranger to get suppliers credit for the transaction
• Arranger get an indicative pricing from overseas bank, which importer confirms.
• Importer approach his bank and get LC issued, restricted to overseas bank counters with other required clauses
• Overseas Bank confirms the LC and advise LC to Supplier’s Bank. Suppliers Bank provides the copy of the LC to Supplier.
• Supplier ships the goods and submits documents at his bank counter.
• Supplier’s Bank sends the documents to Overseas Bank.
• Overseas Bank post checking documents for discrepancies (As per UCP 600) sends the document to importer’s bank for acceptance:
  • If importer is bearing interest cost, supplier receives full payment.
  • If Suppliers is bearing interest cost, supplier will receive LC amount – Interest.
• Supplier receives the payment for the LC. Depending on who is bearing the interest cost:
  • If importer is bearing interest cost, supplier receives full payment.
  • If Suppliers is bearing interest cost, supplier will receive LC amount – Interest.
• Importer’s Bank receives the documents. Importer’s bank and Importer accept documents. Importer’s Bank provides acceptance to Overseas Bank, guaranteeing payment on due date.
• On maturity, Importer makes the payment to his bank and Importer’s bank makes payment to Supplier’s Credit Bank.

Cost Involved (may vary bank to bank)

• Foreign bank interest cost
• Foreign Bank LC Confirmation Cost (Case to Case basis)
• LC advising and or Amendment cost
• Negotiation cost (normally in range of 0.10%)
• Postage and Swift Charges
• Reimbursement Charges
• Cost for the usance (credit) tenure. (Indian Bank Cost)

Requirement :

• Import transaction under LC
• Incoterms : FOB/CIF/C&F
• Arrangement has to be done before LC gets opened. Incase of LC already opened, relevant amendment has to done.
• LC to be restricted to suppliers credit providing bank under 41D clause of LC
• Under Payment Term: 90 days Usance payable at Sight (mention tenure according to tenure and offer received)