TRADE FINANCE, IMPORT, EXPORT

TRADE FINANCE

Introduction SBI Understand there is much stake involved in Export Import business Global economic, political situations, anything and every thing that affects you and your business. SBI offers the trusted financial solution to all your complex Trade finance related fund needs (both in Indian rupee and foreign currencies).
The gamut of our services include credit for both pre shipment and post shipment activities.
Export Avenue
• Rupee Export Credit (Pre-Shipment and Post-Shipment)
• Pre-Shipment Export Credit
• Post-Shipment Export Credit
• PreShipment Credit in Foreign Currency (PCFC)
• Getting Started - Opening a PCFC
• Operating PCFC
• Export Bill Rediscounting
• Letter of Credit

RUPEE EXPORT CREDIT (PRE-SHIPMENT AND POST-SHIPMENT)SBI understands and values your Pre shipment and post shipment commitments…… our trade finance cell offers both Pre shipment and Post shipment credit in rupee denominated terms to exporters having firm export orders or confirmed letters of credit.Avail Rupee export credit at most competitive rates at 449 branches. Click to locate nearest forex authorized branchBook forward contracts in respect of future export credit drawals.Click here for export credit (rupee denominated) Interest rates.
Pre-Shipment Export Credit SBI offers Pre-shipment Credit (Packing Credit) to the exporters, for financing purchase, processing, manufacturing or packing of goods prior to shipment.This would mean any loan or advance extended to you by SBI on the basis of:
a) Letter of Credit opened in your favor or in favor of some other person, by an overseas buyer;b) a confirmed and irrevocable order for the export of goods from India; c) any other evidence of an order or export from India having been placed on the exporter or some other person, unless lodgement of export order or Letter of Credit with the bank has been waived. Packing Credit is granted for a period depending upon the circumstances of the individual case, such as the time required for procuring, manufacturing or processing (where necessary) and shipping the relative goods. Packing credit is released in one lump sum or in stages, as per the requirement for executing the orders/LC. The pre-shipment / packing credit granted has to be liquidated out of the proceeds of the bill dawn for the exported commodities, once the bill is purchased/discounted etc., thereby converting pre-shipment credit into post-shipment credit.
Post-Shipment Export Credit SBI extend Post-shipment Credit that is any loan / advance granted or any other credit provided by SBI for purposes such as export of goods from India. It runs from the date of extending credit, after shipment of goods to the date of realization of export proceeds and includes any loan / advance granted on the security of any duty drawback allowed by the Govt. from time to time. Post-shipment credit has to be liquidated by the proceeds of export bills received from abroad in respect of goods exported.The exporter has the following options at post-shipment stage: i. To get export bills purchased /discounted / negotiated; ii. To get advances against bills for collection; iii. To receive advances against duty drawback receivable from Govt. The exporter has the option to avail of pre-shipment and post-shipment credit either in rupee or in foreign currency. However, if the pre-shipment credit has been availed in foreign currency, the post-shipment credit has necessarily to be under EBR Scheme since foreign currency pre-shipment credit has to be liquidated in foreign currency. The details of pre-shipment and post-shipment credit in foreign currency are mentioned below.For details contact:(the Asstt. General Manager (Commercial & International Banking Products)
PRE-SHIPMENT CREDIT IN FOREIGN CURRENCY(PCFC) SBI‘s Pre-shipment Credit in Foreign Currency (PCFC) is just what you need, when you are looking for funds in foreign currency. Avail it to meet your manufacturing, processing and packing fund requirements at international interest rates. Just not this, you can also cover the cost of both domestic as well as imported inputs of SBI’s PCFC gives you choice of four different currencies in which to operate the scheme - the US Dollar, Pound Sterling, Euro and the Japanese Yen.SBI has 64 branches across the country handling the PCFC facility for your exclusive convenience. Click here for the list of A & B category designated branches, with addresses/phone and fax nos. etc. Our Foreign Department, based at Kolkatta, is the nodal centre for raising and deploying offshore and onshore funds for lending under PCFC.
Getting Started - Opening a PCFC Make sure you have firm export orders or confirmed letters of credit, and you'll find that obtaining the PCFC facility from SBI is a cakewalk. Of course, you also need to satisfy other credit norms.
Now for the icing on the cake - we let you have a running account facility with us for PCFC if you are an exporter with a good track record. The specified eligibility factor is that your over dues should not exceed 5 per cent of the average annual export realisations during the preceding three calendar years. In cases where a running account facility has been extended, you must produce a letter of credit or a firm export order within a reasonable amount of time.
More good news for existing clients - there is no need for a separate sub-limit for PCFC for you! The PCFC can be made available within the export packing credit available to you provided the outstanding amounts under both rupee and foreign currency facilities do not exceed the sanctioned limits.
Operating PCFC PCFC is to be repaid only with the proceeds of the export bill tendered, under the export bill-rediscounting scheme.
In case of cancellation of export order, the PCFC line may be closed by selling equivalent amount of foreign exchange at TT selling rate prevalent on the date of liquidation.
How do the schemes operate? PCFC & EBR schemes go hand in hand. The operation of these schemes is in three stages, viz. i) Disbursement of PCFC ii) Disbursement of EBR and simultaneous repayment of PCFC and iii) Repayment of EBR.
When the exporter has sufficient drawing power available within his overall limit to accommodate the proposed PCFC advance, PCFC is made available to him either in foreign currency for payment of his import bills or in Indian rupees for purchase of domestic raw material by converting the foreign currency of PCFC at T.T. Buying rate.
PCFC is operated like cash credit account with balances in foreign currency. The liability of the exporter to the Bank on account of PCFC is in foreign currency. The rupee equivalent will be shown in the account only at notional rates which really doesn't concern the exporter.Interest on PCFC will be arrived in foreign currency and the rupee equivalent thereof will be recovered at quarterly intervals from the exporter's CC or Current account.
Click here for Export Credit (Foreign Currency Denominated) Interest rates.
For further details, please contact the Asstt. General Manager (Commercial & International Banking Products) nearest to you.
Frequently Asked Questions (FAQs) Q. Is there any withholding tax on SBI PCFC? A. No withholding tax is payable on the PCFC, if the interest on the foreign currency line is to be remitted to SBI foreign offices.
Q. Can PCFC drawals be booked on a forward basis? A. Yes, forward contracts can be booked in respect of future PCFC drawals.
Q. What about cross currency drawals? A. At SBI, PCFC drawals in cross currencies are allowed, subject to the exporter bearing the risk in currency fluctuations. However, cross currency drawals are restricted to the US Dollar. For instance, for an export order in a non-designated currency like the Swiss Franc, PCFC will be given only in USD. However, for orders in Pound Sterling, Euro and the Japanese Yen, pre-shipment credit may be availed in the respective currencies or USD. Multiple currency drawals against the same order are not permitted, for the sake of operational convenience.
EXPORT BILL REDISCOUNTING Introduction Avail SBI's export bill rediscounting (EBR) for post shipment finance at international rates of interest. PCFC will be liquidated with the discounting of bills under EBR scheme. The foreign currency of the bill will be applied to PCFC in foreign currency and if there is any surplus of the bill after adjusting to PCFC, the surplus portion will be converted into Indian rupees and credited to the exporter's CC or Current account. The EBR advance which is a foreign currency loan will be eventually closed when the overseas buyer pays the bill and the export proceeds are realised. Take your pick from any of the four designated currencies: US Dollar, Pound Sterling, Euro and the Japanese Yen.
Contact any of our 64 forex-intensive branches handling EBR.
Getting Started All export bills, demand and usance, are eligible for SBI's EBR scheme. All exporters are eligible to cover their bills drawn under letters of credit, non-credit bills under sanctioned limits in the bill rediscounting scheme.
Operating the EBR Scheme The bank offers export bill rediscounting for a maximum period of 180 days, inclusive of grace and transit periods.
What are the special advantages in availing PCFC & EBR from SBI? Vast network of designated branches to handle the schemes and also a well laid out system of customers of non designated branches availing the schemes at the nearest designated branches.
No minimum amount is prescribed for drawals under PCFC and EBR schemes
No withholding tax need be paid by the exporters, as the lines of credit for funding PCFC and EBR are drawn by SBI from its own foreign offices.
Competitive rates of interest for customers with good credit rating and high value business.
Frequently Asked Questions (FAQs)Q. Is there any withholding tax on SBI's EBR facility?No withholding tax is payable on the PCFC, if the interest on the foreign currency line is remitted to SBI foreign offices. Since the bank dispenses lines of credit only from its foreign offices, exporters need not pay withholding tax. For further details, please contact the Asstt. General Manager (Commercial & International Banking Products) nearest to you .
For further details, please contact the Asstt. General Manager (Commercial & International Banking Products) nearest to you .

Import Avenue
• Foreign Currency import credit
• Supplier's credit
LETTER OF CREDITLeverage SBI's reputation and goodwill in the global market! Avail of SBI's Letters of Credit for your purchases in international and domestic trading operations.
SBI offers Letters of Credit to facilitate purchase of goods in international trading operations. Backed by SBI's strong reputation, you will be able to build better trust in trade and forge business relationships faster.
The bank's vast network of branches and correspondent banks enables your enterprise to sustain a seamless flow of business on a wide platform.
(Click here for the list of forex authorised branches and list of correspondents banks).
Further, the bank's informed trade finance crew can provide you with sophisticated credit and trade information, and market knowledge, helping you to extract more value from business. Since the Bank establishing the Letter of Credit undertakes the responsibility of honouring the drafts drawn there under, the ability of the importer to meet its obligation, the integrity of the exporter, the nature of goods, besides observance of Exchange Control regulations etc. are considered. Foreign Currency import creditThis is ideal for both Indian importers and their foreign suppliers. SBI offers credit to foreign suppliers of Indian importers by purchasing the import bill for its full value through one of the bank's overseas offices. The tenor of this form of supplier's credit does not exceed 180 days. The supplier gets 100 per cent of the invoice value immediately, making his deal practically a cash sale.
Importers get credit for a maximum period of 180 days, enabling them to manage their liquidity better. Further, their interest payables could be lower since international interest rates are currently lower than domestic rates.
These facilities are useful for import by sellers in the domestic market as well as export-related import.
For further details, please contact the Asstt. General Manager (Commercial & International Banking Products) nearest to you. (FAQs)Frequently Asked Questions
Q. What are the exchange control regulations applicable? A. Authorised dealers are permitted to make interest payments accrued on interest bills for a period not exceeding six months from the date of shipment. In this case, the interest rate should not exceed the prime rate of the country in whose currency the import goods are invoiced in. Given that the stipulations on tenor and the interest rate are met, no prior permission from the Reserve Bank of India is required for this facility.
Short term foreign Currency Funding for Imports Suppliers Credit
Suppliers' Credit essentially represents credit sales effected by the supplier on the basis of accepted bills or promissory notes with or without a collateral security. Any credit facility arranged with recourse to the supplier for financing upto 180 days import into India which is not backed up in the form of any letter/document/guarantee/agreement, etc. issued by the LC opening banks or in any other manner except normal routine commercial transactions like an LC, can be treated as a suppliers' credit. The underlying commercial contract between the exporter and the Indian importer should provide for drawing of usance drafts with an upper cap of 180 days on the usance period. When documents under such usance LCs are discounted by our foreign offices and other banks, it is not based on any mandate/letter of comfort/guarantee given by the LC opening bank in India either on their own behalf or at the instance of the importer, i.e.. the buyer of goods. Indian importers are free to enjoy a credit period of 180 days on their imports from the date of shipment provided interest for the period does not exceed the prime rate for the currency in which the goods are invoiced. Prior approval of RBI/GOI was required for exceeding this time limit, till September 2002.
With a view to simplifying the procedure for imports into India, RBI, in September 2002, decided that the Authorised dealers may approve proposals received in form ECB for short term credit for financing, by way of Suppliers' Credit, of import of goods into India, provided.
The credit is being extended for a period of less than 3 years
The amount of credit does not exceed USD 20 million (approx. Rs. 94 crores now) per import transaction.
The 'all-in-cost' per annum, payable for the credit does not exceed LIBOR + 50 basis points for credit upto one year and LIBOR + 125 basis points for credit for periods beyond one year but less than three years.
For further details, please contact the Asstt. General Manager (Commercial & International Banking Products) nearest to you.