Buyer's Credit - Cost Involved

Cost Involved

  1. Interest cost: is charged by overseas bank as a financing cost
  2. Letter of Comfort / Undertaking: Your existing bank would charge this cost for issuing letter of comfort / Undertaking
  3. Forward Booking Cost / Hedging cost
  4. Arrangement fee: Charged by person who is arranging buyer's credit for buyer.
  5. Risk premium: Depending on the risk perceived on the transaction.
  6. Other charges: A2 payment on maturity, For 15CA and 15CB on maturity, Intermediary bank charges.
  7. WHT (Withholding tax): The customer may have to pay WHT on the interest amount remitted overseas to the local tax authorities depending on local tax regulations. In case of India, the WHT is not applicable where Indian banks arrange for buyer's credit through their offshore offices.

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