Steps Involved
- The customer will import the goods either under LC, collections or open account
- The customer requests the Buyer's Credit Arranger before the due date of the bill to avail buyers credit financing
- Arrange to request overseas bank branches to provide a buyer's credit offer letter in the name of the importer. Best rate of interest is quoted to the importer
- Overseas bank to fund Importer's bank Nostro account for the required amount
- Importer's bank to make import bill payment by utilizing the amount credited (if the borrowing currency is different from the currency of Imports then a cross currency contract is utilized to effect the import payment)
- Importer's bank will recover the required amount from the importer and remit the same to overseas bank on due date.
- It helps importer in working capital management.
Read more about this topic: Buyer's Credit
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