We at PANCAPS work with more than 100 Overseas Banks offering Best Buyers Credit & Suppliers credit quotes for Importers. Our arrangement with various banks across globe helps us to arrange cheapest possible quotes. Quotations is done depending upon bank, amount and tenor.
This strategy is used to arrange funds for financing “Sight L/C’s” and for “Rollovers” in which the corporate extends the payment maturity date.
This modus operand is used to discount credit L/c’s in a manner where the supplier /beneficiary receives his payment at Sight whereas the corporate can enjoy the credit period of the L/c at low cost overseas funds.
Best BC Rate:
|Best Deals For Week|
|No of Days||Libor||USD 10,000 to 20,000||USD 20,000 to 50,000||USD 50,000 to 70,000||USD 1,00,000 or more|
Comparison Bank rates:
We have given comparison of benefits on various bank base rates. Generally bank do not finance on their respective base rate. It varies according to creditworthiness of customer.
When you choose not to hedge currency risk, your potential benefit increases up to forward premium saved. In nominal case scenario, it is observed that it does not benefit importer in long run as we are trade deficit country.
|Name of Bank||LIBOR||Spread||LOU||Bank Int Rate||Forward Premium||Net benefit with Hedge||Net benefit with Hedge|
|Bank Of Baroda||0.55||0.5||1||9.05%||7.3%||
|Punjab National Bank||0.55||0.5||1||9.0%||7.3%||-0.30%||+6.95%|
BUYER'S CREDIT ADVANTAGES
- Buyers credit helps local importers access to cheaper foreign funds close to LIBOR rates as against local sources of funding which are costly compared to LIBOR rate.(for example the rate of cash credit is between 11-15%)
- Importer gets extended date for making an import payment as per the cash flows
- The importer can deal with exporter on sight basis, negotiate a better discount and use the buyer's credit route to avail financing.
- Further rollover of buyers credit can be done if the importer has short term liquidity problem
- The funding currency can be in any FCY (USD, GBP, EURO, JPY etc.) depending on the choice of the customer.
- The importer can use this financing for any form of trade viz. open account, collections, or LCs.
The currency of imports can be different from the funding currency, which enables importers to take a favorable view of a particular currency.