Buyer’s Credit

Buyer’s Credit refers to loans arranged on behalf of the importer by an overseas bank for the payment of imports into India. The role of the importer is the buyer, and the exporter is the seller. The overseas lender lends the importer (buyer) based on the Letter of comfort/ Letter of Undertaking issued by the importer’s (buyer’s) bank. The buyer’s bank coordinates between the importer and the overseas lender for arranging the buyer’s credit by issuing a Letter of Comfort /Letter of Undertaking for a certain amount of fee. Hence, this credit helps importers avail foreign funds at a relatively cheaper rate. Some of the key benefits of Buyer’s Credit are:


The exporter is paid on the due date, while the importer earns an extended date to make an import payment according to cash flows.


Bill discounting is a more efficient, faster way of assessing working capital because it is hassle-free and does not involve the lengthy documentation procedure.


The importer can deal with the exporter on a sight basis, negotiate a better discount and use the buyer’s credit route to avail financing.


Depending on the customer’s preference, the funding currency will be available in any FCY (USD, GBP, EURO, JPY, etc.).


This financing can be used by the importer for any sort of trade, viz. open account, collections, or LCs.


The currency of imports may vary from the funding currency, allowing importers to take a favorable view of a particular currency.

The cost involved in buyers credit is as follows:


MT799 charges: The importer’s bank will charge. This charge varies from bank to bank.


Interest Charges: Libor + bps for the period from the date of financing to the maturity date.


SBLC (MT760) Issuance Charges: The importer’s bank will charge for issuing SBLC. This charge varies from bank to bank.


Forward/Hedging Cost: Forward premium as per market rate.


Arrangement fee: This fee is paid to the trade finance consultant for his service.


Other charges: A2 payment on maturity, 15CA and 15CB on maturity, Intermediary bank charges, etc.


Withholding Tax (WHT): For funds arranged from a foreign bank, the importer has to pay WHT on the interest amount.

Advantage of Buyer’s Credit (BC) Services from Finnova Advisory

Finnova Advisory offers Buyer’s Credit (BC) assistance. We have formed alliances with numerous banks and financial institutions to provide a wide range of lender options. According to your eligibility and financial requirement, we recommend quick processing, competitive interest rates, and multiple collateral options to ensure that this is the best option for your business. We also deal with private, PSUs, co-operative banks, and NBFC’s.

Along with this, our team of specialists takes pride in offering unbiased advice to our customers regarding our services. Acting as a mediator, we are readily available to help you apply for corporate finances service from some leading banks and financial institutions.