What does Buyers Credit mean

What does Buyers Credit mean?

 

What does Buyers Credit meanUnder the Buyers' Credit scheme, buyer is extended credit by a financial institution or consortium of financial institutions. Exporter gets the payment immediately. When the financial institution is located in supplier's country, there is no transfer of funds from one country to another as the financial institution in India makes remittances in Indian rupees to the exporter and gets repayment of loan in foreign currency. However, if the financial institution is located in the buyer's country, there is immediate remittance of funds from the buyer's country to the supplier's country to enable the supplier to get payment. This type of credit is normally extended for capital goods.

RBI's approval is needed in extending the buyer's credit as payment is made to the exporter on behalf of resident buyer. The authorised dealer should make application, in I Form DPX 6, for this purpose. 1

 

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