Export bills discounting formalities.

 

The information provided here is part of Guide on howtoexport and import 

What is export bill discounting?

‘Export bill discounting’ is commonly used term in international trade.

As you know, finance plays a major role in Business. Especially in exports, the volume of finance requirement is higher than domestic sales because of its volume of business.

Let the business contract with overseas buyer be on credit basis, the exporter needs finance immediately up on shipment of his exported goods. Here he approaches his banker to finance against his exported goods by producing documentary proof of export, and avail finance. Export bill discounting is common in International trade.

Export bills discounting formalities copy How does export bill discounting work?

Once your goods moved out of your factory, the Customs House Agents appointed by you complete customs formalities on behalf of you and delivers you necessary customs documents. Once customs formalities completed and obtained ‘let export order’ shipping bill, you hand over cargo to shipping carrier to carry your goods to final destination at buyer’s place. Once after handing over cargo to shipping carrier, they issue Bill of Lading under sea shipments or Airway bill under air shipments.

The necessary export documents like Bill of Lading/airway bill, commercial invoice, packing list, certificate of origin, bill of exchange, export order copy are submitted with bank with a request of discounting export bills. You can discount your export documents similar to discounting of cheques, promissory notes etc. with bank.

Bank verifies all documents and arranges to discount your bills and transfer your money to your account. If your export order is in any foreign currency, you can either convert amount in your currency or you can open a dollar account and transfer amount accordingly.

 

As per the guidelines of government of each country, almost all banks extends export bill discounting facility to exporters with a low interest rate.

How to repay the amount financed by bank under export bill discounting?

Once after bill discounted by bank against exports, the amount of discounted bills is collected from the buyer as per the agreed terms and conditions of buyer and seller. For example, if exporter extended a credit period of 60 days to buyer, the bank adjusts the amount of bill discounted received from buyer on maturity date on 60th day. The necessary bank interest till the date of receipt of amount from overseas buyer and other bank charges are debited to exporter’s account.

What happens if discounted export bills not paid by buyer?

If bank does not receive amount against export bills discounted, the whole amount of discounted bills with interest is debited to exporter’s account.

Does bank discount bills against exports of all exporters without collecting their credit worthiness?

Normally bank discounts all export bills of their account holders without collecting exporter’s credit worthiness. However, most of banks demand collateral security from exporters to finance.

Most of the banks also obtain insurance against exporters to cover default of payments against discount of export bills from credit guarantee agencies.

 

 

I hope, I could explain about export bill discounting procedures and formalities in simple language.

Would you like to share your experience in export bill discounting?

The above information is a part of Online export import training guide 

Comment below your thought on export bill discounting.

Other information about Export importt tutorial

What happens, if Bank not received money from buyer after discounting of export bills?

Difference between BRC and FIRC

Disadvantages of Letter of credit (LC) for Exporter

How Letter of Credit (LC) works

EEFC Account. Exchange Earners Foreign Currency Account

Difference between Letter of credit and Bank Guarantee

How to start Export Business?

How to get Export Orders?

What are the risks and solutions in Export Business?

Click here to know India Trade Classification(ITC)

Click here to know HS code of other product/commodity

Service Tax - Click here to read complete notification under Budget 2014

What is Bank post shipment credit to exporters?

Types of export containers
Measurement of export containers
Export Import Policy of India 2015-2020
MEIS, Merchandise Exports from India Scheme
SEIS, Service Exports from India Scheme
Merge your Commercial Invoice and Packing List for all your future exports
Export procedures and documentation

   

Nil rate of GST on sale of Firewood or fuel wood

GST on sale or purchase of sawdust and wood waste and scrap,logs,briquettes, pellets

No GST on sale of Wood charcoal

GST scheduled rate on sale or purchase of walking-sticks, umbrellas, tool handles

GST levied rate on purchase or sale of Wood wool,wood flour

GST rate on purchase or sale of Wood articles

GST on Wood articles under HSN 4408 and HSN 4409

Payable GST on Particle board

GST payable rate on Fibre board of wood or other ligneous materials business

GST on Plywood business

GST slab rate on Densified wood

GST rate on Wooden frames for paintings business

 

 


Comments


manmohan sharma: can a export bill discounted with promissory note.and if discounted importer fail to make payment what will be legal aspect plz reply

venkataratnam: AFTER HOW MANY DAYS THE PACKING CREDIT AMOUNT ALLOWED BECOMES OVERDUE.

Surendran Kollerath: Hi Venkataratnam, I have tried to mention a brief idea about the subject. You may contact your authorized banker to know more about Packing Credit amount allowed and its validity period.

HIMANI ROY: Can a bill of exchange be partially discounted by the bank? e.g Exporter is submitting bill of exchange,invoice and shipping bill certified by customs for USD10000 to the bank. However he is eligible for only USD 6000 as per his discounting limit.Can partial disconting be done with the same set of documents?

BHARAT PANICKER : In case on Import from Spain, if the buyer in India does not have an IEC then how can we go about it? and vise verca.

Admin: Hello Bharat Panicker, Import without IEC is not permitted by customs. However, Deputy commissioner of Customs may permit to do one shipment by remitting penal charges to government. Check whether this arrangement is permitted now as per latest rules and regulations of customs

HALANI MAHESH: For discounting export bill LC is compulsary??

Kiran: So I want to know "Bill discounting limit in post shipment finance for Export Financing". Pls can someone help?

ALPESHBHAI: Dear sir , what type of limi facility required from banker for LC at sight exports ? Thanks in advance

rathod_nirmal@yahoo.com : Kindly send me a list foreign expoter in Gujarat.

Apexion Dental : We have a buyer in Nigeria who wants to buy few dental products from us. The total value of the shipment is about Rs. 3,25,000/-. Since this buyer is an Indian native, he would like to arrange the remittance against this export from India itself. It would help him to save on currency conversions and bank charges. My question is, are we allowed to take remittance from India against the export we make? or should it come from Nigeria itself? It would be nice if could give a clarification.

Viren Lukhi : I would Like to know about Some Queries. Like If We Send Some Goods In a Foreign Countries as a Consignment basis and some goods are sold and some goods are returned. So what is the Actual Date and export rate of USD to be Counted on the Sold Invoice As Per Indian Goverment ?

sandeep ghadse : I am sandeep Ghadse From Nagpur,Maharashtra.I got the IEC as merchant exporter and done the RCMC from APEDA,Ihave selected some product like yellow millet for bird feed and human consumption and oil seeds I am not getting Manufacturing supplier forproduct how to find it or should I go for searching for Importer (buyer) first.

KAVITA THAKKAR : kindly advice the process for obtaing import export code for pvt ltd co

Sushant D: We have a buyer in France, he is issuing US Dollar LC for payment of proceed, The LC to be Advised and payment to be received in Indian bank. The bills can be discounted at a specific Bank in France. Does RBI or FEMA Norms allow us (Indian Entity) to discount bill in Foreign National Bank (French Bank). Kindly Advice.

Gaurav patel: I want to when I am done the shipment and my payment terms is DA with usance period of 60days and my buyer is signed bill of exchange and I have ECGC cover so in this case I can get post shipment finance wia bill of discounting please advise me

SM NAIR: want LC DISCOUNT

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