SBLC : Its use for Buyer’s Credit

We guide and arrange Buyer’s Credit under Standby Letter of Credit (SBLC) based on the client’s profile and requirement.

How does SBLC backed Buyer’s Credit work?

• First of all, the Importer should have Standby Letter of Credit (SBLC) Limit sanctioned.
• Importer finalizes the purchase contract with overseas Exporter for the supply of goods to India on any of the terms of payment i.e. Open Account basis or Documentary Collection basis or under LC.
• For payment to the Exporter, BC quote is either arranged by the Importer himself or WC Bank arranges the same from Lending Bank (Banks, FIs, Foreign Equity Holder located outside India and FIs in IFSC located in India).
• The importer may also share basic details of import transaction with www.isaactudu.com to get the BC quote from Lending Bank.
• www.isaactudu.com arranges and gets the best quote from the Lending Bank.
• Once the BC quote is accepted by the Importer, an Arrangement Letter is issued & an Agreement is executed between the Importer and Lending Bank for the BC facility.
• Importer requests its WC Bank to issue SBLC and WC Bank issues the SBLC in favour of Lending Bank to fund the Exporter. The client also requests Lending Bank to fund the Exporter once SBLC is issued.
• After receipt of SBLC, Lending Bank will fund the NOSTRO Account of WC bank. Subsequently, WC Bank remits the fund to the Exporter’s Bank. Thus, Exporter gets the payment for exported goods.
• On the due date, the Client funds the principal plus interest amount and SBLC Issuing Bank remits the fund to the Lending Bank and reverses the SBLC liability.
• As per RBI Trade Credit (TC) Policy, for non-capital goods, the Buyer’s Credit period shall be up to one year or the operating cycle whichever is less.