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SMR Corporate Service Pvt Ltd Buyers Credit Tenor.

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Presentation on theme: "SMR Corporate Service Pvt Ltd Buyers Credit Tenor."— Presentation transcript:

1 SMR Corporate Service Pvt Ltd Buyers Credit Tenor

2 SMR Corporate Service Pvt Ltd Concept of B/L Date Bill of Lading is discussed in a detailed manner in the following link: Bill of Lading - An Overview Bill of Lading - An Overview Bill of Lading - An Overview The Buyers Credit Period is linked to B/L Date. In the following slides we will see the tenures that are allowed for different sectors and for what spans.

3 SMR Corporate Service Pvt Ltd B/L Date or AWB Date 360 th day from B/L Date – For Non Capital Goods 3 years from B/L Date – For Capital Goods 90 th day from B/L Date – For Bullion & Diamonds Payment prior to B/L Date considered to be ADVANCE PAYMENT Point A = B/L Date Point B = Maximum Allowed Period for buyers credit

4 SMR Corporate Service Pvt Ltd Advance Payments In case any payment is made before the B/L date, then such payment is considered to be advance payment, as very well known In such cases the buyers credit cannot be availed for such advance amounts Example 1.1 Let us say XYZ Co. had received an overseas invoice of US$ 250,000 and supplier stipulated 30% to be paid prior to shipping i.e. US$ 75,000. So, this payment would go prior to B/L date and hence it is advance. The buyers credit can be taken for the rest of the amount. i.e US$ 175,000

5 SMR Corporate Service Pvt Ltd For Non-Capital Goods the maximum allowed period is 360 days from the date of B/L. One can avail rollover until this period is exhausted Example 1.2 XYZ Co. imported non capital goods from Germany. It has to make payment of US $ 100,000. The B/L date is January 1, 2012 Hence maximum allowed period would be 26/12/2012 Excel calculation: AB 1B/L DateMaximum Maturity 21/1/2012=A /12/2012

6 SMR Corporate Service Pvt Ltd Rollover Now in Example 1.2, the BL date is 01/01/2012. The Company availed the Offer Letter and sent the Letter of Undertaking/Comfort on 15/01/2012 requesting a buyers credit of tenor 180 days (as sanctioned by LoU bank) The interest advise copy (sent by financing bank) would then give the maturity date as: 13/07/2012 {can be calculated on excel, as earlier} On the Maturity date i.e. 13/07/2012 the XYZ Co. can avail a rollover of the same transaction. –If availing the finance from earlier financing bank, then only needs to pay interest part and send the Letter of Comfort/undertaking requesting rollover –If availing the finance from other financing bank, the principle + interest must be paid to earlier bank The rollover could be taken upto 26/12/2012 (maximum allowed period), so the rollover period would be 166 days. Hence, XYZ Co can take quote for maximum that many days only

7 SMR Corporate Service Pvt Ltd For Capital Goods the maximum allowed period is 3 years from the date of B/L. One can avail rollover until this period is exhausted as discussed earlier for non capital goods For Bullion and Diamond transactions, the rollovers are not allowed. The maximum period that is allowed is 90 days from B/L and subject to conditions stipulated by the bank

8 SMR Corporate Service Pvt Ltd You can contact us for further information Phone: / 86 / 87 Fax : Corporate Office: 303, GDITL – B8, Netaji Subhash Place, Pitampura Delhi Thank You for visiting us !


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