LIBOR is the acronym for London Interbank Offered Rate. The ‘LIBOR’ serves as the key benchmark rate in calculating interest rates on various loans across the world. Each morning before 11 a.m. (GMT), the sets of major banks that have a significant presence in the London market are asked the rate at which they could…
MIBOR stands acronym for ‘Mumbai Inter- bank Outright Rate’, the benchmark of the Indian call money market. It is the rate at which banks borrow unsecured funds from one another in the inter bank market. The bid rate on how much interest banks would pay to borrow money on a short-term basis from other institutions…
A depository receipt or depositary receipt (DR) is a negotiable financial instrument that represents a foreign company’s (issuing company which is incorporated outside India) publicly traded debt or equity in domestic exchanges. The depository receipts (DRs) which are created by a Domestic Depository bank against the underlying equity shares of the issuing company are termed…
International factoring usually has two factors viz. export factor and import factor. The export factor looks at financing the exporter and collection of account receivables. The import factor evaluates the importer in respect of collecting the dues in time and assessment of chances of default by the importer. The exporter on receipt of export order…
The term forfaiting refers to a form of trade finance involving discounting of export bills receivables such as drafts drawn under LC, bills of exchange, promissory notes, or other instruments on without recourse basis. The export of capital goods involves account receivables of medium and long term maturities. It is a general practice that the…
EXIM bank of India was established by Government of India in 1982 under the Export-Import Bank of India Act, 1981 for the purpose of financing, facilitating and promoting India’s international trade. The bank conducts export market studies and assists Indian Joint ventures in third countries. The bank offers international merchant banking services and financing in…
The banks which are officially authorized by RBI to deal in foreign exchange transactions are called ‘Authorised Dealers’ (ADs). Foreign Exchange Dealers Association of India (FEDAI) is an association of ‘Authorised Dealers’ set up in 1958 under sec 25 of companies’ act 1956. As per RBI guidelines, it is obligatory on the part of all…
FEDAI prescribes rules regarding trading hours, Exchange rate, Crystallization, of foreign currency, extension/cancellation of contracts etc. The FEDAI rules govern all Authorised Dealers of foreign exchange in India. Some of the important rules of FEDAI are as under. Trading Hours of Authorised Dealers (Rule 1): Exchange trading hours for interbank forex market in India would…
Banks extend export credits to exporters of goods and services, where the loans are released for procuring, Packing processing (where necessary), manufacturing and finally for packing of goods. The credit facility is also available to service providers for the working capital requirement like the purchase of consumables, wages, and supplies etc. for the rendering of…
The Exporters of services may seek finances from banks for their requirements to buy consumables, supplies, and wages. Such exporters shall register with the Electronic and software Export Promotion Council or Services Export Promotion Council or with Federation of Indian Export Organizations, as applicable to their unit to be qualified for working capital export credit…