Trade Finance Info

Frequently Asked Questions >> Trade Finance

1.    What are Bank Guarantees?

Guarantee is an unconditional undertaking issued to back up performance and payment obligations on a wide range of international as well as domestic transactions. Most of these instruments place an obligation on the issuer to pay a specified sum of money either on simple written demand or a demand accompanied by stipulated documents in the event of default by the principal debtor. The commonly used guarantees are as under; - Bid Bond Guarantee - Performance Bond Guarantee - Advance Payment Guarantee - Suppliers\' Credit Guarantee - Financial Guarantee - Shipping Guarantee - Customs\' Guarantee - Counter Guarantee etc.

2.    What is Letter of credit?

Letter of Credit (L/C) is a definite undertaking given by a importer\'s bank (issuing bank), guaranteeing payment up to the L/C amount, at the request of a customer (applicant) for the import of goods, to a beneficiary (exporter), against stipulated documents, provided all terms and conditions are complied with. L/C is used in international as well as domestic trade to eliminate risks such as unfamiliarity with the foreign country, customs, or political instability. A Letter of Credit is also commonly referred to as a Documentary Credit. We issue following types of LC as per the requirement of our customers - Sight LC - Time/Usance LC - Differed/Mixed Payment LC - Revolving LC - Confirmed LC - Transferable LC - Back to Back LC - Advance Payment LC

3.    What are Packing Credit / Pre-Shipment Loan?

Packing Credit / Pre-Shipment loan are offered to the exporters to finance purchase of raw materials, manufacturing, processing, packing and shipping of the goods meant for exports against irrevocable Letter of Credit established in favor of the exporter by the buyers for exports through the bank and a confirmed order/export contracts placed by the buyer for exports from Nepal.

4.    What is a Post-Shipment Loan?

Post-Shipment loan is offered to the exporters in the form of export document negotiation / purchase / discount of export bills drawn under letter of credit, confirmed orders / exports contracts. The loan is offered to exporters to finance export receivables after the date of shipment of goods till the date of realization of export proceeds.

5.    What are Trust Receipt/ Importers Loan?

Trust Receipt loans (TR) are granted to importers of goods as a payment to settle the outstanding letter of Credit related to the goods being imported. \"Trust Receipt Loan\" is a short term loan provided to the importer on trust to clear the consignment from the port whereby the borrower agrees to provide legal title of the goods to the bank though under its possession. We provide a very competitive rate of interest for TR loans.