factors for choosing a bank

CHAPTER-1
INTRODUCTION

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Executive summary
In the modern customer centric competitive arena, satisfaction, quality and loyalty prove to be key factors. The higher the (perceived) service quality, the more satisfied and loyal are the customers. In particular, financial institutions (i.e. banks) realized the strategic importance of customer value and seem to be continuously seeking innovative ways to enhance customer relationships. In fact, as the offers of many financial services are very similar and slightly differentiable, loyal customers have a huge value, since they are likely to spend and buy more, spread positive word-of-mouth, resist competitors‟ offers, wait for a product to become available and recommend the service provider to other potential customers. This paper focuses on those factors that affect customer‟s choice in corporate banking. Firstly, the paper tries to investigate about the factors which influence the exporters in choosing a bank. Secondly, this paper also tries to investigate which banking services are given more importance by the exporters. Factor analysis to found out the factors which influence exporters in choosing a bank, chi-square to find out the goodness of fit and cross tabs to know the relationship between variables.

INTRODUCTION Need of the study
Growth of trade made banking boom:
Due to the growth of trade there is a tremendous demand for banking services to averse the risk from the others. Therefore there is boom in banking services for trading like trade finance related services and forex related factors. Trend of exports India‟s exports have been witnessing robust growth and displaying a tendency of moving to a higher growth trajectory since. The sharp recovery witnessed was further consolidated with exports registering a growth rate (in US dollar value and on customs basis) of 21.1 per cent on top of a rise of 20.3 per cent in the preceding fiscal. Volume increase was the main contributor to this strengthening of export performance. Net terms of trade, which had increased on an average by 1.5 per cent per annum, have witnessed a continuous decline. This deterioration in prices of exports relative to imports has been significant in the last two years and seems to have been affected, inter alia, by the resurgence in international crude oil prices. However, given the strong growth in exports in volume terms, the income terms of trade, which measure the import purchasing power of exports, has consistently improved. In the recent past, this capacity to import on the basis of exports increased by 10.0 per cent per year. It reflects the growing competitiveness of Indian exports, with volumes increasing with decline in relative unit prices.

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Objective of the Study   The primary objective of the study is to study the major factors responsible for choosing a bank by exporters. The Secondary objective is to assess which banking services are given importance the most by exporters. Research Methodology used Descriptive research design was used to study the factors for choosing a Bank. The primary data was collected based on stratified sampling method. The secondary data was collected from the articles, newspapers, books and internet. The factor analysis and chi-square were used to find factors for choosing a Bank. The collected data have been analyzed with the help of SPSS16.0 package. The scope of this study is to know which factors influence exporters and importers to choose a bank. This study shows the present level of factors which influence and indicates the area for improvement. Factor analysis and chi-square are done to find out the factors which influence the most and on what services banks have to concentrate respectively. The factors that have been taken are: General Factors:  Speed  Cost  Reach  Customer friendly  Already having an account  All banking services Trade finance factors:  Importer‟s choice of bank  Credit limit  Factoring and forfaiting Forex factors:  Forex limits  Better forex offers

Limitations of the Research:
 Some respondents are not comfortable in revealing their information.  Stratified and judgmental sampling method is used of my own choice.  The selected exporters are surveyed and are the results are generalized to all the exporters of vizag.
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CHAPTER-2
Industry/company profile

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Role of Banks in International Trade
It is hardly possible to be in foreign trade without involving banks for all the services they provide such as advice on financial issues and the potential risks involved. Although one critical hurdle for small and medium enterprises is the documentation, lack of information on international trade processes and banking procedures necessary to carry on with business abroad. For result oriented and cost effective international trade, you will very definitely need access to accurate and timely information and a sound knowledge of banking. All the payments of foreign trade are made by the banks; they have no alternatives without using banks. So a foreigner has to know that which bank offering the best services for the foreign trade from the others. Payment of foreign trade Letter of credit: if the exporter does not know the foreign importer or if he has no confidence about the credit worthiness of the foreign importer, he requests the importer to arrange for the letter of credit from a bank. A letter of credit is an advice issued for undertaking given by a bank that bills drawn on the banker by the exporter, according to the terms of letter of credit, will be honored. All importers usually request the bank to issue a letter of credit in favor of the exporter. Preparing invoice: The next task of the exporter is to prepare several copies of the invoice to be sent to the importer through the bank. The invoice contains the prices to be paid, quantity, and quality of goods etc. several copies of the invoice are sent to the importer both directly and through bank along with other documents, namely, bill of lading, marine insurance policy, consular invoice, certificate of origin etc. Receiving payment: After the goods are dispatched, the exporter is to receive the amount of the goods. For this, he draws bill of exchange in sets of three and sends all these bill to an exchange bank having branch or agent at the importing country along with other documents, namely, bill of lading, trade invoice, consular invoice, certificate of origin, insurance policy etc. This bill may again be D/A (document against acceptance) or D/P (document against payment) bill. In case of D/A bill documents are handed over to the importer on his acceptance of the bill. In that case the exporter must wait till maturity of the bill for securing payment. For this, the banker demands from the exporter a „letter of Hypothecation‟ which empowers the bank to sell the goods in case the importer dishonors the bill. In the case of D/P bill the documents are given to the importer when the payment is made.

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Paying for Bills: the importer will not get the documents until he accepts or pays for the bill. In the case of D/A bill documents are handed over to the importer when he accepts the bills and in the case of D/P bill documents are given on payment. Banks that are serving international trade, understand the crucial role they are required to play. Many large banks maintain worldwide correspondents to provide quick delivery of actual currency, wired money or drafts. Bank may, however, require your account secured through export credit insurance provided by Export Import Bank of United States. You may choose your bank for international trade account on the basis of whether the bank can extend advances against the account receivables. Banks also let you enter into forward exchange contract with your bank and fix the amount of the foreign exchange you receive when you are dealing in convertible currencies. You need your bank to be with you as long as you are in international trade. The Importance of Banking Instruments in International Trade Transactions During the last two decades the world economy has undergone major structural changes. At the same time, international economists have been busy developing new approaches and refining older ideas in an attempt to provide better answers to such perennial questions as the merits of free trade relative to protection and the nature of globalization in every aspect of economic life and etc. Banking has become internationalized and globalized in the wake of the liberalization of the financial markets; changes have taken place in customer structure and behaviour. These factors have resulted in a pressing need for banks to adapt its organizational structures in its domestic and international fields of operations and make them future oriented. Globalization has touched banking mainly in terms of: 1) The growth of transborder deposits 2) The advent of transborder bank lending 3) The expansion of transborder branch networks 4) The emergence of instantaneous transworld interbank fund transfers and 5) The emergence of new credit instruments such as savings accounts for children and savings account calculator. Electronic massages have largely replaced territorial transfers by cheque or draft – and cost far less. The largest conduct for such movements is the Society for Worldwide Interbank Financial Telecommunications. Launched in 1977, SWIFT interconnected over 6800 financial institutions in 189 countries by 1999, carrying payments with an average daily value of more than $ 5 trillion.

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In most financial systems banks play a major role being intermediaries between lenders and depositors. If due to macroeconomic shocks or risky operation a bank starts failing, contagion effect can happen. Overcoming and prevention of the system banking crises can be achieved only through the complex solution of the global instability problem. Nevertheless, often politicians and economists see different solution of this problem, sometimes even diametrically opposite. There are many Development. Attaches offered to modified IMF into “International gendarmes,” authorized with resources and real authorities supporters of the further Globalization for the purpose of increase in the role of International Institutions. This way, the ex-president of the European Bank of Reconstruction and on the long term supervision over economic in different countries, imposing certain sanctions on them for not fulfilling the agreements setting Trusteeship over economies of troublesome countries.

COMPANY PROFILE Indusind Bank Ltd.
Genesis IndusInd Bank derives its name and inspiration from the Indus Valley civilisation -a culture described by National Geographic as 'one of the greatest of the ancient world' combining a spirit of innovation with sound business and trade practices. Mr. Srichand P. Hinduja, a leading Non-Resident Indian businessman and head of the Hinduja Group, conceived the vision of IndusInd Bank -the first of the new-generation private banks in India -and through collective contributions from the NRI community towards India's economic and social development, brought our Bank into being. The Bank, formally inaugurated in April 1994 by Dr. Manmohan Singh, Honorable Prime Minister of India who was then the country‟s Finance Minister, started with a capital base of Rs.1,000 million (USD 32 million at the prevailing exchange rate), of which Rs.600 million was raised through private placement from Indian Residents while the balance Rs.400 million (USD 13 million) was contributed by Non-Resident Indians. A New Era IndusInd Bank, which commenced its operations in 1994, caters to the needs of both consumer and corporate customers. It has a robust technology platform supporting multichannel delivery capabilities. IndusInd Bank has 365 branches, and 674 ATMs spread across 254 geographic locations of the country as on December 31, 2011.The Bank also has 2 Representative offices, one each in London and Dubai.
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The Bank believes in driving its business through technology. It has multi-lateral tie-ups with other banks providing access to their ATMs for its customers. It enjoys clearing bank status for both major stock exchanges - BSE and NSE - and three major commodity exchanges in the country - MCX, NCDEX, and NMCE. It also offers DP facilities for stock and commodity segments. The Bank has been bestowed with the mandate of being a Settlement Banker for six tea auction centers. Ratings: „ICRA AA‟ for Lower Tier II subordinate debt program and „ICRA AA-„ for Upper Tier II bond program by ICRA. „CRISIL A1+‟ for certificate of deposit program by CRISIL. „CARE AA‟ for Lower Tier II subordinate debt program by CARE. „Fitch AA-„ for Long Term Debt Instruments and „Fitch A1+‟ for Short Term Debt Instruments by Fitch Ratings. Mission & Vision Mission We will consistently add value to all our stakeholders and emerge as the Best in class in the chosen parameters amongst the comity of banks, by doubling our profits, clients and branches within the next three years. Vision IndusInd Bank will be:  A relevant business and banking partner to its clients  Customer Responsive, striving at all times to collaborate with clients in providing solutions for their Banking needs  A forerunner in the market place in terms of profitability, productivity and efficiency  Engaged with all our stakeholders and will deliver sustainable and compliant returns Brand IndusInd Bank has been aggressive in its brand building program since last year. As a part of the brand building exercise, the bank has taken many initiatives which have helped the brand connect up with the customers & enhance the visibility quotient. IndusInd Bank had launched its first ever mass media campaign in May-June 2009 along with its punch line “Makes you feel richer” and since then, the bank has been consistent in communication through

Television, Radio, and Outdoor & print advertising.

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IndusInd Bank understands its customers‟ money is not just money. It is the vehicle to realise their dreams! Hence, the bank aims to ensure that the customers‟ experience with the bank is pleasant and enriching. That they get value for their money, enabling them to lead a richer, fuller, content life... For this, the bank:  Offers a new level of banking – better services, better understanding of unique needs and better management of finances  Demystifies the banking process and makes it more accessible  Apart from fulfilling traditional banking responsibilities, advises customers on how and where to use their money to get the best out of it  Projects an image of being a young, energetic, modern bank with values of dynamism, confidence and progression Businesses IndusInd Bank operates in a diverse range of businesses, which include Corporate Banking, Retail Banking, Treasury and Foreign Exchange, Investment Banking, Capital Markets, NonResident Indian (NRI) / High Net worth Individual (HNI) Banking and Information Technology (through a subsidiary). It also claims the distinction of being the first bank in India that received ISO 9001:2000 certification for its Corporate Office and its entire network of branches. Products & Services IndusInd Bank provides multi-channel facilities, which comprise of ATMs, Net Banking, Mobile Banking, Phone Banking, Multi-city Banking and International Debit Cards. It is also credited for being one of the first banks to become a part of RBI‟s Real Time Gross Settlement (RTGS) system. Enlisting the help of KPMG, IndusInd Bank has adopted an enterprise-wide risk management system, including global best practices in the area of Risk Management. The other products and services offered by the bank include: Personal Banking
    

Accounts Deposits Loans Cards - Debit Card, Credit Card, Gold Debit Card, Indus Money Indus Protect
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Wealth Management Services
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Portfolio Management Investments Insurance

Corporate Banking
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Fund Based Facilities Non Fund Based Facilities Value Added Facilities Supply Chain Management

International Banking
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Correspondent Banking SWIFT Rupee Drawing Arrangement R Advisory Services A Facilities to Exporters Trade Finance RFC Account for Residents R Gold Banking Remittance Services Suvarna Mudra

Others
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Investment Banking Treasury NRI Services Online Banking RTGS/ NEFT

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Branches & ATMs Within a few years of its foundation, IndusInd Bank started climbing the ladder of success and became one of the fastest-growing banks in the Indian banking sector. By 2006, it had expanded its branch network, from 61 in 2004, to 137. Apart from setting up 150 ATM centers of its own, the bank also concluded multilateral arrangements with other banks, taking the total number of authorized ATM outlets to 15,000. All the branches as well as ATMs of IndusInd Bank are connected to its central database, via a satellite that operates on the latest version of IBM‟s AS400-720 hardware & Midas Kapiti (now Misys) software. Mile stones 2011 - 2012  Awarded as the “Best Bank Mid-sized” in Business world–PwC Best Banks Survey 2011  Awarded M.IT.R- 50 Marketing & IT Recognition Program amongst top 50 brands – organised by Paul Writer in association with IBM  Awarded the CII Environment Best Practice Award 2012 for the “Most Innovative Environmental Project”  Awarded in the “Business Enterprise Services” category for running ATMs on solar power – Organised by Panasonic Green Globe Foundation 2010 - 2011  Winner of „Best Use of technology in training and e-Learning Initiatives‟ awarded by IBA Banking Technology Awards 2010 2009 - 2010  Tier II Issue – raised Rs. 4200 million in March 2010  Received the prestigious ISO 27001 certification for IT operations 2008 - 2009  Appointed as Clearing & Settlement Bank at 6 major Tea Auction centers (includes 2 which were added in 2010) 2007 - 2008  Extended microfinance to 300,000+ women by partnering leading MFIs like SKS Microfinance  Became clearing/settlement bank for NSE currency futures exchange
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2006 - 2007  GDR - raised Rs 1,460 million, tied up with Chola mandalam MS for bancassurance  Signed an agreement with National Multi Commodity Exchange Ltd as clearing banker 2005 - 2006  Tied-up with Religare Securities for offering 3-in-1 account covering banking, depository & securities trading  Tied up with Aviva Life Insurance for bank assurance 2004 - 2005  Signed an agreement with NCDEX as clearing banker  Opened its second representative office in London. 2001 - 2002  Tie ups with exchange houses in Middle East and banks in the United States 1994 - 2000  IPO - raised Rs 1,800 million, became clearing bank to First Commodities Clearing Corporation of India  2000 – Became clearing/settlement bank for BSE/NSE  Raised Rs 1,000 million through preferential issue of shares  Incorporated in 1994; Promoted by a group of Non Resident Indians. Started  operations with Rs 1000 Mn Capital Further, as a banking partner, the bank also aims to help its customers discover how they can do more things with their money. In the recent advertising campaign, the Bank reinforces its focus on Innovative banking based on the philosophy of Responsive Innovation. The bank is taking „responsiveness‟ theme to customers and reinforces its commitment to give best-of-class services in the industry.

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CHAPTER-3
Literature review

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Literature review
Thomas Foscht, Judith Schloffer, Cesar Maloles III, Swee L. Chia (2009) found the differences among the three age groups contained in Generation Y in terms of their sources of information, financial services used, likelihood of switching, and number of banks utilized. In addition, determinants of satisfaction, loyalty, and behavioural intention are primarily affected by satisfaction with employees and services rendered. There results indicated that as young people reach certain milestones, their needs become more multifaceted. Consequently, the determinants of satisfaction have also changed. A study conducted by Mamunur Rashid, M. Kabir Hassan (2009) in Bangladesh in six full fledged Islamic banks found non-Islamic factors such as Corporal efficiency, Core- Banking Services, Confidence, etc. were given higher weights by majority of the respondents. The report recommends introducing complete E-Banking solution, to increase advanced marketing efforts and to hire experienced human resources for better Islamic Banking activities in Bangladesh. Charles Blankson , Ogenyi Ejye Omar , Julian Ming-Sung Cheng (2009) identified four key factors - convenience, competence, recommendation by parents, and free banking and/or no bank charges - to be consistent across the two economies. The recommendation of the study is that in the context of an open and liberalized market environment, retail bank marketing strategies should be standardized irrespective of the national development stage. It concludes that retail bank managers particularly in developing countries should learn to provide consistent and good customer care. Omar Masood, Jamel E. Chichti, Walid Mansour , Muzafar Iqbal (2009) research attempt is made to assess the degree of customer awareness, satisfaction as well as selection criteria. A sample of 200 respondents took part in this study. The responses where shows a certain degree of satisfaction, there few respondents also have expressed their dissatisfaction with some of the Islamic bank's services. Dominic Celestine Fernandez (2008) conducted a survey and results indicated no attribute obtained was an outright determinant of bank selection choices. This was attributed to the diverse needs of respondents as revealed by this survey. While some determinants such as location was of prime importance when selecting a bank, other factors that emphasize of better social interaction between banker and client, is gaining prominence partly due to the influence of Asian culture. It also revealed the use of the consumer decision making model when selecting bank choices. Charles Blankson, Julian Ming-Sung Cheng, Nancy Spears (2007) study reveals three key dimensions, factors, strategies that are consistent across all three economies. The paper
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concludes that open and liberalized business climate appear to explain consumers' decisions. This research is based on the college student cohort and thus the results do not represent the public. This poses generalizability questions without further replications and validations. This study did not examine whether there were consumers' switching behaviours involving banks. A study conducted by Erdener Kaynak, Talha D. Harcar (2005) revealed banks were evaluated more positively by customers in areas such as extra services offered by the bank, image of the bank, and convenience of the bank. James F. Devlin and Philip Gerrard (2004) presented an analysis of trends in the relative importance of choice criteria in respect of selecting a retail bank. And pointed that the influence of recommendations has increased significantly and is now the most important choice criterion. Other factors which have also increased in importance are the offering of incentives, having a wide product range and economic factors, such as interest rate paid and fees and charges levied. Locational factors, such as choosing a bank close to home or work place, have decreased significantly in importance in motivating choice. Certain criteria have remained broadly constant through time, amongst them, and perhaps surprisingly, are choosing on the basis of a bank's image and reputation and expectations about level of service. Ron Shevlin and Catherine Graeber (2001) explored the various factor the influence a customer in choosing a particular bank. They pointed out that ATM (Automatic Teller Machine) being the primary reason for a customer choice for a bank and further branch visit and referral from friends and relatives are most prevalent sources of influence in Texas, USA. Findings of Mohammed Almossawi (2001) reveal that the chief factors determining college students‟ bank selection are: bank‟s reputation, availability of parking space near the bank, friendliness of bank personnel, and availability and location of automated teller machines (ATM). Findings of Huu Phuong Ta, Kar Yin Har (2000) indicated indicate that undergraduates place high emphasis on the pricing and product dimensions of bank services. The results are of interest to bank managers because they provide information on the importance of the selection criteria as well as areas of strengths and weaknesses of banks.

Burc Ülengin‟s (1998) findings concluded that respondents prefer the extended loyalty programs, the continuous information flow from the bank, the off-site ATMs, the maximum

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five-minutes waiting time in the branches and a simple application for all the accounts the bank offers. Carolyn Kennington, Jeanne Hill, Anna Rakowska (1996) pointed that most important variable influencing customer choice are reputation price and service. Josee Bloemer, Kode Ruyter and Pascel Peeters (1998) investigated how image, perceived service quality and satisfaction determine loyalty in retail banking. The key findings by Laroche, Rosenblatt, and Manning (1986) on diverse demographic segments included importance of location convenience, speed of service, competence and friendliness of bank employees. Meidan (1976) revealed that about 90% of the respondents banked at the branch nearest to their home place and place of work. Convenience, in terms of location, was also found to be the single most important factor for selecting a bank.

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CHAPTER-4
Theoretical framework

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Theoretical framework
The study is based on general factors, trade finance factors and forex factors. So first of all it is essential to know about the trade finance and forex.

Trade finance
What is trade finance? Trade Finance has been reviewing the global trade market since 1983. The remit of what we cover is somewhat broad, and as the market evolves to meet the requirements of financing global trade, so our content has changed. What is trade finance? There are various definitions to be found online as to what trade finance is, and the choice of words used is interesting. It is described both as a „science‟ and as „an imprecise term covering a number of different activities‟. As is the nature of these things, both are accurate. In one form it is quite a precise science managing the capital required for international trade to flow. Yet within this science there are a wide range of tools at the financiers‟ disposal, all of which determine how cash, credit, investments and other assets can be utilised for trade.In its simplest form, an exporter requires an importer to prepay for goods shipped. The importer naturally wants to reduce risk by asking the exporter to document that the goods have been shipped. The importer‟s bank assists by providing a letter of credit to the exporter (or the exporter's bank) providing for payment upon presentation of certain documents, such as a bill of lading. The exporter's bank may make a loan to the exporter on the basis of the export contract. Trade services and supply chain Building on what I have termed traditional trade finance, there are a number of ways in which banks can help corporate clients trade (both domestically and cross-border) for a fee.A typical service offering from a bank will include: Letters of credit (LC), import bills for collection, shipping guarantees, import financing, performance bonds, export LC advising, LC safekeeping, LC confirmation, LC checking and negotiation, pre-shipment export finance, export bills for collections, invoice financing, and all the relevant document preparation.Despite this focus on the LC, over the years the term trade finance has been shifting away from this sometimes cumbersome method of conducting business. It is now estimated that over 80% of global trade is conducted on an open account basis.

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Led by large corporates, this form of trade saves costs and time and so has been adopted by smaller corporates as they become more comfortable with their buyer and supplier relationships. Open account transactions can be described as „buy now, pay later‟ and are more like regular payments for a continuing flow of goods rather than specific transactions. This is much cheaper for corporates. In response to this development, the organisation SWIFT launched the TSU (trade services utility), a collaborative centralised data matching utility, which allows banks to build products around its core functionality to improve the speed and flow of open account trade. This is helping banks re-intermediate themselves into these trade flows.While volumes of LCs have remained flat in recent years, their value actually increased and they remain an essential part of emerging market trade and trade in countries where exchange controls are in force. This increase in value is also a reflection of the commodity price boom of 2007/08. Factoring & Forfaiting Factoring, or invoice discounting, receivables factoring or debtor financing, is where a company buys a debt or invoice from another company. In this purchase, accounts receivable are discounted in order to allow the buyer to make a profit upon the settlement of the debt. Essentially factoring transfers the ownership of accounts to another party that then chases up the debt. Factoring therefore relieves the first part of a debt for less than the total amount providing them with working capital to continue trading, while the buyer, or factor, chases up the debt for the full amount and profits when it is paid. Forfaiting is the purchase of an exporter's receivables (the amount importers owe the exporter) at a discount by paying cash. The purchaser of the receivables, or forfeiter, must now be paid by the importer to settle the debt. As the receivables are usually guaranteed by the importer's bank, the forfeiter frees the exporter from the risk of non-payment by the importer. The receivables have then become a form of debt instrument that can be sold on the secondary market as bills of exchange or promissory notes. Structured Commodity Finance Structured commodity finance (SCF) as covered by Trade Finance is split into three main commodity groups: metals & mining, energy, and soft commodities (agricultural crops). It is a financing technique utilised by commodity producers and trading companies conducting business in the emerging markets. SCF provides liquidity management and risk mitigation for the production, purchase and sale of commodities and materials. This is done by isolating assets, which have relatively predictable cash flow attached to them through pricing prediction, from the corporate borrower and using them to mitigate risk and secure credit from a lender. A corporate therefore borrows against a commodity‟s expected worth.
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If all proceeds to plan then the lender is reimbursed through the sale of the assets. If not then the lender has recourse to some or all of the assets. Volatility in commodity prices can make SCF a tricky business. Lenders charge interest any funds disbursed as well as fees for arranging the transaction. SCF funding techniques include pre-export finance, countertrade, barter, and inventory finance. These solutions can be applied across part or all of the commodity trade value chain: from producer to distributor to processor, and the physical traders who buy and deliver commodities. Export & Agency Finance This part of Trade Finance‟s remit covers the roles of the export credit agencies, the development banks, and the multilateral agencies. Their traditional role is complement lending by commercial banks at interest by guaranteeing payment. These agencies have once again become of vital importance to the trade finance market due to the role that they play in facilitating trade, insuring transactions, promoting exports, creating jobs, and increasingly through direct lending. All are important in the current global downturn. ECAs are private or governmental institutions that provide export finance, or credit insurance and guarantees, or both. ECAs can have very different mandates which we will not delve into here (please refer to Trade Finance‟s annual World Official Agency Guide).The development banks, sometimes referred to as DFIs (development finance institutions), and the multilaterals similarly have different mandates depending on their ownership or regional remit. Most will have a form of trade facilitation programme that promotes trade through the provision of guarantees. ECAs and multilaterals are becoming a crucial part of the financing of large infrastructure projects around the world as credit from commercial banks remains scarce. Make sure you stay abreast of the latest news and analysis across the spectrum of global trade with Trade Finance – the information source on the trade, supply chain, commodity and export finance markets.

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DESCRIPTION OF FACTORS FOR CHOOSING A BANK BY EXPORTERS The factors that have been taken are: General Factors:  Speed  Cost  Reach  Customer friendly  Already having an account  All banking services Trade finance factors:  Importer‟s choice of bank  Credit limit  Factoring and forfaiting Forex factors:  Forex limits  Better forex offers Costs  Lower costs related to preparation, submission and approval of documents; lower cost of clearance and transportation of goods.  The elements involved in the cost are described in annexture-2. Speed  Because procedures and processes are rationalized and transparent, facilitation of just‐in‐time delivery is done by almost all the banks. Payments: There are 3 standard ways of payment methods in the export import trade international trade market: 1. Clean Payment 2. Collection of Bills 3. Letters of Credit L/c Clean Payments In clean payment method, all shipping documents, including title documents are handled directly between the trading partners. The role of banks is limited to clearing amounts as required. Clean payment method offers a relatively cheap and uncomplicated method of payment for both importers and exporters.
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There are basically two type of clean payments: Advance Payment In advance payment method the exporter is trusted to ship the goods after receiving payment from the importer. Open Account In open account method the importer is trusted to pay the exporter after receipt of goods. The main drawback of open account method is that exporter assumes all the risks while the importer get the advantage over the delay use of company's cash resources and is also not responsible for the risk associated with goods. 2. Payment Collection of Bills in International Trade The Payment Collection of Bills also called “Uniform Rules for Collections” is published by International Chamber of Commerce (ICC) under the document number 522 (URC522) and is followed by more than 90% of the world's banks. In this method of payment in international trade the exporter entrusts the handling of commercial and often financial documents to banks and gives the banks necessary instructions concerning the release of these documents to the Importer. It is considered to be one of the cost effective methods of evidencing a transaction for buyers, where documents are manipulated via the banking system. There are two methods of collections of bill : Documents Against Payment D/P In this case documents are released to the importer only when the payment has been done. Documents Against Acceptance D/A In this case documents are released to the importer only against acceptance of a draft. 3. Letter of Credit L/c Letter of Credit also known as Documentary Credit is a written undertaking by the importers bank known as the issuing bank on behalf of its customer, the importer (applicant), promising to effect payment in favour of the exporter (beneficiary) up to a stated sum of money, within a prescribed time limit and against stipulated documents. It is published by the International Chamber of Commerce under the provision of Uniform Custom and Practices (UCP) brochure number 500.

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Various types of L/Cs are : Revocable & Irrevocable Letter of Credit (L/c) A Revocable Letter of Credit can be cancelled without the consent of the exporter. An Irrevocable Letter of Credit cannot be cancelled or amended without the consent of all parties including the exporter. Sight & Time Letter of Credit If payment is to be made at the time of presenting the document then it is referred as the Sight Letter of Credit. In this case banks are allowed to take the necessary time required to check the documents. If payment is to be made after the lapse of a particular time period as stated in the draft then it is referred as the Term Letter of Credit. Confirmed Letter of Credit (L/c) Under a Confirmed Letter of Credit, a bank, called the Confirming Bank, adds its commitment to that of the issuing bank. By adding its commitment, the Confirming Bank takes the responsibility of claim under the letter of credit, assuming all terms and conditions of the letter of credit are met. Documentary collections Payment Collection Against Bills also known documentary collection as is a payment method used in international trade all over the world by the exporter for the handling of documents to the buyer's bank and also gives the banks necessary instructions indicating when and on what conditions these documents can be released to the importer. It is different from the letters of credit, in the sense that the bank only acts as a medium for the transfer of documents but does not make any payment guarantee. However, collection of documents are subjected to the Uniform Rules for Collections published by the International Chamber of Commerce (ICC). Role of Various Parties Exporter The seller ships the goods and then hands over the document related to the goods to their banks with the instruction on how and when the buyer would pay. Exporter's Bank The exporter's bank is known as the remitting bank , and they remit the bill for collection with proper instructions. The role of the remitting bank is to :
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Check that the documents for consistency. Send the documents to a bank in the buyer's country with instructions on collecting payment.



Pay the exporter when it receives payments from the collecting bank.
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Buyer/Importer The buyer / importer is the drawee of the Bill. The role of the importer is to :
 

Pay the bill as mention in the agreement (or promise to pay later). Take the shipping documents (unless it is a clean bill) and clear the goods.

Importer's Bank This is a bank in the importer's country : usually a branch or correspondent bank of the remitting bank but any other bank can also be used on the request of exporter. The collecting bank act as the remitting bank's agent and clearly follows the instructions on the remitting bank's covering schedule. However the collecting bank does not guarantee payment of the bills except in very unusual circumstance for undoubted customer , which is called availing. Importer's bank is known as the collecting / presenting bank. The role of the collecting banks is to :
  

Act as the remitting bank's agent Present the bill to the buyer for payment or acceptance. Release the documents to the buyer when the exporter's instructions have been followed.

If the bill is unpaid / unaccepted, the collecting bank :


May arrange storage and insurance for the goods as per remitting bank instructions on the schedule.



Protests on behalf of the remitting bank (if the Remitting Bank's schedule states Protest)



Requests further instruction from the remitting bank, if there is a problem that is not covered by the instructions in the schedule.



Once payment is received from the importer, the collecting bank remits the proceeds promptly to the remitting bank less its charges.

Documents Against Payments (D/P) This is sometimes also referred as Cash against Documents/Cash on Delivery. In effect D/P means payable at sight (on demand). The collecting bank hands over the shipping documents including the document of title (bill of lading) only when the importer has paid the bill. The drawee is usually expected to pay within 3 working days of presentation. The attached instructions to the shipping documents would show "Release Documents Against Payment"

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Risks : Under D/P terms the exporter keeps control of the goods (through the banks) until the importer pays. If the importer refuses to pay, the exporter can:


Protest the bill and take him to court (may be expensive and difficult to control from another country).



Find another buyer or arrange a sale by an auction.

With the last two choices, the price obtained may be lower but probably still better than shipping the goods back, sometimes, the exporter will have a contact or agent in the importer's country that can help with any arrangements. If the importers refuses to pay, the collecting bank can act on the exporter's instructions shown in the Remitting Bank schedule. These instructions may include:
  

Removal of the goods from the port to a warehouse and insure them. Contact the case of need who may negotiate with the importer. Protesting the bill through the bank's lawyer.

Documents Against Acceptance (D/A) Under Documents Against Acceptance, the Exporter allows credit to Importer, the period of credit is referred to as Usance, The importer/ drawee is required to accept the bill to make a signed promise to pay the bill at a set date in the future. When he has signed the bill in acceptance, he can take the documents and clear his goods. The payment date is calculated from the term of the bill, which is usually a multiple of 30 days and start either from sight or form the date of shipment, whichever is stated on the bill of exchange. The attached instruction would show "Release Documents Against Acceptance". Risk Under D/A terms the importer can inspect the documents and , if he is satisfied, accept the bill for payment o the due date, take the documents and clear the goods; the exporter loses control of them. The exporter runs various risk. The importer might refuse to pay on the due date because :
  

He finds that the goods are not what he ordered. He has not been able to sell the goods. He is prepared to cheat the exporter (In cases the exporter can protest the bill and take the importer to court but this can be expensive).



The importer might have gone bankrupt, in which case the exporter will probably never get his money.

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Usance D/P Bills A Usance D/P Bill is an agreement where the buyer accepts the bill payable at a specified date in future but does not receive the documents until he has actually paid for them. The reason is that airmailed documents may arrive much earlier than the goods shipped by sea. The buyer is not responsible to pay the bill before its due date, but he may want to do so, if the ship arrives before that date. This mode of payments is less usual, but offers more settlement possibility. These are still D/P terms so there is no extra risk to the exporter or his bank. As an alternative the covering scheduled may simply allow acceptance or payments to be deferred awaiting arrival of carrying vessel. There are different types of usance D/P bills, some of which do not require acceptance specially those drawn payable at a fix period after date or drawn payable at a fixed date. Bills requiring acceptance are those drawn at a fix period after sight, which is necessary to establish the maturity date. LETTER OF CREDIT Letter of Credit L/c also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade. The document is issued by a financial organization at the buyer request.The International Chamber of Commerce (ICC) in the Uniform Custom and Practice for Documentary Credit (UCPDC) defines L/C as: "An arrangement, however named or described, whereby a bank (the Issuing bank) acting at the request and on the instructions of a customer (the Applicant) or on its own behalf : 1. Is to make a payment to or to the order third party ( the beneficiary ) or is to accept bills of exchange (drafts) drawn by the beneficiary. 2. Authorised another bank to effect such payments or to accept and pay such bills of exchange (draft). 3. Authorised another bank to negotiate against stipulated documents provided that the terms are complied with. A key principle underlying letter of credit (L/C) is that banks deal only in documents and not in goods. The decision to pay under a letter of credit will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the letter of credit. Parties to Letters of Credit


Applicant (Opener): Applicant which is also referred to as account party is normally a buyer or customer of the goods, who has to make payment to beneficiary. LC is initiated and issued at his request and on the basis of his instructions.

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

Issuing Bank (Opening Bank) : The issuing bank is the one which create a letter of credit and takes the responsibility to make the payments on receipt of the documents from the beneficiary or through their banker. The payments has to be made to the beneficiary within seven working days from the date of receipt of documents at their end, provided the documents are in accordance with the terms and conditions of the letter of credit. If the documents are discrepant one, the rejection thereof to be communicated within seven working days from the date of of receipt of documents at their end.



Beneficiary : Beneficiary is normally stands for a seller of the goods, who has to receive payment from the applicant. A credit is issued in his favour to enable him or his agent to obtain payment on surrender of stipulated document and comply with the term and conditions of the L/c. If L/c is a transferable one and he transfers the credit to another party, then he is referred to as the first or original beneficiary.



Advising Bank : An Advising Bank provides advice to the beneficiary and takes the responsibility for sending the documents to the issuing bank and is normally located in the country of the beneficiary.



Confirming Bank : Confirming bank adds its guarantee to the credit opened by another bank, thereby undertaking the responsibility of payment/negotiation acceptance under the credit, in additional to that of the issuing bank. Confirming bank play an important role where the exporter is not satisfied with the undertaking of only the issuing bank.



Negotiating Bank: The Negotiating Bank is the bank who negotiates the documents submitted to them by the beneficiary under the credit either advised through them or restricted to them for negotiation. On negotiation of the documents they will claim the reimbursement under the credit and makes the payment to the beneficiary provided the documents submitted are in accordance with the terms and conditions of the letters of credit.



Reimbursing Bank : Reimbursing Bank is the bank authorized to honor the reimbursement claim in settlement of negotiation/acceptance/payment lodged with it by the negotiating bank. It is normally the bank with which issuing bank has an account from which payment has to be made.



Second Beneficiary : Second Beneficiary is the person who represent the first or original Beneficiary of credit in his absence. In this case, the credits belonging to the original beneficiary is transferable. The rights of the transferee are subject to terms of transfer.

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Types of Letter of Credit 1. Revocable Letter of Credit L/c A revocable letter of credit may be revoked or modified for any reason, at any time by the issuing bank without notification. It is rarely used in international trade and not considered satisfactory for the exporters but has an advantage over that of the importers and the issuing bank. 2. Irrevocable Letter of CreditL/c In this case it is not possible to revoked or amended a credit without the agreement of the issuing bank, the confirming bank, and the beneficiary. Form an exporters point of view it is believed to be more beneficial. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made. 3. Confirmed Letter of Credit L/c Confirmed Letter of Credit is a special type of L/c in which another bank apart from the issuing bank has added its guarantee. Although, the cost of confirming by two banks makes it costlier, this type of L/c is more beneficial for the beneficiary as it doubles the guarantee. 4. Sight Credit and Usance Credit L/c Sight credit states that the payments would be made by the issuing bank at sight, on demand or on presentation. In case of usance credit, draft are drawn on the issuing bank or the correspondent bank at specified usance period. The credit will indicate whether the usance draft are to be drawn on the issuing bank or in the case of confirmed credit on the confirming bank. 5. Back to Back Letter of Credit L/c Back to Back Letter of Credit is also termed as Countervailing Credit. A credit is known as backtoback credit when a L/c is opened with security of another L/c. A backtoback credit which can also be referred as credit and countercredit is actually a method of financing both sides of a transaction in which a middleman buys goods from one customer and sells them to another. The parties to a BacktoBack Letter of Credit are: 1. The buyer and his bank as the issuer of the original Letter of Credit. 2. The seller/manufacturer and his bank, 3. The manufacturer's subcontractor and his bank.
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The practical use of this Credit is seen when L/c is opened by the ultimate buyer in favour of a particular beneficiary, who may not be the actual supplier/ manufacturer offering the main credit with near identical terms in favour as security and will be able to obtain reimbursement By presenting the documents received under back to back credit under the main L/c. The need for such credits arise mainly when : 1. The ultimate buyer not ready for a transferable credit 2. The Beneficiary do not want to disclose the source of supply to the openers. 3. The manufacturer demands on payment against documents for goods but the beneficiary of credit is short of the funds 6. Transferable Letter of Credit L/c A transferable documentary credit is a type of credit under which the first beneficiary which is usually a middleman may request the nominated bank to transfer credit in whole or in part to the second beneficiary. The L/c does state clearly mentions the margins of the first beneficiary and unless it is specified the L/c cannot be treated as transferable. It can only be used when the company is selling the product of a third party and the proper care has to be taken about the exit policy for the money transactions that take place. This type of L/c is used in the companies that act as a middle man during the transaction but don‟t have large limit. In the transferable L/c there is a right to substitute the invoice and the whole value can be transferred to a second beneficiary. The first beneficiary or middleman has rights to change the following terms and conditions of the letter of credit: 1. Reduce the amount of the credit. 2. Reduce unit price if it is stated 3. Make shorter the expiry date of the letter of credit. 4. Make shorter the last date for presentation of documents. 5. Make shorter the period for shipment of goods. 6. Increase the amount of the cover or percentage for which insurance cover must be effected.

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Standby Letter of Credit L/c Initially used by the banks in the United States, the standby letter of credit is very much similar in nature to a bank guarantee. The main objective of issuing such a credit is to secure bank loans. Standby credits are usually issued by the applicant‟s bank in the applicant‟s country and advised to the beneficiary by a bank in the beneficiary‟s country. Unlike a traditional letter of credit where the beneficiary obtains payment against documents evidencing performance, the standby letter of credit allow a beneficiary to obtains payment from a bank even when the applicant for the credit has failed to perform as per bond. A standby letter of credit is subject to "Uniform Customs and Practice for Documentary Credit" (UCP), International Chamber of Commerce Publication No 500, 1993 Revision, or "International Standby Practices" (ISP), International Chamber of Commerce Publication No 590, 1998. Import Operations Under L/c The Import Letter of Credit guarantees an exporter payment for goods or services, provided the terms of the letter of credit have been met. A bank issue an import letter of credit on the behalf of an importer or buyer under the following Circumstances
 

When a importer is importing goods within its own country. When a trader is buying good from his own country and sell it to the another country for the purpose of merchandizing trade.



When an Indian exporter who is executing a contract outside his own country requires importing goods from a third country to the country where he is executing the contract.

Export Operations Under L/c Export Letter of Credit is issued in for a trader for his native country for the purchase of goods and services. Such letters of credit may be received for following purpose: 1. For physical export of goods and services from India to a Foreign Country. 2. For execution of projects outside India by Indian exporters by supply of goods and services from Indian or partly from India and partly from outside India. 3. Towards deemed exports where there is no physical movements of goods from outside India But the supplies are being made to a project financed in foreign exchange by multilateral agencies, organization or project being executed in India with the aid of external agencies.
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4. For sale of goods by Indian exporters with total procurement and supply from outside India. In all the above cases there would be earning of Foreign Exchange or conservation of Foreign Exchange. Banks in India associated themselves with the export letters of credit in various capacities such as advising bank, confirming bank, transferring bank and reimbursing bank. In every cases the bank will be rendering services not only to the Issuing Bank as its agent correspondent bank but also to the exporter in advising and financing his export activity. 1. Advising an Export L/c The basic responsibility of an advising bank is to advise the credit received from its overseas branch after checking the apparent genuineness of the credit recognized by the issuing bank. It is also necessary for the advising bank to go through the letter of credit, try to understand the underlying transaction, terms and conditions of the credit and advice the beneficiary in the matter. The main features of advising export LCs are: 1. There are no credit risks as the bank receives a onetime commission for the advising service. There are no capital adequacy needs for the advising function. 2. Advising of Amendments to L/Cs Amendment of LCs is done for various reasons and it is necessary to fallow all the necessary the procedures outlined for advising. In the process of advising the amendments the Issuing bank serializes the amendment number and also ensures that no previous amendment is missing from the list. Only on receipt of satisfactory information/ clarification the amendment may be advised. 3. Confirmation of Export Letters of Credit It constitutes a definite undertaking of the confirming bank, in addition to that of the issuing bank, which undertakes the sight payment, deferred payment, acceptance or negotiation. Banks in India have the facility of covering the credit confirmation risks with ECGC under their “Transfer Guarantee” scheme and include both the commercial and political risk involved. 4. Discounting/Negotiation of Export LCs When the exporter requires funds before due date then he can discount or negotiate the LCs with the negotiating bank. Once the issuing bank nominates the negotiating bank, it can take the credit risk on the issuing bank or confirming bank.
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5. Reimbursement of Export LCs Sometimes reimbursing bank, on the recommendation of issuing bank allows the negotiating bank to collect the money from the reimbursing bank once the goods have been shipped. It is quite similar to a cheque facility provided by a bank. In return, the reimbursement bank earns a commission per transaction and enjoys float income without getting involve in the checking the transaction documents. reimbursement bank play an important role in payment on the due date ( for usance LCs) or the days on which the negotiating bank demands the same (for sight LCs). Pre Shipment export finance Pre Shipment Finance is issued by a financial institution when the seller want the payment of the goods before shipment. The main objectives behind preshipment finance or pre export finance is to enable exporter to:
     

Procure raw materials. Carry out manufacturing process. Provide a secure warehouse for goods and raw materials. Process and pack the goods. Ship the goods to the buyers. Meet other financial cost of the business.

Types of Pre Shipment Finance
 

Packing Credit Advance against Cheques/Draft etc. representing Advance Payments.

Requirment for Getting Packing Credit This facility is provided to an exporter who satisfies the following criteria
  

A ten digit importer exporter code number allotted by DGFT. Exporter should not be in the caution list of RBI. If the goods to be exported are not under OGL (Open General Licence), the exporter should have the required license /quota permit to export the goods.

Packing credit facility can be provided to an exporter on production of the following evidences to the bank: 1. Formal application for release the packing credit with undertaking to the effect that the exporter would be ship the goods within stipulated due date and submit the relevant shipping documents to the banks within prescribed time limit.

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2. Firm order or irrevocable L/C or original cable / fax / telex message exchange between the exporter and the buyer. 3. Licence issued by DGFT if the goods to be exported fall under the restricted or canalized category. If the item falls under quota system, proper quota allotment proof needs to be submitted. The confirmed order received from the overseas buyer should reveal the information about the full name and address of the overseas buyer, description quantity and value of goods (FOB or CIF), destination port and the last date of payment. Bank guarantee: A bank guarantee is a written contract given by a bank on the behalf of a customer. By issuing this guarantee, a bank takes responsibility for payment of a sum of money in case, if it is not paid by the customer on whose behalf the guarantee has been issued. In return, a bank gets some commission for issuing the guarantee. Anyone can apply for a bank guarantee, if his or her company has obligations towards a third party for which funds need to be blocked in order to guarantee that his or her company fulfils its obligations (for example carrying out certain works, payment of a debt, etc.). In case of any changes or cancellation during the transaction process, a bank guarantee remains valid until the customer dully releases the bank from its liability. In the situations, where a customer fails to pay the money, the bank must pay the amount within three working days. Benefits of Bank Guarantees For Governments 1. Increases the rate of private financing for key sectors such as infrastructure. 2. Provides access to capital markets as well as commercial banks. 3. Reduces cost of private financing to affordable levels. 4. Facilitates privatizations and public private partnerships. 5. Reduces government risk exposure by passing commercial risk to the private sector. For Private Sector 1. Reduces risk of private transactions in emerging countries. 2. Mitigates risks that the private sector does not control. 3. Opens new markets. 4. Improves project sustainability.
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Legal Requirements Bank guarantee is issued by the authorised dealers under their obligated authorities notified vide FEMA 8/ 2000 dt 3rd May 2000. Only in case of revocation of guarantee involving US $ 5000 or more need to be reported to Reserve Bank of India (RBI). Types of Bank Guarantees 1. Direct or Indirect Bank Guarantee: A bank guarantee can be either direct or indirect. Direct Bank Guarantee It is issued by the applicant's bank (issuing bank) directly to the guarantee's beneficiary without concerning a correspondent bank. This type of guarantee is less expensive and is also subject to the law of the country in which the guarantee is issued unless otherwise it is mentioned in the guarantee documents. Indirect Bank Guarantee With an indirect guarantee, a second bank is involved, which is basically a representative of the issuing bank in the country to which beneficiary belongs. This involvement of a second bank is done on the demand of the beneficiary. This type of bank guarantee is more time consuming and expensive too. 2. Confirmed Guarantee It is cross between direct and indirect types of bank guarantee. This type of bank guarantee is issued directly by a bank after which it is send to a foreign bank for confirmations. The foreign banks confirm the original documents and thereby assume the responsibility. 3. Tender Bond

This is also called bid bonds and is normally issued in support of a tender in international trade. It provides the beneficiary with a financial remedy, if the applicant fails to fulfill any of the tender conditions. 4. Performance Bonds

This is one of the most common types of bank guarantee which is used to secure the completion of the contractual responsibilities of delivery of goods and act as security of penalty payment by the Supplier in case of non delivery of goods.

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5.

Advance Payment Guarantees

This mode of guarantee is used where the applicant calls for the provision of a sum of money at an early stage of the contract and can recover the amount paid in advance, or a part thereof, if the applicant fails to fulfil the agreement. 6. Payment Guarantees

This type of bank guarantee is used to secure the responsibilities to pay goods and services. If the beneficiary has fulfilled his contractual obligations after delivering the goods or services but the debtor fails to make the payment, then after written declaration the beneficiary can easily obtain his money from the guaranteeing bank. 7. Loan Repayment Guarantees

This type of guarantee is given by a bank to the creditor to pay the amount of loan body and interests in case of non fulfilment by the borrower. 8. B/L Letter of Indemnity

This is also called a letter of indemnity and is a type of guarantee from the bank making sure that any kind of loss of goods will not be suffered by the carrier. 9. Rental Guarantee

This type of bank guarantee is given under a rental contract. Rental guarantee is either limited to rental payments only or includes all payments due under the rental contract including cost of repair on termination of the rental contract. 10. Credit Card Guarantee

Credit card guarantee is issued by the credit card companies to its customer as a guarantee that the merchant will be paid on transactions regardless of whether the consumer pays their credit. Bank Guarantees vs. Letters of Credit A bank guarantee is frequently confused with letter of credit (LC), which is similar in many ways but not the same thing. The basic difference between the two is that of the parties involved. In a bank guarantee, three parties are involved; the bank, the person to whom the guarantee is given and the person on whose behalf the bank is giving guarantee. In case of a letter of credit, there are normally four parties involved; issuing bank, advising bank, the applicant (importer) and the beneficiary (exporter). Also, as a bank guarantee only becomes active when the customer fails to pay the necessary amount where as in case of letters of credit, the issuing bank does not wait for the buyer to default, and for the seller to invoke the undertaking.
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Role of Foreign exchange in international trade
Liquidity


In terms of international trade, liquidity is the ease in which foreign currency is converted into domestic currency. FX markets, such as the New York Mercantile Exchange, match buyers and sellers to bring about speedy, orderly transactions.

Rates


Buyers and sellers set prices using the auction method in the FX market. Sellers try to earn the highest "ask" price possible, and buyers try to purchase currency at the lowest "bid." Buyers and sellers meet at the "spot" price, the current value and exchange rate for a particular currency against others.

Reserves


International governments enter the FX market to build and manage foreign exchange reserves. They build the reserves to make official payments and influence domestic currency values.

International Trade


Businesses rely on FX markets to buy currency that is spent to obtain overseas goods. Corporations will also look to FX markets to convert international earnings back into the domestic currency.

Hedging


Traders use foreign exchange derivatives, which "derive" their valuations and costs from the spot market. Options and futures contracts effectively lock in exchange rates for a set period, to hedge against the risks of currency fluctuations.

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CHAPTER-5
Data analysis and interpretation

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DATA ANALYSIS AND INTERPRETATION
Objective of the Study   The primary objective of the study is to study the major factors responsible for choosing a bank. The Secondary objective is to assess which banking services are given importance the most. Research Methodology used Descriptive research design was used to study the factors for choosing a Bank. The primary data was collected based on stratified sampling method. We first found out a list of companies from the internet and rang each and every company to know which companies are functional and then went to them for survey.The secondary data was collected from the articles, newspapers, books and internet. The factor analysis and chi-square were used to find factors for choosing a Bank. The collected data have been analyzed with the help of SPSS16.0 package. The scope of this study is to know which factors influence exporters and importers to choose a bank. This study shows the present level of factors which influence and indicates the area for improvement. Factor analysis and chi-square are done to find out the factors which influence the most and on what services banks have to concentrate respectively. The factors that have been taken are: General Factors:  Speed  Cost  Reach  Customer friendly  Already having an account  All banking services Trade finance factors:  Importer‟s choice of bank  Credit limit  Factoring and forfaiting Forex factors:  Forex limits  Better forex offers

Empirical findings
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Factor analysis
The factors which we assumed are general factors, trade finance factors and forex factors. Factor analysis has grouped all these 10 factors into three categorical factors which are export related services factor, convenience factor and efficiency factor.

Correlation matrix

speed

cost

reach

Customer friendly 0.167 0.208 -0.332 1 -0.459

Already have a account -0.193 0.05 0.467 -0.459 1

Importers choice -0.223 -0.067 0.353 -0.107 0.081

Credit limit 0.111 0.089 -0.54 0.434 -0.19

All banking services 0.015 -0.196 -0.304 0.298 -0.207

Factoring and forfaiting 0 0.111 -0.415 0.208 -0.151

Better forex offers 0 0.111 -0.415 0.208 -0.151

Forex limits -0.01 0.109 -0.32 0.055 -0.12

speed cost reach Customer friendly Already have a account Importers choice Credit limit All banking services Factoring and forfaiting Better forex offers Forex limits

1 0.553 -0.046 0.167 -0.193

0.553 1 0.038 0.208 0.05

-0.05 0.04 1 -0.33 0.47

-0.223 0.111 0.015

-0.07 0.089 -0.2

0.35 -0.54 -0.3

-0.107 0.434 0.298

0.081 -0.191 -0.207

1 -0.396 -0.053

-0.4 1 0.026

-0.053 0.026 1

-0.336 0.802 -0.196

-0.336 0.802 -0.196

-0.19 0.722 -0.4

0

0.111

-0.42

0.208

-0.151

-0.336

0.802

-0.196

1

1

0.792

0

0.111

-0.42

0.208

-0.151

-0.336

0.802

-0.196

1

1

0.792

-0.014

0.109

-0.32

0.055

-0.119

-0.185

0.722

-0.402

0.792

0.792

1

Interpretation : From the above correlation matrix we can find out that all factors are not highly correlated with each other except forex offers which are correlated around 70% with better forex offers and factoring and forfaiting.

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Total Variance Explained

Extraction Sums of Squared Initial Eigen values Loadings

Rotation Sums of Squared Loadings

% of Component Total Variance

Cumulative % Total

% of Variance

Cumulative % Total

% of Variance

Cumulative %

1 2 3 4 5 6 7 8 9 10 11

4.124 1.981 1.600 .969 .739 .533 .438 .314 .208 .093 -

37.490 18.007 14.549 8.812 6.716 4.850 3.979 2.858 1.890 .849

37.490 4.124 55.497 1.981 70.045 1.600 78.857 85.573 90.423 94.403 97.261 99.151 100.000

37.490 18.007 14.549

37.490 55.497 70.045

3.856 2.194 1.655

35.054 19.945 15.047

35.054 54.998 70.045

2.736E- -2.487E-15 16

100.000

Interpretation : From this total variance matrix table we can see that all the factors have been reduced to three factors. In which first factor contribute about 35% of total variance, second factor contribute 20% and third factor 15%.Only these three factors are taken since these three factors explain about 70% of total variance. The first factor has to be given more importance since it contributes more to the total variance. What constitutes first factor will be explained in rotated component matrix. From this study it is evident that the important factors which influence the exporters and importers in choosing a bank are

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1) Export related services factors: which include credit limit, factoring and forfaiting, better forex offers, forex limits. 2) Convenience factor: which include reach, customer friendly, already having an account, all banking services. 3) Efficiency: which include speed and cost of transactions. The three factors explain the 70% of the total variance of the data. Therefore only these three factors are considered. From the rotated component matrix. The resultant table is as follows
Rotated Component Matrix
Component 1 Speed Cost Reach Customer friendly Already have an account Importers choice Credit limit All banking services Factoring and forfaiting Better forex offers Forex limits .957 .957 .902 .848 .723 -.678 .689 -.696 2 3 .857 .877

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization.

From the rotated component matrix the first important factor seems to be the export related services factor account for 35% of co-variance among variables, convenience account for 20% of co-variance and efficiency factor account for 15%.Export related services factor include:     Credit limit Factoring and forfaiting Better forex offers Forex limits

All these explain the factor on an average of 90% each. The next important factor is the convenience factor which includes reach, customer friendly, already having an account and all banking services.
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Interpretation: The above plot shows the graph between Eigen value and components. We can see that the graph steeply decreases up to third component and from then it is becoming stable. Meaning the each successive factor is accounting for smaller and smaller amounts of the total variance.

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Chi-square Chi-square is a statistical test commonly used to compare observed data with data we would expect to obtain according to a specific hypothesis. For example, if, according to Mendel's laws, you expected 10 of 20 offspring from a cross to be male and the actual observed number was 8 males, then you might want to know about the "goodness to fit" between the observed and expected. Were the deviations (differences between observed and expected) the result of chance, or were they due to other factors. How much deviation can occur before you, the investigator, must conclude that something other than chance is at work, causing the observed to differ from the expected. The chi-square test is always testing what scientists call the null hypothesis, which states that there is no significant difference between the expected and observed result. Findings for another objective, i.e. banking services which are used the most are evident from the data by using chi-square test. The resultant table is as follows:
Test Statistics Documentary collections letter of credit
a a b

Type of LC

Services regarding LC
a

Shipping guarantees

Post shipment export finance
a a

Transaction services

Advising, negotiating services

ChiSquare Df Asymp. Sig.

.000

4.800

15.000

13.333

16.133

4.800

19.200

a

8.533

a

1 1.000

1 .028

2 .001

1 .000

1 .000

1 .028

1 .000

1 .003

Interpretation: This table shows that all the services are significant. From the chi-square test we can find out the significance of the data obtained. The resultant table of chi-square shows that all services have significance less than 0.05 which explains that all services are given importance. The documentary collection has an exception because the values of documentary collection are almost constant therefore the significance value is 1i.e. the chi-square can not be applied for variables which are constant. Chi-square shows that the variables are significant or is the best fit to the sample population, because the significance values of all the variables are less than 0.05.

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Frequencies

Interpretation: The above graph shows that the survey has been done in the following sectors  Sea food  Pharma  Misc o Granite o Jewellery o Decorative items Sea food sector has more sample size because it is the dominant sector in vizag, therefore the more the sample size, more accurate the results will be. Then pharma companies are surveyed more since there exists pharma city in vizag which are also large in number. The miscellaneous companies include granite, jewellery and decorative items, which are less in number.

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Exports

The graph shows the volume of exports of the companies that are being surveyed. The companies which have exports :     < 5 crores are export house 5- 25 crores are 25-125 crores 125-625 crores
Particulars Advance payments Open account Documentary collections Letter of credit Services regarding LC Bills collection Bills discounting Shipping gaurantees Preshipment Export finance Postshipment export finance Transaction services Advising, negotiating services Yes 0% 0% 50% 80% 80% 100% 100% 10% 100% 30% 100% 80% No 100% 100% 50% 20% 20% 0% 0% 90% 0% 70% 0% 0%

Interpretation: The above frequency table shows that except the Advance payments, open account and post shipment finance services all other services are used the most and are given equal importance. Advance payments and open account are very risky therefore naturally they are avoided as much as possible.
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Frequencies of factors:

Interpretation: The above bar-graph shows that most of the respondents has opted for strongly and agree only. Therefore this factor can be considered as a very important factor.

Interpretation: Like speed cost also got the same response. so this factor can also be considered as a very important factor .

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Interpretation: We can see from the bar graph of the responses that many people disagreed or said not an issue regarding reach as a factor for choosing a bank. This shows that people are not interested in whether the bank in reach or not. The reason might be since the technology has been developed, now a days everything is going online , there is no worry regarding the reach of the bank.

Interpretation: Almost all respondents agree that customer friendly is one of the factors for choosing a bank. Therefore this factor also need to be considered as an important factor.

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Particulars Already having an account Importer's choice of bank Credit limit All banking services Factoring and forfaiting Better forex offers Forex limits

Strongly Strongly disagree Disagree Neutral Agree agree 30% 70% 0% 0% 0% 45% 65% 0% 0% 0% 0% 0% 0% 55% 45% 0% 0% 0% 85% 15% 0% 0% 0% 50% 50% 0% 0% 0% 50% 50% 0% 0% 15% 45% 40%

Interpretation: From the above frequency table , it is evident that all agreeing exporter‟s trading services as factor for choosing a bank , except already having an account and importer‟s choice of bank. Therefore banks should be more competitive in these factors to attract customers. Crosstabs

Interpretation: The above bar graph shows the relation between volume of exports and documentary collection service. It shows that companies small companies (< 5 crores and 525 crores) and showed a little bit interest in documentary collections. The reason would be documentary collection services would be comparatively cheaper and have some sought of safety. Therefore who could not afford for costly services they go for cheaper services.

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Interpretation: The above bar graph shows the relation between volume of exports and letter of credit. It shows that low volume exporting companies does not prefer LC and others preferred as it is safe to use.

Interpretation: The above graph shows that most of the respondents use sight and usance letter of credit. The other types are not used by any one because respondents are not aware of the other LC services available.

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Interpretation: Every respondent who use LC obviously uses the services regarding LC.

Interpretation: almost all the respondents said that they don‟t need shipping guarantees, because most of them are using services which are safer and also includes shipping guarantees. It is preferred by those who use documentary collections.

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Interpretation: every respondent responded positively for transaction because it is key service for trade. It is used for payments, foreign exchange transactions, etc..

Interpretation: many companies said yes for advising, negotiating bank services.

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CHAPTER-6
Conclusion and suggestions

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Conclusion:
From the analysis we can conclude that while choosing a bank, these exporters are giving importance to export related services first(credit limit, factoring and forefaiting, better forex offers, forex limits), because they want to work efficiently by reducing their costs take service with better quality. Then the importance is given to general factors and then to efficiency factor. Coming to the services used the most, exporters are using all the export services offered by the bank with exception of advance payments and post shipment finance. In vizag most of the exporters are not using advance payments and documentary collections, it suggests that exporters of vizag are risk averse since usage of advance payments and documentary collections are risky comparatively.

Suggestions :
As per the analysis made the suggestions that can be made are  The important factor seem to be the export related services factor then general factors and then efficiency factor. Therefore it is advisable to concentrate more on export related service factors.  Then coming to the services used, exporters are using all the export services offered by the bank with exception of post shipment finance and shipment guarantees. As the exporters of vizag seem to be risk averse it is better to concentrate on service which are safe to use like LC, etc...  Most of the exporters in vizag are not aware of different types of LC‟s, so first awareness of the different types of LC‟s have to be created and their uses have to be explained to create a market.

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Annexure-1
FACTORS FOR CHOOSING A BANK FOR TRADING SERVICES Type of industry e-mail id : : Designation Company Name : :

1) What is the turnover of your company? a) <1 million b) 1 million – 100 millions c) 100 millions – 1 billion d) > 1 billion 2) What is the major share of your business? a) Exports b) Imports c) Both exports and imports. 3) What is the total exports and imports of your company annually? a) < 5crores b) 5 crores – 25 crores c) 25 crores – 125 crores d) 125 crores – 625 crores e) > 625 crores 4) What percentage of turnover is your exports or imports? a) <10% b) 10% – 50% c) 50 – 80% d) >80% 5) How frequently do you export or import? a) Weekly b) Monthly c) Quarterly d) Semi annually e) Annually 6) What mode of payment do you use for exports and imports? a) Advance payments b) Open account c) Documentary collections(D/P, D/A) d) Letter of credit

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7) What type of LC do you prefer the most for your industry and why? a) Sight letter of credit._______________________________________ b) Usance letter of credit.______________________________________ c) Negotiable letter of credit.___________________________________ d) Revolving letter of credit.___________________________________ e) Red clause letter of credit.___________________________________ f) Green clause letter of credit._________________________________ g) Transferable letter of credit._________________________________ h) Back to back letter of credit._________________________________ i) Stand by letter of credit.____________________________________ 8) What are all the bank services you prefer for your exports and imports?(can opt more than one choice) a) Services regarding LC b) Bills collection. c) Bills discounting d) Shipping guarantees e) Pre-shipment export finance f) Post-shipment export finance g) Transaction services. h) Negotiating, advising, confirming bank services.
FACTORS I choose a bank with respect to speed of transactions. I choose a bank with respect to cost of transaction I prefer a bank which is in reach to me. I choose a bank which is customer friendly I choose a bank in which I already have a account Trade finance I choose a bank which is of importer‟s choice Credit limit is one of the factors of choosing a bank I choose a bank which gives all the banking services. Factoring and forfaiting are some of the factors of choosing a bank Forex services FOREX services are dealt by your company regularly I choose a bank which has better forex offers I choose a bank according to the forex limits offered by bank. Strongly disagree Disagree Neutral Agree Strongly agree

9) Do you expect any more banking services for exports and imports?

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Annexture-2

SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - TRADE FINANCE
CATEGORY PARTICULARS

INWARD REMITTANCES: A. OUR CUSTOMERS TT Commission Comm in lieu of exchange Cheque received from other banks in INR Euro remittance from SG Paris with charges as sharing/BENE (in case MT 100/103) In case MT 202 (in INR) Charges for filing FCGPR Forward contracts booked B. NON CUSTOMERS TT Commission Courier Charges:

Rs. 150 @ 0.125% (Min Rs.100/-) Rs. 100 Rs. 200.00 Rs. 200.00 Rs. 2500.00 Rs. 500 per contract

Rs. 250.00 Rs. 50.00 Rs. 100.00

Ot of Pocket Expenses: Telephone / Fax FIC charges < 6 months FIRC charges > 6 months If payment is made in same FCY FDD charges SWIFT charges SG Paris (in case MT100/103) amt in EUR In case MT 202 (in INR) OUTWARD REMITTANCES: Foreign demand draft Foreign telegraphic transfer + Remittance charges Foreign travellers cheques Foreign Travellers Cheques/Currency through TRAVELEX (plus applicable pay order charges) Foreign currency issued Forward contracts booked Commission in lieu of exchange In case debit to EEFC a/c

Rs. 200.00 Rs. 200.00 Rs. 500.00 @ 0.125% (Min Rs.100/-) Rs. 200.00 Rs. 500.00 Rs. 200.00 Rs. 200.00

Rs. 200 per draft Rs. 500 per swift message 0.125% (Min Rs.100/-) 1% Rs. 500.00 0.125% (Min Rs.100/-) Rs. 500 per contract

0.125% (Min Rs.100/-)

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SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - TRADE FINANCE
CATEGORY IMPORTS: L/C OPENING CHARGES A. For L/C value upto INR 40 mio: Commitment charges Usance charges PARTICULARS

0.15% per qtr Sight Upto 3 months 0.30% for the first 3 months + 0.075% per month in excess of 3 months for bills over 3 months (Min Rs. 4,500/-)

B.

For L/C value exceeding INR 40 mio: For first INR 40 mio Amt in excess of INR 40 mio; upto INR 80 mio Amt in excess of INR 80 mio; upto INR 120 mio For value exceeding INR 120 mio & Communication charges INLAND L/C OPENING CHARGES Commitment charges Usance charges per management's discretion subject to a minimum as 'A' Rs. 2,000.00

0.20% per qtr 0.40% for bills upto 3 months 0.20% per month in excess of 3 months 0.15 % (Min Rs. 250/-) Rs. 500 per swift message

Commission on L/C documents handled & Communication charges Commission collection document received through bank/supplier/advance payment & Communication charges Commission on import documents received directly by importers Documents for value upto INR 10 mio Amount in excess of INR 10 mio & Communication charges Charges on issuance of delivery order (Prior to receipt of documents ECB / Trade credit approval

0.25% (MIN RS. 250/-) Rs. 500 per swift message

0.125% .0625 % (Min Rs. 250/-) Rs. 500 per swift message

Rs. 500.00 Rs. 500.00

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SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - TRADE FINANCE
CATEGORY EXPORTS: SERVICE CHARGES Fax Overseas Swift Export certificates Export collection bills Upto Rs. 2 lakhs Rs. 2 lakhs and above Processing Charges Commission in lieu Of exhange Acceptance commission Overdue export bills Courier FBC charges ETX charges Invoice certification in excess of 5 Certificate issuance Processed LC document return charges PARTICULARS

Rs. 250.00 Rs. 500.00 Rs. 100.00 Rs. 250.00 0.0625% (Min Rs. 250/-)** Rs. 1400.00 0.125% (Min Rs.100/-) 0.15% per month Rs. 1000.00 per quarter Rs. 1200.00 0.0625% (Min Rs. 250/-)** Rs. 250.00 Rs. 50 per certificate Rs. 100.00 Rs. 1500.00

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SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - TRADE FINANCE
CATEGORY INTEREST RATES: 1 A. Pre-shipment credit upto 90 days beyond 91 days and upto 270 days beyond 270 days and upto 365 days Pre-shipment credit upto 180 days beyond 180 days and upto 360 days 2 A. Post shipment credit on demand bills for transit period Usance bills upto 90 days beyond 91 days to 180 days beyond 181 days upto 365 days Post shipment credit on demand bills for transit period Usance bills upto 6 months from the date of shipment Export L/C advising Non-customer Customer Export L/C amendment advising Non-customer Customer Export L/C cancellation charges TRANSFER Customer Non-customer Confirmation charges INR Funding at or above base rate at or above base rate 14.50% FCY Funding not exeeding 200 bps over Libor/ Euribor Eur-Libor at the time of enxtension + 200 bps INR Funding at or above base rate at or above base rate at or above base rate 14.50% FCY FUNDING not exeeding 200 bps over Libor/ Euribor/ Eur-Libor not exeeding 200 bps over Libor/ Euribor/ Eur-Libor PARTICULARS

1 B.

2 B.

Rs. 1500.00 Rs. 1000.00

Rs. 750.00 Rs. 500.00 Rs. 750.00 Rs. 500.00 Rs. 1000.00 per HO approval and pricing

Arrangement

Write off of export bills

1 lot Rs.3,000/- + 2 lots Rs.3,500/- flat plus applicable discrepancy fees if not collected by issuing bank Rs. 500.00 per bill

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SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - TRADE FINANCE
CATEGORY GUARANTEES: Per sanction..Minimum guarantee commission Rs. 4,500/Charges for network guarantees SG Eurpore & New York PARTICULARS

based on country / bank risk (Min EUR 150 per quarter) per sanction (min INR 4,500/-)

Corporates Amendment charges If tenor not extended If tenor is extended

Rs. 500.00 as above INR 1 per 1,000 upto INR 1,000,000 or part thereof & INR 2 per 1,000 thereafter

Stamp duty Handling charges for network guarantees On issuance of guarantee On issuance of amendment to guarantee Pricing for Paris guarantees Guarantees upto EUR 5000 - EUR 9999 : Flat Commission EUR 100/- per annum Commission at EUR 25 per quarter with minimum of EUR 100 Guarantees above EUR 10,000 - EUR 50000 : Flat Commission EUR 200/- per annum Commission at EUR 50 per quarter with minimum of EUR 200 Guarantees above EUR 50,000 : Commission @ 0.80% p.a. minimum EUR 150/- per quarter.

 

EUR 25.00 EUR 25.00

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SOCIETE GENERALE, INDIA LIST OF SERVICE CHARGES - CUSTOMER SERVICES
CATEGORY Payorders Upto 1 lac Above 1 lac Revalidaton / Cancln / stop payt / duplicate issuance DD issuance through special arrangement [HDFC] Upto 1 lac Above 1 lac Revalidaton / Cancln / stop payt / duplicate issuance SBM Upto 10k Above 10k Cancellation DD issuance not through special arrangement [SBM] Upto 5000 Rs.5001 to 10,000/Rs.10,001 to Rs.1,00,000/Above Rs.1 Lakh Any amount Revalidaton / Cancln / stop payt / duplicate issuance Branches DD Upto 1 lac Above 1 lac Revalidation / Cancellation Outstation collection of Cheques (OCC/NCLG) Savings a/c [Per instrument] Rs. 25.00 Rs. 50.00 Rs. 100.00 Rs. 100.00 Rs. 2.5/- per Rs. 1000/- (Min. Rs.500/-, Max. Rs. 3k) Other than Savings a/c [Per instrument] Rs. 50.00 Rs. 50.00 Rs. 100.00 Rs. 150.00 PARTICULARS Rs. 1/- per 1000/- (Min Rs. 100/-) Rs. 0.50/- per 1000/- (Min Rs.100/-, Max 1000/-) Rs. 100/-

Rs. 2/- per 1000/- (Min Rs. 100/-) Rs. 1.5/- per 1000/- (Min Rs. 200/-, Max. Rs. 3000/-) Rs. 100/-

Rs. 50/- (Min Rs. 100/-) Rs. 2/- per 1000/- (Max Rs. 5000/-) Rs. 25/-

Rs. 35/Rs. 40/Rs. 3 per 1000 Rs. 2.50 per 1000 Rs. 1.75 per 1000/- + STAX + ECESS (Min Rs. 30/-, Max Rs. 11200/-) Rs. 60/-

Rs. 2/- per 1000/- (Min Rs. 100/-) Rs. 1.5/- per 1000/- (Min Rs. 200/-, Max Rs. 3000/-) Rs. 100.00

Upto Rs.5000 Above Rs.5000 - utpo Rs.10000 Rs.10,001 to Rs.100,000 Above Rs.100,000/Above 1 lac

These charges are all inclusive and no additional charges to be recovered. (Collecting & Paying bank to share 50:50 charges for collection of outstation cheque) Speed Clearing System Savings a/c [Per instrument] Nil Rs.100.00 Other than Savings a/c [Per instrument] Nil Rs.150.00

Upto Rs.100,000 Above Rs.100,000

These charges are all inclusive and no additional charges to be recovered. Collection of Bills Upto 1 lac Above 1 lac

Rs. 5/- per Rs. 1000/- (Min.Rs.100/-) Rs. 4.5 per Rs. 1000/- (Min.Rs.500/-, Max. Rs.3000/-)

Duplicate A/c statement chgs Balance confirmation certificate (except March)

Rs. 100.00 Rs. 100.00

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Bibliography
 www.indusind.com/  indiabudget.nic.in/es2004-05/chapt2005/chap64.pdf  Role of Banks in International Trade, BankNewsToday.com http://www.banknewstoday.com/role-of-banks-in-international-trade/wpadmin/install.php  S&P(standard and poor) industry report card on Banking sector,Thu Jul 22, 2010. http://in.reuters.com/article/2010/07/22/idINIndia-50314520100722  ICRA Research(2011), Indian Banking Sector: Challenges unlikely to derail the progress made, June 2011 http://www.icra.in/Files/ticker/Banking%20note-final.pdf  The Economic times (2012) ,Economic Survey 2011-12: Banking system to become stronger, Mar 16, 2012. http://articles.economictimes.indiatimes.com/2012-03-16/news/31201247_1_baserate-indian-banking-system-banking-space  Budget Analysis 2012: Sectoral impact of union budget 2012-13 by PINC Research Published on Sat, Mar 17, 2012. http://www.moneycontrol.com/news/brokerage-recos-others/budget-analysis-sectoralimpactunion-budget-2012-13-by-pinc-research_682023.html  Business line, Dec 2012, China, India open banking sector to each other. http://www.thehindubusinessline.in/2010/12/17/stories/2010121752830400.htm  Services charges, http://www.societegenerale.in/files/ServiceCharges.pdf  Bank Selection Criteria Employed by MBA Students in Delhi: An Empirical Analysis http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1597902  http://www.eximguru.com/exim/guides/exportfinance/ch_5_pre_shipment_trade_fina nce.aspx

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