Trade Finance

Affin Bank

Trade Financing

We are well equipped with trained, experienced resources and systems to manage trade related transactions. Our range of import & export related products and services amongst others, includes the following:-

Letters Of Credit

Commercial LC Red Clause LC Transferable LC Back to Back LC Revolving LC Standby LC

Import

Trust Receipt (TR) Bankers Acceptance (BA) Purchase Shipping Guarantee Import under Documentary Collections

Export

Bankers Acceptance (BA) Sales Bill Purchase/Discounting Bill Negotiation Export Credit Refinancing Export under Documentary Collections

Guarantees

Tender/Bid Guarantee Performance Guarantee Advance Payment Guarantee Security Deposit Guarantee

Bank Islam

Accepted Bills-i (AB-i)

An AB-i can be drawn to finance domestic purchases or imports and domestic sales or exports. AB-i (Purchase) is a financing facility using the Murabahah contract, granted to the buyer or importer to finance their purchase of tradable goods that include raw materials, semi-finished and finished goods. Payments to suppliers will be made immediately by Bank Islam, and customer may match the deferred payment according to the aging of credit terms.

Using this facility:

Bank Islam appoints the customer as its agent to purchase goods on its behalf Upon delivery of goods, Bank Islam pays the supplier at sight or upon maturity of credit

term for the cost of the goods based on the invoice value Bank Islam will subsequently sell the goods to the customer on deferred payment terms at

a price inclusive of the Bank’s profit The deferred payment term on sale of goods granted to the customer, constitute creation

of a debt. This is securitised in the form of AB-i drawn by Bank Islam Upon maturity, the customer pays Bank Islam the agreed sale price of the financing

AB-i (Sales) is a financing facility using the Bai´ Dayn contract, granted to the seller or exporter to finance their sales or export of goods on credit terms that include raw materials, semi-finished and finished goods. Bai´ Dayn or debt trading is a short-term financing facility whereby Bank Islam purchases the customer’s right to the debt, which is normally securitised in the form of Accepted Bills.


The seller/exporter who wishes to avail himself of this facility, prepares sales/export documents as required under the sale of contract

Seller/Exporter presents these documents to Bank Islam to be purchase> As the sales/export documents have to be sent to the buyer, Bank Islam requests the

seller/exporter to draw the AB-i drawn on Bank Islam Bank Islam will purchase the debts and credit the proceeds to the seller/exporter Upon receiving payment from its buyer, seller/exporter will use it to settle the AB-i

BENEFITS

Provide up to 100% financing of invoice value Improves customer’s cash flow as sales proceeds are received immediately while

payment is made only upon maturity of AB-i

Bank Guarantee-i (BG-i)

BG-i is an irrevocable written obligation issued by Bank Islam to pay an agreed sum, in case the customer defaults in fulfilling his obligation. Issued under the Kafalah contract, BG-i is Bank Islam’s irrevocable undertaking to guarantee performance or financial standing of a customer. BG-i is not a financing instrument.

FEATURES

Bank Islam acts as a guarantor. In the event the customer defaults in performing his obligations, Bank Islam will take the responsibility to honour the beneficiary’s claims

All BG-i must have specific expiry date and claims period o BG to cover government contracts o BG in respect of contracts for a specified period

BENEFITS

BG-i is widely accepted, thus giving the beneficiary more confidence.

Bilateral Payments Arrangment (BPA)

BPA is a scheme for the settlement of net monetary obligations arising from trade between pairs of countries. BPA consists of 2 important elements:

The undertaking of sovereign risks by the Central Banks to facilitate settlement of monetary obligations among commercial banks in both countries arising from trade

The undertaking by the Central Banks of both countries to settle the net balance arising from the trade conducted between the two countries

FEATURES

Periodic settlement of net balance between signatory Central Banks Central Banks grant net credit limit to each other Letters of Credit (LCs) must be marked with special reimbursement clause Trade transactions are carried out through the existing financial or banking system

BENEFITS

Guaranteed payments in domestic currency for exports and elimination of the credit risk and exchange risk

Greater confidence to trade with developing countries Easier access to banking facilities

Bills of Exchange Purchased-i (BEP-i)

A financing facility using Bai´ Dayn contract, granted by Bank Islam to its customer whereby Bank Islam purchases the customers’ debts arising from the creation of the outward bills for collection under open account or drawn against export letter of credit. The customer’s account is credited immediately with the proceeds from the purchasing of the debt. The proceeds of the collection will be used to liquidate the financing.

BEP-i is classified into two:

1. DOMESTIC BILLS OF EXCHANGE PURCHASED-i (DBEP-i)Domestic bills drawn in RM purchased by Bank Islam against outward bills for collection under open account or against letter of credit.

2. FOREIGN BILLS OF EXCHANGE PURCHASED-i (FBEP-i)Foreign bills drawn in foreign currencies purchased by Bank Islam against outward bills for collection under open account or against export letter of credit.

BENEFITS

Margin of finance up to 100% of the invoice amount Able to improve cash flow by obtaining immediate funds as a mean of financing for

working capital requirement Simple document preparation

Export Credit Refinancing-i (ECR-i)

ECR-I(Pre-shipment)Pre-Shipment ECR-i is a financing facility based on Murabahah contract, granted to exporters to prepare goods prior to shipment. It is an effort to encourage the exports of Malaysian agriculture products and manufactured goods.

ECR-I(Post-shipment)Post-shipment ECR-i is a financing facility based on Bai´ Dayn contract, available to direct exporter who exports eligible products on sight or usance terms. For sight term, the financing period shall not exceed 60 days.

FEATURES

The facility is funded by Export Import Bank of Malaysia Berhad (EXIM Bank) Financing only covers Halal products and those not listed in the EXIM Bank’s Negative

List Guideline The Financing rate shall be determined by EXIM Bank from time to time Bank Islam can add up to a maximum margin of 1% to the ECR Financing rate for

financing its customer Post-shipment ECR-i is only available to direct exporter who export eligible products on

sight or usance terms

BENEFITS

Lower cost of financing as it is funded by EXIM Bank For Post-shipment ECR-i, customer can obtain immediate funds upon presentation of

export documents after shipment

Letter of Credit-i (LC-i)

A written undertaking by Bank Islam at the request of the Buyer/Applicant to pay the Seller/Beneficiary a certain sum of money as stipulated in the Letter of Credit, provided that the Seller/Beneficiary complies with the terms and conditions of the Letter of Credit. The Letter of Credit can be issued under Wakalah contract (agency relationship) and thereafter the goods purchased maybe financed under the Murabahah contract (cost plus).

WAKALAH CONTRACT

Bank Islam is appointed to act as an agent on behalf of the Buyer/Applicant Buyer/Applicant will place deposit to the full amount of goods to be purchased Bank Islam establishes the Letter of Credit and remits the payment to the

Seller/Beneficiary utilising the customers’ deposit

MURABAHAH CONTRACT

Bank Islam will act as the financier for the Buyer/Applicant for the purchase of the goods Bank Islam will establish the Letter of Credit and remit the payment to the

Seller/Beneficiary utilising its own funds Bank Islam sell the goods to the Buyer/Applicant at a sale price comprising its cost and a

profit margin Buyer/Applicant is given a deferred payment term for the settlement of the purchase

BENEFITS

No ‘transit interest’ charges as Bank Islam remits payment to the Seller/Beneficiary only upon receipt of documents

No other hidden costs Efficient payment arrangement

Shipping Guarantee-i (SG-i)

Shipping Guarantee is a facility where Bank Islam indemnifies and guarantees the shipping company for the release of goods to the buyer/importer without the presentation of the original Bill of Lading. Issued under the Kafalah contract, it can be defined as a surety provided by a party to the owner of the goods, who had placed or deposited his goods with the shipping company, whereby any subsequent claim by the owner for his goods must be met by the guarantor.

BENEFITS

Importer can take delivery of goods immediately Importer will not have to incur demurrage and warehousing charges Enables the importer to sell the goods without delay

Trade Working Capital Financing-i (TWCF-i)

A financing facility under the Murabahah contract, to finance domestic or international trade documents against Letter of Credit or Inward Bills for Collection.

Murabahah refers to the sales of goods at a price, which includes cost plus profit as agreed by both seller and the buyer. This contract allows the customer to take delivery of the goods immediately on arrival and settle with the Bank on a deferred payment arrangement.


Bank Islam purchases or appoints the customer as its agent to purchase the goods on its behalf

Upon delivery of goods, Bank Islam pays the supplier at sight or upon maturity of credit term for the cost of goods based on the invoice value

Bank Islam subsequently sells the goods to the customer on deferred payment terms at a price inclusive of the Bank’s profit

Customer will undertake to settle the selling price on the maturity date

BENEFITS

Enables the customer to settle payment obligation to the seller Facilitates convenient cash flow management of a business by having a fixed rate

financing nature

As a prudent and reliable basis in the preparation of the business projection, since the selling price will not be affected by fluctuation in the Base Financing Rate

Provide up to 100% financing of invoice value

Bank Muamalat

Import

Transaction Type Of Charges Amount

1) Outward Documentary Credit

Issuance of DC

i) Irrevocable DC Issuance Commission As spelt out in the Letter of Offer normally between 0.1% to 0.15% per month or part thereof Minimum RM50

Handling Charges (for LC issuance free of commission)

RM50 flat

ii) Special Credit (Standby, Transferable, Back to Back, Revolving, Red Clause)

Issuance Commission As spelt out in the Letter of Offer normally between 0.15% to 0.2% per month or part thereof Minimum RM100

Amendments of DC

i) Amount Increase Amendment Commission Between 0.1% to 0.15% per month or part thereof Minimum RM50

ii) Validity Date Extended Amendment Commission Between 0.1% to 0.15% per month or part thereof Minimum RM50

iii) Other Amendment Amendment Commission RM50

Usance Bill Under DC Usance Commission 0.1% to 0.15% per month or part thereof from DC expiry date to the expiry date of the usance bill Minimum RM50

Advising own DC direct to Beneficiary

Commission RM50

Direct presentation of DC documents from beneficiary

Commission 0.1% flat Minimum RM50 Maximum RM100

Checking Fee RM50

Cancellation of DC (prior to expiry date)

Handling Charges RM50

DC Negotiation

i) Negotiation charges Commission No Charges

ii) Reimbursement charges Commission No Charges

iii) Checking fee Checking Fee No Charges

iv) Agent's Charges on DC Negotiation

Agent Charges Actual charges claimed by agent

v) Discrepancy fee (less from proceeds)

Handling Charges RM50 (local DC) USD50 or equivalent (foreign DC)

vi) Drawing After Expiry Date (less from proceeds)

0.1% per month or part thereof on the negotiation amount from the expiry date to the date of receipt of documents.Minimum equivalent of RM100

vii) Drawing Exceeds DC Amount (less from proceeds)

0.1% per month or part thereof on the overdrawn amount from the DC issue date to the date of receipt

of documents. Minimum equivalent of RM100

Endorsement of Bill of Lading and Airway Bill

i) Advance Set (BL) Handling Charges RM100

ii) Airway Bill Handling Charges RM100

2) Shipping Guarantee Commission 0.1% of invoice value or as spelt out in the Letter of Offer Minimum RM50

If the SG is not returned after 3 month from the date of issuance, additional 0.5% per annum will be charged and subsequently 3 months thereafter until the return of the SG

3) Inward Bills for Collection (DIBC/FIBC)

i) Domestic Bill Collection Commission 0.1% of invoice value Minimum RM50 Maximum RM500

ii) Foreign Bill Collection Commission 0.1% of invoice value Minimum RM50 Maximum RM100

iii) Document Release Free of Payment


iv) Document Redirect to Another Bank

Commission 0.1% of invoice value Minimum RM50 Maximum RM500 (domestic) Maximum RM100 (foreign)


v) Dishonoured Bill Handling Charges RM50

vi) Protest Bill Handling Charges RM200 plus legal expenses

4) Bank Guarantee

Issuance of BG Commission Rate of Commission is based on the approval as stated in each Letter of Offer normally between 0.1% to 0.15% per month or part thereof

Minimum RM50

Issuance of BG (Ad-hoc Cash Margin)

Commission Rate of Commission is based on the approval as stated in each Letter of Offer normally 0.15% per month or part thereof. Minimum RM200

Renewal of BG Commission Rate of Commission is based on the approval as stated in each Letter of Offer.

Extension of BG Commission Rate of Commission is based on the approval as stated in each Letter of Offer.

Cancellation of BG (prior to expiry)


Amendment of BG

i) Amount Increase Amendment Commission Rate of Commission is based on the approval as stated in each Letter of Offer.

ii) Validity Date Extended Amendment Commission Rate of Commission is based on the approval as stated in each LOO.

Export


1) Inward Documentary Credit

i) Advising Commission RM 50

ii) Amendment Commission RM 50

iii) Confirmation of Inward DC

Confirmation Commission

Between 0.15% to 0.2% per month or part there of depending on the country/sovereign risk. Minimum RM100

iv) Usance DC Confirmed Commission Additional 0.15% to 0.2% per month or part thereof from the DC expiry date to the expiry date of the usance bill. Minimum RM100

2) Inward Transferable DC

i) Advice of Transfer Commission Between 0.15% to 0.2% on DC transferred amount Minimum RM100

ii) Amendment to Transferred DC

Commission RM 100

iii) Document Handling under Transferred DC

Handling Charges RM 100

iv) Document Checking Fee

Checking Fee RM50

3) Bill Purchased (DBEP/FBEP (AP)/Doc)

i) Domestic Bill Purchased Profit Rate As spelt out in the Letter of Offer (spread + BFR)


ii) Foreign Bill Purchased Funding Rate As determined by Treasury (interbank offered rate)

iii) Checking Fee for Document Drawn under LC


Checking Fee RM50

4) Outward Bills for Collection (DOBC/FOBC)

i) Domestic Bill Commission 0.1% flat Minimum RM50 Maximum RM100

ii) Foreign Bill Commission 0.1% flat Minimum RM50 Maximum RM100

5) Accepted Bills - Islamic Funding Rate Based on money market rate for the specified tenor – determined by Treasury

Acceptance Commission As spelt out in the Letter of Offer

6) Murabahah Working Capital Financing (MWCF)

Profit Rate As spelt out in the Letter of Offer (spread + BFR)

7) Bai Al Dayn Working Capital Financing (BWCF)

Profit Rate As spelt out in the Letter of Offer (spread + BFR)

Others


1) Direct Presentation of Documents (not under DC or Collection)

Commission in lieu of Collection

0.1% on the amount financed Minimum RM50 Maximum RM500 (local bill) Maximum RM100 (foreign bill)

2) Commission in lieu of Forex (Export Proceeds Not Converted to Ringgit Malaysia)

Commission in lieu of Forex

i) Credit to Own FCA Account with the Bank

Commission No Charge

ii) Remit to FCA account with other Banks

Commission 0.1% of invoice value Minimum RM100 Maximum RM500

3) Handling of Volumeness Documents (Bunching of Invoices and Multiple Payments exceeding 5 invoices and 5 payment per transaction)


4) Compensation for Late Payment

Compensation Charges At Islamic Money Market Rate (IMMR) on the number of days

5) Overdue Bill Handling Charges


6) Reproducing of Statement, Debit/Credit Advices

Handling Charges RM 5.00 per request

7) Cable / SWIFT

i) DC Issue / DC Charges RM 60

Amendment

ii) Others Charges RM 30

iii) FOT Charges (less from proceeds)

Charges USD 20.00 or RM70 equivalent

8) Letter of Indemnity on

i) Bank Guarantee Stamp Duty RM 10

ii) Shipping Guarantee Stamp Duty RM 10

iii) Documentary Credit (parcel/courier receipt)

Stamp Duty RM 10

iv) BL / AWB Endorsement

Stamp Duty RM 10

v) Fax Application Stamp Duty RM 10

9) Application Request/ Financing Document

i) Documentary Credit Stamp Duty RM 10

ii) Letter of Hypothecation Stamp Duty RM 10

iii) DC Murabahah Contract Note

Stamp Duty RM 10

iv) Al Murabahah Contract Note

Stamp Duty RM 10

v) Murabahah Working Capital Financing Letter

Stamp Duty RM 10

vi) Bai Al Dayn Contract Note

Stamp Duty RM 10

vii) Shipping Guarantee Stamp Duty RM 10

viii) Letter of Stamp Duty RM 10

Authorization (Bank Guarantee)

ix) Original Bank Guarantee

Stamp Duty RM 10

10) Sending of Documents At Customer's Request

Courier Charges Actual Courier Charges

Handling Charges (inclusive of postage, facsimile, email, scanning)

RM 10

11) On Line Credit to Beneficiary's Account


Hong Leong Bank

Trade Services

Hong Leong Bank Trade Services with its worldwide network of agent banks has the capability to fulfill your needs to reach the global market. Our Trade Services Centres together with the Trade Business Desks located strategically nationwide are always within your easy reach.

At Hong Leong Bank Trade Services, we are your partners in fulfilling your needs whether it is to finance your trade or to expand it. We can offer advice on a wide range of trade products to assist your trade activities.

IMPORTS

Letter of Credit

Our letters of credit offer you a secured means of paying your suppliers by ensuring the documents you stipulate are in order before we effect payment. This will help you to minimise the risks associated with the payment for your imports/purchases.

With over 600 agent banks in more than 90 countries worldwide, Hong Leong Bank's Trade Services enables you to transact your international payments right at your doorstep.

Collections

We will inform you immediately upon receipt of the shipping documents received from your supplier. Upon your payment, you may take delivery of the shipping documents. If credit terms

has been arranged with your supplier, you will need to provide your acceptance or undertaking in order to take delivery of the shipping documents .

Financing

We provide various financing options for your local purchases and imports at favourable rates. Each of our financing options is designed to cater for specific needs and these include:

Bankers Acceptances Onshore Foreign Currency Loans Trust Receipt Invoice Financing

EXPORTS

Letter of Credit

As an exporter, a letter of credit provides you with the assurance of receiving payment against your shipping documents which comply strictly to the terms and conditions as stipulated in the letter of credit. You must be able to comply with the terms and conditions and in particular avoid any discrepancies in your documentation. Our trade advisors will be able to help you in this aspect.

We can also have your export letters of credit confirmed. This will remove any concerns you have with letters of credits received from countries or banks you are not comfortable with as our confirmation will remove the sovereign and bank risks.

Collections

As the exporter, you will present your shipping documents to us for the collection of proceeds. We will send your shipping documents to the buyer's banker with specific instructions as to the release of the shipping documents. You will maintain control over the goods until they are paid for or until the buyer has given their undertaking or acceptance to pay at a future date.

We shall keep track of your export collection until the proceeds are received by us whereby we will credit your account promptly. In the event of non-payment, we will also inform you immediately.

Financing

We provide various financing options for your local sales and exports both pre and post-shipment at favourable rates. Each of our financing options is designed to cater for specific needs and these include:

Bankers Acceptances Export Credit Refinancing - Pre-shipment and Post-shipment Advance Against Trade - Pre-shipment and Post-shipment Invoice Financing Onshore Foreign Currency Loan Foreign Bills of Exchange Purchased/Foreign Bills of Exchange Purchased (Approval to

Purchase) Domestic Bills of Exchange Purchased/Domestic Bills of Exchange Purchased (Approval

to Purchase)

SERVICES

Bank Guarantees

We can issue Bank Guarantees in standard formats favouring beneficiaries such as Tenaga Nasional, Telekom Malaysia, Jabatan Imigresen and Kastam. We can also provide guarantees such as Performance Bonds, Tender Bonds, Supplier Credit Guarantees and Financial Guarantees.

Transferable LCs

If you are a trading company, we can assist you to transfer the LCs received in your favour to your suppliers either in full or in part. This will ensure that payment risks between all parties are eliminated when complying documents are presented.

Export Credit Insurance

Export Credit Insurance assists you to extend credit terms to qualified international or domestic buyers and reduce the risk of non-payment. We can arrange for the evaluation of your buyers as well as arranging to insure them against non-payment risk. For your international trade, political or economic deterioration may also result in non-payment. This risk is similarly covered under the Export Credit Insurance.

With the Export Credit Insurance in place, you can now venture into markets you would not have considered previously. You can also have the access to increased working capital with our specially structured financing product against payment of an arrangement fee.

RHB Bank

Bank Guarantee

For the Importer

Bank Guarantee is a financial instrument where the bank guarantees a stated sum of money to the beneficiary upon non-performance of the applicant's obligation and performance. RHB Bank will assist in issuing guarantees on your behalf to support your business activities. Guarantees include bid, tender, performance, advance payment, customs, utilities and security deposit guarantees. Bank guarantees in nature are separate transactions from the contracts they relate to.

Benefits

RHB Bank provides an undertaking on your behalf, and provides comfort and assurance to your business counterpart

RHB Bank assists in reviewing the content of your guarantee before issuance, thereby protecting your interest

Facilitates transactions between contracting parties to extend your reach beyond local boundaries

Export Credit Refinancing

For the Exporter

RHB Bank participates in the Export Credit Refinancing (ECR) Scheme initiated by Bank Negara Malaysia. The scheme is currently managed by Export-Import Bank of Malaysia Bhd to promote Malaysia's exports and international trade. The scheme allows the financing of exports at competitive rates. Financing is categorized under pre-shipment ECR and post-shipment ECR. Pre-shipment ECR is advanced to facilitate the production of eligible goods prior to shipment and encourage backward linkages between the exporters and local suppliers. Post-shipment ECR is advanced to exporters to finance the export of eligible goods after shipment.

Benefits

Competitive financing rates offered Pre-shipment financing provides working capital upon receipt of export orders Allows the exporter to pay their suppliers early and secure better pricing Allows the exporter to expand their business with the added funds

Letter Of Credit

For the Importer

RHB Bank's Letter of Credit allows you to make payment only upon presentation of compliant documents by your supplier, documents you have agreed with your supplier at the beginning. The same documents spell out the terms and conditions you have agreed with your supplier. Thus, you are assured that your interests are taken care of in the process of purchasing goods. The Letter of Credit also allows you to take control of your payment terms and establish your credit worthiness as a buyer.

Benefits

Minimizes the risks of non-delivery or late shipment as the Letter of Credit assures your supplier of payment

Ensures your goods are delivered within the agreed terms and conditions Improves your credibility as a purchaser Allows access to financing options through our comprehensive range of import financing

products Governed by International Chamber of Commerce rules Can be issued to suppliers worldwide in major currencies in the form of SWIFT, telex,

courier and registered mail.

For the Exporter

Letter of Credit provides the exporter with assurance that payment will be received if the terms and conditions of the Letter of Credit are met. Upon receipt of the Letter of Credit, the exporter will ship the goods in accordance with the terms and conditions of the Letter of Credit and present documents to reflect compliance. Documents presented will then be checked for compliance and payment is guaranteed by the buyer's bank. Thus the exporter can prepare for shipment or even source materials required to manufacture the goods for shipment upon receipt of the Letter of Credit.

Benefits

Reduces the risk of non-payment by the buyer as payment is guaranteed by a bank Reduces the risk of non-payment by the buyer's bank when your documents are checked

by a bank Governed by International Chamber of Commerce rules Allows access to financing options through our comprehensive range of export financing

products Can be received from buyers worldwide in major currencies in the form of SWIFT, telex,

courier and registered mail

Trust Receipt

For the Importer

RHB Bank allows you to finance imports on Letter of Credit, Documentary Collection and Open Account through Trust Receipt. Trust Receipt allows you to take possession of the goods and convert the goods into cash prior to maturity of the Trust Receipt. Trust Receipt is an agreement signed by the buyer and the bank, which states that the buyer will hold the goods in trust as the agent of the bank. The buyer will sell the goods and use the proceeds of sale to settle the advance made to the buyer.

Benefits

Allows you to take possession of the goods without having to use your own funds immediately

Improves cash flow by having additional time to convert your goods into cash Flexibility in payment as partial repayment and early repayment is allowed without

penalty

Eon Bank

The Essential Trade Financing Facilities

The facility is an Interest Free Trade Finance Facility designed to suit your business needs.

Facilities

Letter of Credit-i Under this concept, the Bank acts as an Agent of the customer.

The customer informs the Bank of his Letter of Credit-i requirements and requests the Bank to provide the facility.

The Bank may require the customer to place a deposit to the full amount of the price of the goods to be purchased/imported which the Bank accepts under the principles of Al-Wadiah Yad Dhamanah.

The Bank establishs the Letter of Credit-i and pays the proceeds to the negotiating bank utilising the customer’s deposit; and subsequently releases the documents to the customers.

The Bank charges the fees and commission for its services under the principles of Al-Ujrah.

Trust Receipt-i

Trust Receipt-i is a trade finance facility offered by the Bank to facilitate customers’ importation/purchase of goods which are relevant to their business. Prior to the financing, the customers have to establish a letter of credit for settlement of the related transaction with the seller/exporter.

Under this arrangement, the customer informs the Bank of his requirement and requests that the Bank purchases/imports the intended goods by establishing Letter of Credit-i with the Bank. The customer also undertakes to purchase the said goods from the Bank upon negotiation or acceptance of the said credit under the principles of Al-Murabahah or lump-sum deferred payment sale.

Upon negotiation of a sight Letter of Credit-i or maturity of a usance Letter of Credit-i, the Bank pays the proceed to the negotiating/accepting Bank and subsequently then sells the goods to the customer. The Bank’s selling price comprises its cost and a profit margin that will mature on a specified future date.

Accepted Bills-i

Accepted Bills-i, commonly known as IAB is a very useful facility to boost

your liquidity requirement, whether as an importer, an exporter, a manufacturer or a trader.

IAB is an alternative to the conventional Bankers Acceptance (BA). It is a relatively cheaper form of short term financing for both external and domestic trade as the profit margin is benchmarked to the Islamic Inter-Bank Money Market rates (Profit is calculated at fixed rate for the period of financing).

Under Murabahah arrangement, payment to supplier can be made immediately and you, being an importer may match your differed payment to us according to your ageing of credit terms. Hence, IAB will help a trader to obtain a discount from the supplier as payments by the Bank is on cash term.

In financing of usance sales of residents/non-residents, IAB will facilitate sourcing of immediate funds for working capital for manufacturers who want to increase sales by offering competitive credit terms to their customers.

Murabahah Working Capital Financing (MWCF)-i

MWCF-i is the financing of trade by way of lump sum deferred payment cost plus profit sale. It can be extended to facilitate in purchasing stocks, inventories, parts or semi-finished goods and raw materials.

Under MWCF-i the Bank appoints the customer as its agent to purchase the required goods on its behalf and settles the purchase price (at sight or upon maturity for usance bill) to the supplier. The Bank subsequently sells the goods to the customer at an agreed price comprising the purchase price and the profit margin and allows the customer to settle the price on a differed term. The Bank’s profit margin will be benchmarked to the prevailing funding cost plus the approved margin. However, once the Sales Price is contracted, it will be fixed until its maturity. On due date, the customer pays the bank the agreed sale price in full.

Documentary Collection (Import/Export)-i

Documentary collections for import and export are operated under the principles of Al-Wakalah (Agency). Under this facility the Bank acts as a collecting or paying agent to you.

Through our international network, we ensure your import and export settlements can be carried out efficiently at minimum charges.

Bai-Al-Dayn-i

A deferred payment contract or sales give rise to a debt. While waiting for

the payment, the creditor may sell the debt to Bank at an agreed price and undertakes to recover the amount from the debtor upon its maturity. This facility is an alternative to conventional discountings.

Under this agreement, the customer who wishes to avail himself to this facility, forwards to the Bank the debt documents in relation to his contract. In addition the customer is also required to submit the Assignment of Payment from their Awarding Party.

When the Bank is satisfied that all the terms and conditions of the facility have been complied with, we will purchase the debt and proceeds will be credited into customer’s account. This will facilitate the customer’s cashflow for generating further business contracts.

Bank Guarantee-i

The Bank Guarantee-i constitutes an undertaking to guarantee the performance in your business obligation to a third party in case of any default.

The Bank Guarantee-i may be issued to cover the following needs:

Tender Guarantee Performance Guarantee Guarantee for Advance Payment Guarantee in Lieu of Security Deposit/Supply Guarantee Guarantee for Sub-Contract Guarantee for Exemption of Custom Duties Custom Bond Guarantee for maintaining Ledger Account Guarantee for Honouring of Cheques

Shipping Guarantee-i

Shipping Guarantee-i helps the importer to clear the purchase goods under Letter of Credit-i while awaiting presentation of the shipping documents.

It saves you from incurring additional charges for storage and clearance of goods by the Port Authority while awaiting the arrival of the shipping documents.

Trade Finance

Documents

Transcript of Trade Finance