Product Offering Under Imports
Documentary Letter of Credit (Conventional and Islamic)
A Documentary Letter of Credit (Usually referred to as L/C) is an undertaking issued by a Bank (Issuing Bank), on behalf of an applicant (the buyer/importer), to the beneficiary (seller/exporter) to pay for goods or services provided that the beneficiary presents documents which comply with the terms and conditions of the credit
At your request, we can issue, amend and effect payment as per the terms and conditions of the credit.
Types of Import L/Cs:
Revolving Documentary Credit
A revolving credit is one that allows the amount to revolve on the same terms and conditions as the original credit, following the occurrence of an event that will trigger a revolvement.
By using a revolving credit, the applicant and beneficiary can agree on the structure of a single credit; determine the base amount of each revolvement, timetable and whether it is cumulative or non- cumulative and the number of revolvement that are required to fulfill the total value of the contract. As per the agreement of applicant and beneficiary, there are cases where the revolving only comes into effect after a specific amendment.
Transferable Documentary Credit
Allows the Beneficiary to transfer the L/C to one or more second beneficiaries (as per the credit terms and conditions). It is generally used when the initial beneficiary is a middleman who may wish to transfer all, or part, of the value of the L/C to one or more second beneficiaries. In transferable credit the beneficiary is not required to have a credit line/facility with the bank, the beneficiary can benefit by coordinating the trade transaction between the applicant and the supplier.
Products that can support your business by demonstrating your financial credibility and ability to meet contractual obligations.
Standby Letter of Credit
Standby letters of credit are used to underwrite a wide variety of commercial and financial operations. They adopt the same basic forms as a commercial documentary credits, but the intention is often that the beneficiary, in whose favor a standby letter of credit is issued, draws only in case of default on the transaction to which the standby letter of credit relates. Thus, unlike a commercial documentary credit, a standby letter of credit acts as a guarantee if there is a failure to perform a contractual undertaking, such as the obligation of the buyer to pay or that of the seller to deliver.
Product Offering Under Exports
We can advise the issuance and amendment of confirmed/unconfirmed L/Cs in your favor.
When we add our confirmation to a Letter of Credit issued in your favor, we undertake to make payment provided documents are presented in compliance with the L/C terms and conditions.
A confirmation by a bank (the Confirming Bank) upon the authorization or request of an Issuing Bank, constitutes a definite undertaking of the Confirming Bank, in addition to that of the Issuing Bank, provided that the stipulated documents are presented to the Confirming Bank or the Nominated Bank in compliance with the terms and conditions of the Letter of Credit.
Product Offering Under Letter of Guarantees
A bank guarantee may be defined as an irrevocable obligation of a bank to pay a sum of money in the event of non-performance/default of a third party on whose behalf the bank has issued the guarantee.
Types of Guarantees:
- Bid Bond
This type of guarantee is required in connection with public tenders. If a company participates in such a tender, it must submit a bid bond together with its offer. Bid bonds therefore secure payment of the guaranteed amount.
- Performance Bond
This type of guarantee is used by a bank at the request of the applicant to undertake to pay the beneficiary amount in the event the applicant fails to fulfill its contractual obligations.
- Advance Payment
Usually an advance payment guarantee is issued to secure the refund of an advance payment in case of non-fulfillment of the contractual delivery/service obligations.
- Payment Guarantee
Issued as a means of securing payment for goods delivered or services rendered.
- Retention Bond
Retention money guarantee secures the release of “prepaid” retention monies in case of non-fulfilment of the contractual warranty obligations.
- Zakat & Income Tax Bond
Issued in favor of the Department of Zakat and Income Tax as a security against the payment of the outstanding income tax, delay penalty and legal Zakat.
- Shipping Guarantee
In case of missing Bills of Lading, a guarantee may be issued in favor of the carrier, to obtain release of goods, without presentation of an original Bills of Lading.
- Special Text Guarantees
Tailor-made guarantees which are structured in accordance with a customers’ specific requirements.
- Counter Guarantees
A guarantee issued by a bank in favor of another bank induce them to issue guarantee in favor of a beneficiary usually located in its country.
Product Offering Under Import/Export Documentary Collection
Documentary collection is a method of executing trade transactions, when there is an element of trust between the buyer and seller and there is no requirement for a bank undertaking such as a Letter of Credit or Guarantee. Documentary collection is an instruction to a “Collecting Bank” to deliver documents to the buyer against payment or accept a bill of exchange.
Documentary collection is a cost-effective; as it does not require the use of credit/bank facilities.
- Letter of Credit and Collection post finance
This is an extension of credit to the buyer (importer) against its purchase through a Letter of Credit or Documentary Collection, it serves to improve cash flow.
Irrevocable unconditional undertaking for payment by the bank on behalf of the buyer (for the goods purchased/service provided) to the seller at specific maturity date.It is cost effective compared to Letter of Credit.
- Bills Discounting
Discounting usance bills under Import & Export Letters of Credit and Bills Avalized, improves cash flow and the ability of financing your business.
Offering Under Structured Products
Apart from traditional Trade finance products BSF also offers structured trade finance solutions to its clients, whereby the Trade Finance Specialist will assess your business model and advise you a solution in terms of your regular trade business or a one-time transaction or contract. The team will access the best product or a combination of products or design a structured solution that will be best suited and cost effective.
Product Concept & Benefits: The product is designed to benefit importers by saving on their financial cost pertaining to their credit purchases from their suppliers. The importer (BSF client) gets an option to swap Supplier credit (Deferred Payment Terms that comes with a cost) with less costly credit extended by us (Banque Saudi Fransi), and hence gets the opportunity to reduce their Cost of Goods.
Supplier Finance Program (SFP):
Under SFP concept the supplier provides the credit to clients through a special arrangement and solution created by Banque Saudi Fransi.