Import and Export Payment Methods

1
Import and Export Payment Methods
World Bank regulates imports and exports in
between various countries. It sets certain
mandatory guidelines to follow for easing payment
procedures via IBRD and IDA.
2
World Bank

• An international creditor to developing countries

• Its Goal Making the world free of poverty.
• Three Prime Roles
• Promote foreign investment
• Promote international trade
• Provide facility of capital investment

3
Two Branches of World Bank

• International Bank of Reconstruction
  Development (IBRD)
• Provides loans to under-developing countries
  middle-income group
• International Development Association (IDA)
• Lends money to the poorest countries as grants
  and credits at no interest rate

4
Methods of Finance

• Four methods are used in import and export
  business

1. Bankers Acceptance (BA)
2. Working Capital Financing
3. Medium-Term Capital Goods Financing
4. Countertrade

5
Role of Bankers Acceptance (BA)

• For making payment to the importer.
• Time bound draft
• Importers bank clear it at maturity date
• BA can be encashed in the money market by selling
  it.
• Acceptor bank charges all-in-rate, including
  discount rate and commission.

6
Role of Working Capital Financing

• It is short terms loan.
• Helps in moving on working capital
• Done by purchasing inventory until it gets
  converted in cash

7
Role of Medium-Term Capital Goods Financing

• It is a promissory note.
• Issued for 3 to 7 years.
• Issued to pay for importing capital goods
• Exporter sells it to banks without delay.

8
Role of Countertrade

• Interlinking financial transaction
• It links export of goods to import of goods from
  the same country
• Types Barter, Compensation and Counterpurchase
  
• Occurs between the government and the
  multinational traders

9
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