Forfaiting Is About Eliminating Risks

Characteristics of Forfaiting

100% financing without recourse to the seller of the obligation.

• Importer's obligation is normally supported by a local bank guarantee or aval.
• The debt is typically evidenced by Letter of credit, Bills of Exchange, Promissory Notes. Credit periods can range from 90 days to 10 years
• Amounts financed to be upwards of USD 2,50,000/-
• Contract in any of the world's major convertible currencies can be financed.
• Finance to be either on a fixed (market norm) or floating rate basis

Risk Elimination
Elimination of the following Risks associated with cross border transactions.

• Commercial Risk - The risk of non-payment by a non-sovereign or private sector buyer or borrower in his home currency arising from insolvency.
• Political Risk - The risk of the borrower country government actions, which prevent or delay the repayment of export credits.
• Transfer Risk - The risk of an inability to convert local currency into the currency in which debt is denominated.
• Interest Risk - The risk of interest rate fluctuations during the credit period of the transaction.
• Exchange Risk - The risk of exchange rate fluctuations.

Products Suitable

• High Value Exports
• Heavy Machinery / Capital Goods
• Consumer Durable
• Vehicles
• Bulk Commodities
• Consultancy and Construction Contracts

• Low Value but repetitive business
• Drugs & Pharmaceuticals
• Dyes and Chemicals
• Textiles / Leather
• Granites