MBF302 TRADE FINANCE AND CMS MANAGEMENT

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ASSIGNMENT

 

DRIVE SUMMER 2014
PROGRAM MBABF
SEMESTER III
SUBJECT CODE & NAME MBF302

TRADE FINANCE AND CMS MANAGEMENT

BK ID B1393
CREDITS 4
MARKS 60

 

Note: Answer all questions. Kindly note that answers for 10 marks questions should be approximately of 400 words. Each question is followed by evaluation scheme.

 

 

  1. 1. Discuss the types of risks in international trade?

 

Answer:Risks in International Trade are the major barriers for the growth to the same. International trade has been a much debated topic. Economists have differed on the real benefits of international trade. The increase in the export market is highly beneficial to an economy, but on the other hand the increase in imports can be a threat to the economy of that country. It has been the worry of the policy makers to strike the right balance between free trade and restrictions.

International trade can develop an economy, but at the same time certain domestic players can be outperformed by financially stronger

 

 

  1. 2. What are the various options available for the exporter in trade finance?

Discuss the different factors and considerations of trade finance?

 

Answer: 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

 

  1. 3. Explain ECGC and its functions.

Discuss the objectives of the Exim Bank of India?

 

Answer: The Export Credit Guarantee Corporation of India Limited (ECGC) was established on 30 July 1957 with an objective to provide insurance cover in respect of risks in export trade. These risk may include loss of money on account of foreign buyer becoming bankrupt or sudden import or exchange restrictions resulting in stopping of payments etc.[1] The Export Credit Guarantee Corporation of India Limited is a company wholly owned by the

 

  1. 4.Explain the concept of cash management as a tradeoff between liquidity and profitability.

 

Answer: The term cash management refers to the management of cash resource in such a way that generally accepted business objectives could be achieved. In this context, the objectives of a firm can be unified as bringing about consistency between maximum possible profitability and liquidity of a firm. Cash management may be defined as the ability of a management in recognizing the problems related with cash which may come across in future course of action, finding appropriate solution to curb such problems if they arise, and finally delegating these solutions to the competent authority for carrying them out.

 

  1. 5.Explain the concept of formulating loan policy in a commercial bank.

Analyse the factors influencing loan policy in a commercial bank.

Answer: While appraising loan proposals involving real estate, banks should ensure that the borrowers have obtained prior permission from government / local governments / other statutory authorities for the project, wherever required. In order that the loan approval process is not hampered on account of this, while the proposals could be sanctioned in the normal course, the disbursements should be made only after the borrower has obtained requisite clearances from the government authorities. Banks’ Boards may also consider incorporation of aspects

 

  1. 6. Define cash management services. Discuss the types of cash management’s services?

 

Answer: Cash management is the corporate process of collecting, managing and (short-term) investing cash. A key component of ensuring a company’s financial stability and solvency. Frequently corporate treasurers or a business manager is responsible for overall cash management. Successful cash management involves not only avoiding insolvency (and therefore bankruptcy), but also reducing days in account receivables (AR), increasing collection rates, selecting appropriate short-term investment vehicles, and increasing days cash on hand all

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