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ASSIGNMENT
| DRIVE WINETR | WINTER 2014 |
| PROGRAM | MBADS (SEM 4/SEM 6) MBAFLEX/ MBAN2 (SEM 4)
PGDIB (SEM 2) |
| SUBJECT CODE & NAME | IB0018 – Export-Import Finance |
| SEMESTER | 4 |
| BK ID | B1910 |
| 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 .Discuss the role of EXIM bank in promoting foreign trade.
Answer : Exim Bank’s role in promoting international trade
Export-Import Bank of India (Exim Bonk, In short) is a wholly cerement-owned financial institution, set up for the purpose of financing, facilitating and promoting Indian’s ‘foreign trade. Exim Bank plays a four-pronged role with ‘regard to India’s foreign trade: those of a coordinator, a source of finance, consultant and promoter.
Exim Bank offers a diverse range of financing services for the Indian exporter, including a variety of Export Credit Facilities and Finance for Export
2 What is the need for export finance in India? Write a short note on export financing facilities in India.
Answer : Need for export finance in India
Trade Finance is a specific topic within the financial services industry. It’s much different, for example, than commercial lending, mortgage lending or insurance. A product is sold and shipped overseas, therefore, it takes longer to get paid. Extra time and energy is required to make sure that buyers are reliable and creditworthy. Also, foreign buyers – just like domestic buyers – prefer to delay payment until they receive and resell the goods. Due
- Advance Against Export Bills Sent on Collection Basis
Bills can only be sent on collection basis, if the bills drawn under LC have some discrepancies. Sometimes exporter requests the bill to be sent on the collection basis, anticipating the strengthening of foreign currency.
Banks may allow advance against these collection bills to an exporter with a concessional rates of interest depending upon the transit period in case of DP Bills and transit period plus usance period in case of usance bill.
4 Write short notes on:
- a) Export credit guarantee corporation
Answer : Export Credit Guarantee Corporation is a central government undertaking body to provide credit guarantee on the default of payments by the buyer. It works as an insurance firm who guarantees export payment, if the buyer defaults in making payment.
Procedures with ECGC to cover insurance:
Once after finalizing the order, the buyer execute a purchase order to the seller with the terms and conditions as agreed by both. The purchase order should contain full details of buyer and buyer’s bank account details. The exporter approaches Export Guarantee Corporation to get approval on the buyer with amount of limit. Here, the ECGC
b Foreign exchange risk
Answer : Foreign exchange risk is the risk to the value of one’s assets when it is valued in another currency. The exchange rate of a currency to another may be volatile. It is this change in value of the currency that gives rise to foreign exchange risk. A depreciation in the currency in which your assets are denominated will result in a lower
5 Discuss the payment options available to exporter and importer.
Answer : Consignment Purchase
Consignment purchase terms can be the most beneficial method of payment for the importer. In this method of purchase, importer makes the payment only once the goods or imported items are sold to the end user. In case of no selling, the same item is returned to the foreign supplier. Consignment purchase is considered the most risky and time taking method of payment for the exporter.
6 What is custom duty? Discuss its types.
Answer : n economics, a duty is a kind of tax, often associated with customs, levied by a state. The term is often used to describe a tax on certain items purchased abroad.Properly, a duty differs from a tax in being levied on specific commodities, financial transactions, estates, etc., and not on individuals. Duties may be import duties, excise duties, stamp duties, death or succession duties, etc.; but income tax levied on a
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