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Import Finance Facility 2017-12-13T16:52:54+00:00

Import Finance Facility

Get Financed to import your goods

Loan granted to finance importation of raw materials or finished goods.

An Advance facility offered specifically to facilitate the importation of current/working assets

Import Finance Facility may be availed via Bas (Banker Acceptance), CPs (Commercial Paper) or ODF (Overdraft Facility) in non-checking accounts Associated risk includes new or unforeseen regulatory policy, supply, demand, unpredictable fluctuations in FX rates, improper (over/under) invoicing

Modes of Payment In International Trade

  • Open account – seller dispatches goods to the buyer (without payment) with an agreement to make payment within a specified period
  • Bills  for  collection  – seller dispatches goods to the buyer with an agreement that the buyer makes payment within a specified period but underlying document delivered to its banker
  • Advance payment – buyer pays the seller before goods are dispatched
  • Letter  of credit  – debt instrument issued by a bank on behalf of its customer to make payment to third party against certain stipulated documents

Letter of Credit

  • Governed by Uniform Customs and Practice for Documentary Credits
  • (UCP 600)
  • Applicant – buyer
  • Issuing bank – buyer’s bank (resident in buyer’s country)
  • Advising bank – seller’s bank (resident in seller’s country)
  • Beneficiary – seller

Modes of LC Payment

  • Sight payment
  • Deferred payment
  • Acceptance Negotiation
  • Company’s trade cycle
  • Experience/track record
  • Terms of payment (Confirmed or Unconfirmed LC/Sight or deferred payment)
  • Nature of goods (Prohibited or not/Perishable or not) Customer’s contribution
  • Demand deficiency/Marketability
  • FX fluctuation


  • Equity contribution by customer
  • Documents required for establishment of LC submitted
  • Independent verification of price & marketability to avoid over/under invoicing
  • Consignment   o f   goods   t o   t he   or der   o f   t he bank/warehousing   arrangement,   integrity/capacity   of company to pay on arrival of shipping documents
  • Independent security etc.
  • Proforma invoice from supplier/Form ‘M’ Customer’s stock level
  • Contribution (minimum of 30% of Landing Cost – CIF+ Custom duty+ Clearing Charges)
  • Documentary evidence of previous importation
  • Profitability Analysis
  • Security
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