IB0018 – Export-Import Finance

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ASSIGNMENT

DRIVE	FALL 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 importance of exports for India. How do commercial banks assist in exports?

Answer : Exports of a country play an important role in the economy. A healthy balance, a sustainable development with trade and foreign exchange reserves to maintain the country's export growth should be a constant and high rate. Exports as a whole affect the industrial environment. To compete internationally, the industry standard for quality products, competitive price, good packaging, etc, which is important for overall industry. For export as a national priority for government and private sectors recognized by all agencies to export, export growth is to maintain high rates. Partnership between public and

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 diligence and careful financial management can mean the difference between profit and loss on

3  As an exporter, what benefits you can get from Post shipment finance scheme? Discuss the types of post shipment credits.

Answer : Post shipment finance is provided to meet working capital requirements after the actual shipment of goods. It bridges the financial gap between the date of shipment and actual receipt of payment from overseas buyer thereof. Whereas the finance provided after shipment of goods is called post-shipment finance.

4  Write short notes on:

a) Letter of credit

Answer : A letter of credit is a document issued by a financial institution or a similarly accredited professional party. The letter assures payment to a seller of goods or services provided certain documents have been presented to the bank.[1] "Letters of Credit" are documents that prove the seller has performed the duties specified by an underlying contract (e.g., the sale of goods contract) and the goods/services have been supplied as agreed. In return for these documents, the beneficiary receives payment from the financial

b Types of foreign exchange risk exposure

Answer : Growth of international business has led to an increasing exposure to foreign exchange risk for many companies. Foreign exchange dealing results in three major kinds of exposure including transaction exposure, economic exposure and translation exposure. Many companies manage their foreign exchange exposure by hedging it using complex financial instruments. Hedging involves reducing the uncertainty related to cash flows resulting from positive foreign exchange exposure. One way to hedge foreign exchange risk is to buy or sell currency at a predetermined future date and price.

Transaction exposure

The transaction exposure component of the foreign exchange rates is also referred to as a short-term economic exposure. This relates to the risk

5. What is forex market? Explain the unique features of forex market.

Answer : Continuous process of currency exchange is determined by a large variety of causes starting from terms of payment for contracts, made by transnational corporations till receiving of bank credit on lower interest rates.

A unique telecommunication network has been formed because of constant need of currency exchange. It gives a possibility to million currency sellers and buyers to carry out swap twenty four hours a day from any part of the word.

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 person is not considered a duty.

Types of Customs Duties             

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