IB0018 – Export-Import Finance

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ASSIGNMENT

DRIVE	SPRING 2015
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.

Q.1. Discuss any 5 trade financing schemes by EXIM bank in brief.

Answer: Export-Import Bank of India is the premier export finance institution in India, established in 1982 under the Export-Import Bank of India Act 1981. Since its inception, Exim Bank of India has been both a catalyst and a key player in the promotion of cross border trade and investment. Commencing operations as a purveyor of export credit, like other Export Credit Agencies in the world, Exim Bank of India has, over the period, evolved into an institution that plays a major role in partnering Indian industries, particularly the

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

Q3  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.

DEFINITION:

Credit facility extended to an exporter from the date of shipment of goods till the realization of the export proceeds is called Post-shipment Credit.

IMPORTANCE OF FINANCE AT POST-SHIPMENT STAGE:

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,

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 value of your assets when measured in another currency compared to the

Q5. There are several factors that affect the exchange rate of a country. Explain any 5 determinants of exchange rate.

Answer : Answer: Foreign Exchange rate (ForEx rate) is one of the most important means through which a country’s relative level of economic health is determined. A country's foreign exchange rate provides a window to its economic stability, which is why it is constantly watched and analyzed. If you are thinking of sending or receiving money from overseas, you need to keep a keen eye on the currency exchange rates.

Factors that affect the exchange rate

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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