SID Bank - Insurance - Export credit insurance - Foreign Buyer/Bank Credit Insurance

Foreign Buyer/Bank Credit Insurance

Foreign buyer/bank credit insurance is an advanced form of export transactions financing, which enables the exporter to receive the whole payment for each executed supply (situation) or conclusion of work abroad from the bank/creditor. Therefore the exporter does not need to wait for the buyer's payment for a longer time period or assume the risks connected with that.

Buyer repays the exporter wholly with advances (pre-delivery payments or payments by delivery) and from the credit approved to the buyer by exporter's bank or bank/creditor. In this case the objects of insurance are receivables arising from this buyer credit, the policyholder being the bank or other financial institution, which grants it.

Several variations of this scheme are eligible for insurance (following are the most frequent ones):

Foreign buyer credit Exporter's bank grants a credit directly to the buyer.
Foreign bank credit Exporter's bank grants a credit to the buyer's bank, which finances the exporter's buyer.
Credit line is a special custom-made form of foreign bank credit principally intended for a larger number of exporters and buyers.
Purchase of receivables In this case bank purchases receivables from the exporter, pays out the exporter and enters into a debt relationship.
Documentary credit Various forms (sight, with deferment of payment, confirmed); deed of sale and payment terms are agreed under the letter of credit.

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