Foreign Trade

Introduction:

We provide import as well as export based services including financing to our customers.  Customers can avail trade financing in local currency as well as foreign currency as allowed by the Central Bank and Bank's internal policy. We have central processing unit for Trade Finance handled by Foreign Trade Department, Corporate Office, Tangal, Kathmandu.

We provide following services:

Additional Services:

  • Availability of Credit facilities to finance your imports/exports. 
  • Extensive network of global correspondent banking relationship for fast and cost effective payments.
  • Easy and fast processing.
  • Advisory services for all regulatory and procedural requirements.
  • Competitive fees and charges.

Get in Touch with our Trade Team

For any inquiries on Trade/Bank Guarantee you can get in touch with our Trade Team at Tangal Corporate Office Phone Number: 01 4443357/ 01 4443358 or email at lc@kumaribank.com and gtee@kumaribank.com. Please visit your nearest branch for additional information.

Application Forms

  1. Application for Issuance of Documentary Credit (DC)
  2. Application for Amendment of Documentary Credit
  3. Bi. Bi. Ni.3
  4. Document Release Request for Original Documents
  5. Request for Delivery Order for Copy Documents
  6. Delivery Order (DO)
  7. Application for Trust Receipt (TR)
  8. Application for Bank Guarantee/Amendment
  9. Third Party Indemnity for Issuance of Bank Guarantee
  10. Application for Negotiation Collection of Export documents

Basic Information on Trade Finance

Letter of credit is an undertaking by the bank on behalf of the importer/account holder to pay exporter the value of the goods. KBL promises to honor such undertaking provided the required documents are submitted and the terms and conditions of the credit are complied with. 

Product Features

  1. Improve negotiating status - issuing of letter of credit means that the importer provides the exporter with conditional payment commitment of the bank. It improves credit and negotiating status of the importer, so may be able to negotiate for a low purchase price and better terms
  2. Ensure goods – ensure to the extent that goods supplied are evidenced in the documents.
  3. Reduce capital occupied – Customer may utilize their limit/credit facility and may not spend self-owned capital from the time of issuance of letter of credit to the delivery of goods supplied by the seller.

Application Procedures

  1. The importer submits the “Application for Issuing Letter of Credit”, the bank then issues letter of credit upon approval and against sufficient security or line of credit.
  2. The exporter arranges for the shipment according to the terms and conditions of the letter of credit after receipt of it.
  3. The exporter prepares and presents the required documents directly or through the presenting bank to KBL for payment or acceptance.
  4. After receipt of the documents, KBL pays or accepts when having determined the compliance of the documents.
  5. KBL to pay at maturity.

Advising of Documentary Credit

Advising of letter of credit means KBL advises to the beneficiary the received letter of credit or amendments thereto.

Product Features

To enable the beneficiary (the exporter) under the letter of credit to receive the apparently authenticated letter of credit or amendments thereto.

Eligible Applicants

The beneficiary of the letter of credit.

Application Procedures

KBL checks the apparent authenticity of the received letter of credit or amendments thereto, and advises it to the beneficiary.

Examination of Documents

The Examination of Documents means the combined service provided by KBL, including examination of documents and sending of the document for payment to the issuing bank on behalf of the exporter.

The product is for the needs of exporters for settlement and collection of payments under L/Cs.

Product Features

  1. The product is for the needs of exporters for settlement and collection of payments under L/Cs;
  2. Low risks. The issuing bank's bank credit substitutes the commercial credit of importers and provides a conditional payment undertaking for exporters;
  3. High initiative. So long as the document quality is ensured, the unconditional payment undertaking will be granted by the issuing bank, while the document quality is under the full control of exporters;

Eligible Applicants

  1. Exporters who are not familiar or confident with the credit standing of importers, thus requiring additional commitment from the bank of importers;
  2. Exporters need to apply for packing loan from a local bank to finance the goods to be exported.
  3. The applicant shall have the qualification to engage in import and export trade.

Application Procedures

  1. The exporter (beneficiary) presents export documents to KBL after the preparation and shipment of the goods under the L/C terms;
  2. After examining the documents, KBL mails the documents to the foreign issuing bank or the nominated bank to claim reimbursement;
  3. The foreign issuing bank presents the received documents to the applicant under the L/C;
  4. The foreign issuing bank makes due payment to KBL which will be further creditedto the exporter.

Our Advantages

  1. High quality of document examination and experienced in handling complicated articles, most professional among the peers.
  2. Highly skilled negotiation skills and effective response to and disposal of disputes such as unjustified payment rejection; skillful application of international practices to protect your interests to the maximum extent.
  3. Fast collection of payment. With a global network of correspondent banks, advanced technical means and rigorous system on expediting collection and appraisal, we guarantee timely collection of your export payments.

Inward Collection/Clean Collection

Entrusted by a foreign correspondent bank or an affiliated bank, and according to their instructions, KBL collects import payments and delivers relevant commercial documents to the importer.

Product Functions

Upon receipt of documents from the remitting bank, in accordance with instructions received, the bank (collecting bank) collects payment/acceptance from the importer (the drawee) and releases the relevant commercial documents to the importer. There are two types of inward collection: DAP and DAA. Under DAP terms, import documents are released to the importer against payment. Under DAA terms, documents are released to the importer against acceptance.

Product Features

  1. Low cost - low banking fees, help reduce financial expenses and control the costs;
  2. Easy to use - simple procedures and easy to use compared to L/Cs;
  3. Reduce funds occupation - no advance payment required when the exporter prepares and ships the goods, the goods documents can be obtained immediately and the goods become disposable upon payment or acceptance;
  4. Improve cash flow - with DAA, the importer can immediately obtain the goods document and dispose the goods after acceptance, and can make payments later as the inflow of cash are generated by the sale of goods. With almost no occupation of funds, the company’s financial position and solvency can be greatly improved.

Eligible Applicants

  1. Importers who wish to pay to exporters with lower cost and simpler procedures than L/Cs.
  2. Importer with sufficient liquidity may use DAP.
  3. Importers with insufficient liquidity who need exporters to grant financing facility of forward payment may choose DAA provided that they have a good business relationship with exporters.
  4. The foreign exporter initiates collection by submitting relevant documents to its bank after the preparation and shipment of goods.
  5. Exporter's bank mails the collection documents to KBL and we will notify the importer to pay (DAP) or accept (DAA) as instructed.
  6. After the importer has made payment or acceptance to the exporter via KBL, we shall release the documents to the importer.
  7. When the acceptance under DAA is due, the importer shall pay to the exporter via Bank of China.

Gentle Reminder

  1. Under DAA terms, the exporter should accept the draft in accordance with relative local law and pay at maturity.
  2. Importers are welcome to apply for KBL’s trade finance under such inward collection.  

Export Collection

KBL sends documents for collection on behalf of the Beneficiary/Our client or discount Bills under Clean Collection and finances customers. It can well meet customers’ short period finance needs.

Eligible Applicants

  1. Customers lacking liquidity who want to develop business relying on fast capital turnover.
  2. Customers who come across temporary difficulties in capital turnover before proceeds and collected under clean collection.
  3. Customers get  new investment opportunity by financing under clean collection, and the anticipated yield is higher than discounted rate.

Application Requirements

  1. Basic qualifications

    The business license of enterprises legally approved, registered and annually checked and other valid certifications sufficient to prove the legitimacy and scope of its operation.
     
  2. Others
  • Customers have demand draft for payment issued by other bank;
  • Occupation of paying bank's credit line.

Application Procedures

  1. Customers submits KBL the bills and applications for relevant business;
  2. KBL shall check the documents, then process payment to customer and retain rights of recourse or 
  3. KBL claims for payment by sending out the bills to the overseas paying bank;
  4. The overseas bank makes payment to KBL when due, with which KBL repays the discount loan or credit exports/client account.

Bank Guarantee

A written document issued by KBL at the request of the customer to the owner of a contracted project or the buyer of a sales deal, guaranteeing the applicant will strictly perform the contracts.

Product Functions

Guarantee fulfills contractual obligations and the quality of the subject matter of contract; solves the problem of mutual mistrust between the parties, and reduce capital occupation.

Solves the problem of mutual mistrust between both parties of a transaction. With good reputation, KBL acts as a guarantor to promote smooth transaction by providing guarantee for the parties.

Indemnify the damaged party in case of breach of contract to avoid or reduce contract breaching activities, thus saving trouble and expenses arising from litigation or arbitration.

Eligible Applicants

  1. Contractors involved in contracted projects;
  2. Suppliers involved in material procurement projects.

Application Requirements

  1. The applicant shall hold a business license of legal person that has passed the annual inspection or other valid certificates which fully prove its legal operation and scope of business;
  2. The applicant shall have the qualification to engage in relevant business (such as qualification of contracting foreign projects, construction qualification of building enterprise, etc.);
  3. The applicant shall have a credit line at KBL, or pay full margin, or full guarantee acceptable to KBL.

Application Procedures

  • Application for letter of guarantee
    • The applicant fills out an application form or a contract for issuance of a letter of guarantee
    • The applicant pays margin or submits other counter-guarantee
    • The applicant submits primary documents related to the contract
    • The applicant submits other documents necessary for issuance of a letter of guarantee as required by KBL.
       
  • Examination and issuance of letter of guarantee
    • KBL examines the customer qualification, underlying transaction and relevant documents;
    • KBL confirms the customer's margin or credit line and other mortgages;
    • KBL examines the written application for guarantee and issues letter of guarantee.

Basic Information on Trade Finance

Trade can be defined as an action carried out between a buyer and a seller for the exchange of goods or services with money or any other goods or services.

INTERNATIONAL TRADE

  • International trade is defined as trade between two or more parties from different countries (an exporter and an importer).       
  • METHODS OF TRADE SETTLEMENT
  • Payment in advance
  • Open account
  • Collection
  • Letter of Credit

TYPES OF LC

  • Irrevocable Letter of Credit 
  • Sight Letter of Credit
  • Acceptance or Time Letter of Credit(Usance)
  • Deferred Payment Letter of Credit
  • Confirmed Letter of Credit

DOCUMENTS UNDER LC

  • Invoice 
  • Packing List
  • Weight List
  • Export/Import License 
  • Certificate of Origin 
  • Third Party Pre-shipment Inspection Certificate 
  • Quality Certificate 
  • Certificate of Analysis 
  • Health/Veterinary/Phyto-sanitary Certificate 
  • Bill of Lading 
  • Airway Bill or Air Consignment Note 
  • Rail or Road Consignment Note 
  • Post Parcel Receipt 
  • Insurance Policy
  • Bill of Exchange or Draft

INCOTERMS

For Sea and Inland Waterway Transport:

  • FOB - Free On Board: Buyer pays all transportation and insurance costs, once delivered on board the ship by the seller. 
  • CIF - Cost, Insurance and Freight: Seller arranges and pays cost, freight and insurance to destination port. Adds insurance costs to CFR.
  • CFR - Cost and Freight: Seller arranges and pays cost and freight to the named destination port. 

For Any Mode or Modes of Transportation: 

  • EXW - Ex Works: Seller delivers (without loading) the goods at disposal of buyer at seller’s premises. 
  • FCA - Free Carrier: Seller delivers the goods to the carrier at an agreed place and may be responsible for clearing the goods for export. 
  • CIP - Carriage and Insurance Paid To: Seller delivers goods to the carrier at an agreed place, but seller pays carriage and insurance to the named place of destination. 
  • CPT - Carriage Paid To: The seller clears the goods for export, delivers them to the Carrier, and is responsible for paying for carriage to named port of destination. 

KEY NRB-FOREX GUIDELINES RELATING TO LC

  • Charges / Margin can be deducted from applicant’s account only
  • Firms other than companies cannot enjoy L/C facility more than 20 times their registered capital
  • 10% additional margin must be collected for Reimbursement L/Cs at the time of opening the L/C for trading units
  • For Sight L/Cs equal or above $50K, Business Credibility Information (BCI) Report of the Beneficiary with satisfactory credit rating/conduct of account is required. BCI cannot be more than 1 year old. BCI obtained by one bank can be shared with others.
  • All import Letters of credit shall compulsorily specify the border customs point through which the goods will be brought into Nepal
  • LC’s can be sent/advised to the foreign beneficiaries through correspondent banks only
  • LC Issuing Bank can accept shipping documents under LC’s (INR/FCY) received through correspondent banks only 
  • LC cannot be issued for an individual. 
  • Payment cannot be made directly to the beneficiary/individual under LC’s (INR/FCY)
  • Usance facility for a trading unit cannot be more than 120 days (both in INR . For Industry the usance period can be of any number of days depending upon the agreement between the Applicant and Beneficiary. 10% NRB Margin also needs to be obtained while issuing BBN 4 for such LCs.
  • Import exceeding INR 5 Crores can be done through LC only by obtaining 10% of LC value as NRB security margin.
  • Extra caution has to be applied for LC opened in India in FCY. Only selected goods can be imported from India in FCY.