Presenters:

Prabhjot
Tanveer
 Contents

• Overview • International business

– Importing & exporting
• Methods of trade
• Products for exporters
– Advance payment
• Products for importers

– Open account payment – Managing international risk

– Collections – Managing foreign

– Documentary credits exchange.

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OVERVIEW

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• HSBC's origins in India date back to 1853, when the Mercantile Bank of India was

established in Mumbai.

• The Bank has since, steadily grown in reach and service offerings, keeping pace

with the evolving banking and financial needs of its customers.

• In India, the Bank offers a comprehensive suite of world-class products and services

to its corporate and commercial banking clients as also to a fast growing personal

banking customer base.

• HSBC, or The Hongkong and Shanghai Banking Corporation Limited, in India has 46

branches located in India’s 25 main cities.

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METHODS
OF
TRADE

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Methods of trade

Advance Payment

Open Account Payment

Collections

Documentary Credits
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• This trade payment method is prevalent for

transactions where the seller has a much

higher bargaining power than the buyer.

• Such payment method may also be employed

where the buyer may not have the ability to

open letters of credit (formally called

Documentary Credits) through their bank/s.

• It is also possible that the buyer is a cash rich

company and therefore wants to avail a cash

discount from the seller.

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• In an open account trading scenario,
the buyer has a much greater leverage
than the seller.

• Under open account trade, the entire

risk in the transaction is borne by the
seller since the payment is made by the
buyer only after the latter has taken
possession of the goods.

• Seller's risk is therefore of non-payment

or delayed payment.

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• An export collection is a form of payment in foreign trade in

which the exporter, after shipment of the goods, sends the

commercial documents to its bank and requests the bank to

collect payment from the buyer through a foreign bank.

• The security of a collection item is based on the fact that the

buyer cannot get the goods without collecting a bill of lading

entitling to the goods from the bank.

• A collection item is a suitable form of payment for exports

shipped by sea.

• Export collection items are most common in trading with

Mediterranean countries.

• Direct collection is a form of export collection in which the

exporter sends the documents direct to the collecting bank with

HSBC Bank's reference number. Otherwise, the collection is

handled normally.

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10
• DCs, more commonly known as letters of

credit.

• Important aspects to check for when you

receive a DC are:
– Payment terms

– Availability of the DC

– Acceptability of issuing bank

– Terms of shipment

– Feasibility of complying with terms of the DC

– Workability of the DC

– Bank charges to whose account.

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INTERNATIONAL
BUSINESS

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PRODUCTS FOR
EXPORTERS

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• Export Collections • Trade Solutions

• Export Financing • Forfaiting

• Advance Remittances • Fixation of Credit Limit
• DC Advising • Rate of Interest
• DC Confirmation • Other Benefits
• DC Transfer

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 Export Collections
• HSBC can collect your commercial / shipping documents through their
banking network.

• For exporters, it is a more secure option than trading on open account

terms because the shipping document will be delivered to the
importer only against payment or an acceptance to pay on due date.

• They also offer instant email functionality, providing details on the

export collection transactions, to a designated person in your office
through their EDCA offering.

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 Export Financing
• HSBC can address funding gaps in your trade cycle and support your business,

by providing you export financing options in foreign currency (at LIBOR linked

rates) or in Indian Rupees, both at the pre-shipment and post-shipment stage.

• They can discount your export receivables by negotiating bills drawn under a

DC or discounting bills under collection, with the latter available both for D/P

(Documents against Payment) and D/A (Documents against Acceptance).

• They can reduce country and bank risk, exposure to interest and exchange rate

fluctuations and turn your receivables into cash.

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 Advance Remittances

• Any payments into the country by overseas

parties are processed expeditiously and
credited to your account promptly.

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 DC Advising
• A Documentary Credit ("DC") opened by the overseas importer's bank, will
be checked for authenticity and couriered across to your doorstep.

• With a presence in over 83 countries and over 10,000 group offices, and
global correspondent banking relationships with over 2,500 banks, they have
Swift key arrangements with most of the major banks, to facilitate straight
through processing of DC advising.

• They also offer a real time electronic DC advising functionality wherein the
DC is sent through an automated email to a designated person in your office.

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 DC Confirmation
• Reduce bank and country risk effectively by enjoying the security
of payment commitments from both the issuing bank and the
confirming bank.

• HSBC is one of the largest institutional banks with global

correspondent banking relationships with over 2,500 banks.

• If HSBC confirms the DC, and your documents are presented in

compliance with the DC terms, payment from HSBC will be final.

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 DC Transfer
• Ideal for buyers working with sourcing agents who
require credit cover.
• If you are a sourcing agent or the first beneficiary,
HSBC can provide guidance on the terms and
conditions of your DC and assist in either fully or
partially transferring your DC to the ultimate supplier.

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 Trade Solutions
• Lower overseas bank charges viz. handling charge, courier, cable
charges, discrepancy fee, reimbursement fee; which are to the account
of beneficiaries:
– Faster communication and quicker turnaround times. As both the import and
export legs of the transactions are handled by one bank you should receive
funds 6 days earlier on average, saving you interest charges.

– Peace of mind that documents are only checked once and held by the local
HSBC office until acceptance and

– Opportunities for Pre and Post shipment finance.

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 Forfaiting

• HSBC can arrange for an

offshore financing on your

export receivables to

countries especially high /

medium risk with medium

to long credit periods.

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 Gold Card Scheme For Exporters
• Key features of the Gold Card Scheme are as follows:
– Eligibility criteria: Exporters who:

– Route 100% business through HSBC or a minimum routing of export

transactions aggregating USD15M per annum and

– Comply with all terms and conditions of sanction and

– Who have had no irregularity / adverse feature in their account for the past 3
years.

– Those exporter customers who meet the eligibility criteria will be issued a
letter confirming gold card status, valid for a period of 3 years.

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 Benefits for Gold Card Customers
• Fixation of Credit Limit

– Limit will be sanctioned for a period of 1 year. Renewal will be subject to an annual review,

which will be completed within the time frames specified below provided however that all

relevant financial information is furnished at least 30 days prior to the renewal date.

– Disposal of fresh application - 25 days.

– Renewal/Review of limits - 15 days.

– Sanction of ad hoc limits - 7 days.

– A stand-by limit of up to 20% of the assessed limit may be made available to meet peak

season requirements on request from the company.

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 Cont…
• Rate of Interest
– Rates of interest are as per the extant Reserve Bank of India guidelines
and are subject to change from time to time at the discretion of the
Bank.
– As a Gold Card exporter you will be eligible for a maximum interest rate
of Libor +200 bps p.a. + out - of pocket expenses on pre-shipment
finance and post-shipment finance in foreign currency.
– Rupee finance will be made available to you at an agreed rate subject
to ceiling prescribed by RBI.

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 Cont…
• Other Benefits
– Tariff - A minimum of 20% off on our standard published tariff for
trade related services.

– Free issuance of bank realization certificate.

– Free offering of electronic banking.

– Free Documentary Credit Safe Custody Service.

– One-point contact within Trade Services for transaction information/

query resolution relating to your trade transactions, etc.

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PRODUCTS FOR
IMPORTERS

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• Issuance of documentary credits (DCs) and standby letter of
credits (SBLCs).
• Import Collection Services.

• Import financing.

• Advance remittances/ Direct Remittances.

• Issuance of shipping guarantees/delivery order or any other
guarantee.
• Advisory services on any Import transactions.

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 Issuance of documentary credits (DCs) and
standby letter of credits (SBLCs).

• When issuing DCs or SBLCs through HSBC, you enjoy the

following benefits:
– Detailed advice on structuring the instruments to meet your
import requirements.

– Comprehensive guidance on the DC terms and conditions.

– Access to HSBC's vast global expertise and resources.

– Ability to turnaround transaction processing expeditiously.

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 Import Collection Services
• This is a cost-effective solution for trading internationally.

• Under this arrangement, the importer gets the shipping

documents, after making payment or providing an
acceptance to pay at a future date.
• HSBC has established strict service standards, which
ensure that you are promptly informed of any
documentary collections drawn on you.

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 Import financing
• HSBC can address funding gaps in your trade cycle and
support your business, by providing you import
financing options in foreign currency (at LIBOR linked
rates) or in Indian Rupees.
• It can arrange import buyers' credit financing through
HSBC branches / group entities overseas, at
internationally competitive LIBOR linked rates.
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Advance remittances/ Direct Remittances

• For your import payments to be made to

overseas beneficiaries, it provide a quick
turnaround for payments by way of
Telegraphic Transfer / Demand Drafts etc.

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 Issuance of shipping guarantees/delivery
order or any other guarantee

• In case the goods you import arrive before the

transport documents, HSBC could issue you a
shipping guarantee / delivery order to facilitate
taking delivery of the goods.
• You then have immediate access to your goods and
avoid expensive storage fees and demurrage charges.

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 Advisory services on any Import
transactions
• Whatever your sourcing requirements, bank is well positioned to
provide you expert advice for structuring your import transactions.

• Leveraging on bank’s global presence, it can offer solutions where

HSBC group entities can handle the transaction on both sides thereby
ensuring a smoother, safer and a more cost-effective execution of
transactions.

(Terms and Conditions apply)

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Warehouse
Financing

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• Warehouse Financing (WF) is a structured method of financing,
wherein funds are extended to manufacturers and processors based
primarily on the underlying asset - commodities as identified by a
warehouse receipt issued by an independent collateral manager
appointed by the Bank.
• At present, HSBC is offering short term financing against warehouse
receipt for Cotton Bales, Castor Seed, Cashew nuts, Pulses, Paddy /
Rice, Maize, Mustard Seed, Soya bean Seed and Wheat.

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 The objective of WF
• is to partially transfer the credit risk from the borrower to the underlying commodity

and adding risk mitigants in order to deliver the following benefits to the borrower:
– Leverage the strength of its raw material (commodity) by using it as the primary collateral

– Get a structured pricing which is more attractive than adhoc working capital or ad hoc short-

term loans

– Get financing in tranches aligned with the stock build-up schedule

– Repayment schedule aligned to actual usage of raw material.

– No additional collateral required for availing this facility.

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Managing Foreign
Exchange

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• With HSBC’s global reach manage your finances in different

currencies and interest rates. Make foreign exchange and

money transfers, when and how you want, on the HSBC’s

secured platform. Transact online instantly 24/7.

• With treasury capabilities in over 60 countries, HSBC is better

poised to provide knowledge and advice to help better

understand the risks at hand.

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 HSBC Global Markets India
• Strong 52 member Dealing room encompassing Interest Rate Trading,

Derivatives, Foreign Exchange Trading, Institutional Sales, Corporate Sales

and Debt Syndication.

• One of the biggest Inter-bank players and market makers in the USD/INR

Market. Major Inter-bank presence in Bond Trading and Rupee Derivatives.

• Most preferred bank for Large value transactions with specialization in

handling FDI flows and have managed several large ticket FDI / FII flows

into the country.

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 Cont…
• With one of the largest franchises amongst the foreign banks, HSBC

commands a substantial share of the flows business for most

multinationals operating in India.

• Offers a comprehensive suite of products and services that encompasses

vanilla FX and Swaps, funding/syndication to complex structured

solutions.

• Preferred bankers to all major corporate and institutional counterparties.

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 Features and Benefits

• Manage your risk through our comprehensive

suite of products.
• Flexibility.
• HSBC Research.

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 Manage your risk through our
comprehensive suite of products
• Forwards and options allow you to proactively manage your risks,
thereby minimizing the risk for both exporters and importers.

• Spot - Buy/Sell foreign currency at the prevailing rate in the

market.

• Forwards - Fix the rate today to buy/sell currency at a future date.

• Options - Right to buy/sell foreign currency at a future date at a

price fixed today.

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 Flexibility
• HSBC gives you flexibility in choosing the
terms of each option.

Currencies All major currencies

Strike price Your choice

Expiry date Your choice (at 11.30 a.m. IST)

Tenor Your choice

Premium payment 2 Business days from deal date

Settlement date 2 Business days after notice of exercise

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 HSBC Research

• Its strong research team provides relevant

research on factors affecting foreign currency
movements. The reports include:
– Daily treasury update: Daily round up of the key
events in the Domestic and International market.

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