Benefits to Customer:
1. For the importer, Co-acceptance works out cheaper as compared to opening Import Letter of Credit (LC) since under LC, commission is payable from the date of opening LC whereas in the case of co-acceptance commission is applicable after shipment has taken place from the overseas exporter’s end.
2. Further, unlike in LC, the importer need not use up his non-fund based limit until the goods are shipped by the exporter and documents are received at the counters of the importer’s Bank.
3. It is a means of non-recourse finance for the exporter, thereby strengthening the importer’s bargaining power.
Benefits to Bank:
1. Additional Avenue for fee income.
2. An addition to Trade Services product range in general and import finance product range in particular, which can be used by the Bank to attract new clients.
3. Customers, who do not use their LC limits with the Bank, can be encouraged to make use of the Co-acceptance facility, which is cheaper.
1. Sanctioning of Co-Acceptance Limit (Non-Fund based limit) to the client by the co-accepting Bank and signing of one-time co-acceptance Facility Agreement.
2. Receipt of import documents including a Bill of Exchange from the overseas exporter drawn on Indian importer by the Co-accepting bank.
3. A presentation memo generated and sent to the customer (importer) for acceptance.
4. On receipt of Acceptance Letter and a request letter from the customer (importer), Bank will co-accept the bill of exchange.
5. The exporter notified of Co-acceptance by the co-accepting Bank through a SWIFT message sent to his bank.
6. From here on, the process flow will be same as that of an Import Bill under LC.