I. BUYERS CREDIT 1. SIGHT L/C BUYERS CREDIT 2.

ROLLOVER/EXTENSION of L/Cs (1) SIGHT L/C BUYERS CREDIT Consider a case of Importer, who is going to open a Sight L/C.There are two options available for the payment of the L/C. i). Pay L/C on Sight: In the normal situation, the company would pay off the L/C on Sight out of their CC limit. ii). Extend L/C for a further period of 180-days In this option a financing bank will be funding the openers bank to pay the L/C at sight to the beneficiary. The importer will pay his bank the L/C amount with interest after 180 days.(The Importer can opt for credit period of upto 1 year for Raw materials and upto 3 years for Capital Goods).The financing will be in LIBOR related rates. Modus Operandi of Sight L/C Buyers Credit transaction: 1. The financing quote for the LC Back transaction is obtained from the overseas lender (the Financing bank). 2. The importer then approaches his banker and applies for the Buyer Credit backed by undertaking of the Bank to pay Principal Amount + Interest to Lending Bank on maturity. Application is in Form ECB. 3. The documents to present to the Banker will be as follows. - L/C Copy (with all amendments) - A copy of Proforma Invoice from the supplier / Import Contract. - The Offer Letter for Financing the RO from the overseas banker. 4. Issuing Bank gives approval for the Buyer Credit.

5. On Receipt of Documents, Issuing bank sends authenticated SWIFT message to the overseas financing Bank for financing the Import L/C. 6. On receipt of the SWIFT message, the financing bank pays the Opening bank, which pays off the Supplier. Cost Comparison of Rollover Buyers Credit & Local Cost of Funds on a Fully Hedged Basis: COST COMPARISON BETWEEN SIGHT L/C BUYER's CREDIT & LOCAL FUNDS Sl. No PARTICULARS CHARGES TOTAL 1 Local Cost of Funds (CC Cost) 15 % p.a 15 % p.a 2 BUYERs CREDIT ROUTE a 6 Mth USD LIBOR * 0.46 % p.a. Spread over LIBOR for 180 b days 1.50 % p.a. 6 month forward cover** 3.144 % p.a p.a % 5.1 p.a. Total 5.1 % p.a. % 3 TOTAL NET SAVINGS 9.90 p.a. * - LIBOR as on 20/2/13 **- Forward cover as on 20/2/13 Required Details: Please provide us with the following details to enable us to get a financing quote: 1. Opener 2. L/C Opening Bank 3. L/C Value 4. L/C No. & Date 5. Due date: 6. Tenor 7. Beneficiary 8. Commodity

9. Port of Shipment 10.No. of Shipments

(2). ROLL OVER / EXTENSION OF L/Cs Consider a case of a company, which has imported raw materials under L/Cs, opened by his bankers. Further, the supplier has given a 180-day free credit to the Indian company (importer). The importer has two options: i) Pay the L/C on due date: In the normal situation, the company would pay off the L/C on its due date. Let us assume that the company borrows the amount from his bank (by drawing on his cash credit limit) at say 10% ii) Extend L/C for a further period of 180-days In this option a financing bank will be funding the openers bank to pay the L/C. The importer will pay his bank the L/C amount with interest after 180 days. Again the financing will be in LIBOR related rates. Modus Operandi of Roll Over Buyers Credit transaction: 1. The financing quote for the LC Backed transaction is obtained from the overseas lender (the Financing bank). 2. The importer then approaches his banker and applies for the Buyer Credit backed by undertaking of the Bank to pay Principal Amount + Interest to Lending Bank on maturity. Application is in Form ECB. 3. The documents to be presented to the Banker will be as follows. - A duly filled and signed Form ECB - L/C Copy (with all amendments) - A copy of Proforma Invoice from the supplier / Import Contract. - A copy of Bill of Lading - A copy of Bill of Entry - The Offer Letter for Financing the RO from the overseas banker.

4. Issuing Bank gives approval for the Buyers Credit. 5. Before Due date, Opening bank sends authenticated SWIFT message to the overseas financing Bank for financing the Import L/C. 6. On receipt of the SWIFT message, the financing bank pays the Opening bank, which pays off the Supplier. Cost Comparison of Rollover Buyers Credit & Local Cost of Funds on a Fully Hedged Basis :

COST COMPARISON BETWEEN ROLLOVER BUYER's CREDIT & LOCAL FUNDS Sl. No 1 2 PARTICULARS Local Cost of Funds (CC Cost) BUYERS CREDIT ROUTE a 6 Mth USD LIBOR * Spread over LIBOR for 180 b days 6 month USD Forward cover** e LC Extension Cost (Approx.) Total 3 TOTAL NET SAVINGS * - LIBOR as on 20/2/2013 **- Forward cover as on 20/2/13 CHARGES 15 % p.a 0.46 % p.a. 1.50 % p.a. 3.14% p.a 0.5 % p.a. 5.6 % p.a. % 5.6 p.a. % 9.4 p.a. TOTAL 15 % p.a

Aditya Forex Service Role: Obtain a firm letter of offer from an overseas financing bank for financing the L/C for a further period of 90 days. Help you fill the required form (ECB). Provide any other assistance to ensure that the transaction goes through smoothly.

Details required: Please provide us with the following details to enable us to get a financing quote: 1. Opener 2. L/C Opening Bank 3. L/C Value 4. L/C No. & Date 5. Due date 6. Tenor 7. Commodity 8. Port of Shipment 9. Shipment date In all the above three illustrations the costs are worked out on a fully hedged basis right from the first day of the opening of the exposure. The savings obtained could be further improved by pro-actively managing the dollar rupee exposures while hedging. .