Financing of foreign trade by banks in India: A case study on PNB

Bhotika, Vineet (2008) Financing of foreign trade by banks in India: A case study on PNB. [Dissertation (University of Nottingham only)] (Unpublished)

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Abstract

The importance of foreign trade in an economy for a country is too well known to need emphasis. A number of advantages flow from foreign trade. The most important task performed by the commercial banks is to finance foreign trade i.e. they provide the finances needed to execute the transactions. The aim of the study is to critically examine the role of banks in the growth of exports, by means of providing finance to the exporters. The aim is to examine whether there is a lack of financing schemes offered by the banks generally and specifically by the Punjab National Bank. And exporters experience in availing themselves of finance under various schemes offered by the banks? This study is basically exploratory in nature and the design is flexible in nature. The author used the triangulation method. The aim is to identify loan schemes offered by the banks and the experience of exporters in dealing with the banks. The idea is to identify the problem area. Therefore, this study is divided into two major parts, viz. identification of the different financing schemes for exporters offered by the banks and evaluation of exporters experience of these schemes. The survey found that post-shipment finance is the most utilised facility of all the export finance facilities available. The second most utilised loan facility used by the exporters is pre-shipment finance. This type of finance is particularly important for small firms that have limited access to long-term capital markets and, therefore, need to rely on trade credit and short-term loans. Exporters could obtain finance at the pre-shipment stage through anticipatory letter of credit and banking credits that include short-term loans, overdrafts and cash credits. The third place is occupied by Packing Credit in Foreign Currency, which has low utilization because only a few exporters who import certain components or materials avail this service. The facility of loans against duty drawbacks is the least used. This is because it is applicable

to only a few export items, which have very low profit margin sometimes equivalent to the amount of the duty drawback.

Item Type: Dissertation (University of Nottingham only)
Keywords: Financing of foreign trades
Depositing User: EP, Services
Date Deposited: 25 Jun 2008
Last Modified: 24 Oct 2016 01:48
URI: http://eprints.nottingham.ac.uk/id/eprint/21755

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