INTRODUCTION

1
 INTRODUCTION

The Housing Development Finance Corporation Limited (HDFC Ltd) was amongst the first

to set up a bank in the private sector. The bank was incorporated on 30th August 1994 in the

name of ‘HDFC Bank Limited’, with its registered office in M umbai. It commenced its

operations as a Scheduled Commercial Bank on 16th January 1995. The bank has grown

consistently and is now amongst the leading players in the industry.

In a milestone transaction in the Indian banking industry, Times Bank was merged with

HDFC Bank Ltd., effective February 26, 2000. The amalgamation added significant value to

HDFC Bank in terms of increased branch network, expanded geographic reach, enhanced

customer base and skilled manpower. As of 1st April 2005, the Bank has an enviable

network of 495 branches spread over 217 cities across the country. All branches are linked on

an online real-time basis. It also has a network of over 900-networked ATM s across these

cities. M oreover, all domestic and international Visa/M asterCard ,Visa Electron/M aestro,

Plus/Cirrus and American Express Credit/Charge cardholders can access its ATM network.

Now it has 84,325 employees and has a presence in Bahrain, Hong Kong and Dubai. HDFC

Bank is India's largest private sector lender by assets. It's the largest Bank in India by M arket

capitalization as of Feb. 2016. It was ranked 69th in 2016 Brand Z Top 100 most valuable

Global Brands.

Snap Shots

Company Background

Industry Finance – Bank – Private Sector

Business HDFC Group

Incorporation Date 31/12/1994

Public Issue Date 31/12/1995

Face Value 10.0000

Company/Business Registration No. INE040A01018

Key Officials CEO Aditya Puri

2
 HISTORY OF HDFC

In 1994, HDFC Bank was incorporated, with its registered office in M umbai. India its first

corporate office and a full service branch at Sandoz House, Worli were inaugurated by the

then union finance minister, M anmohan Singh.

As of June 30, 2017 the Bank's distribution network was at 4715 branches and 12,260 ATMs

across 2657 cities & towns. The Bank also installed 4.30 lacs Pos terminals & Issued 235.7

lacs debit and 85.4 lacs credit cards in FY 2017.

1. Mission :–

I- World class Indian Bank.

II- Benchmarking against customer franchises across district business.

III- Best practices in terms of product offerings technology, service levels, risk

management and audit and compliance.

2. Vision Statement of HDFC

The HDFC Bank is connected to maintain highest level of Ethical standard, professionals

Integrity and Regulatory compliance. It's based on four core value such as :–

1. Operational Excellence

2. Customer focus

3. Product leadership

4. People

The objective of the HDFC bank is to provide its target market customers a full range of

financial products and banking services, giving the customer a one – stop window for all his /

her requirements. The HDFC Bank plus and the Investment advisory service programmers

have been designed keeping in minds seeds of customers who seeks district financial

solutions, information and advice on various investment awareness.

3
3. Business

I- Increasing market share in India's expanding banking.

II- Delivering high quality customer services.

III- M aintaining current high standards for assests.

IV- Develop innovative products and service that attract targeted customers and address

inefficiencies in the Indian Financial Sector.

4
 Business Segment :

The bank has three key business segment :

1. Wholesale Banking Services:

In this field target market is primarily large, blue-chip companies and to a lesser extent,

emerging mid-sized corporates. For these corporates, bank provide a wide range of services,

including working capital finance, trade services, transactional services, cash management,

etc..

2. Retail Banking Services:

The objective of the Retail Bank is to provide target market customers a full range of

financial products and banking services, giving the customer a one-stop window for all

his/her banking requirements. The products are backed by world-class service and delivered

to the customers through the growing branch network, as well as through alternative delivery

channels like ATMs, Phone Banking, Net Banking and M obile Banking.

3. Treasury Operations:

Within this business, the bank has three main product areas -

a) Foreign Exchange and Derivatives,

b) Local Currency M oney M arket &

c) Debt Securities and Equities.

With the liberalization of the financial markets in India, corporate need more sophisticated

risk management information, advice and product structures. These are provided through the

bank's Treasury team. The Treasury business is responsible for managing the returns and

market risk on the bank's investment portfolio.

5
HDFC BANK TOP MAN AGEMENT

M r. Deepak Parekh Chairman

Aditya Puri M anaging Director

Group Heads

Kaizad Bharucha Executive Director

Abhay Aima Equities and private banking, NRI

and International Consumer Business

Ashish Parthasarthy Treasurer

Arvind Kapil Unsecured loans,

Home & M ortgage loans

Ashima Bhat ` Finance, administration

& Infrastructure

Ashok Khanna Vehicle Loans

Bhavesh Zaveri Wholesale Banking Operations

and cash management products

Chakrapani V Country Head – Internal audit

& Chief of Internal Vigilance

6
Jummy Tata Chief Risk Officer

M unish M ittal Chief Information Officer

Navin Puri Country head – Branch Banking

Neil Francisco Underwriting & Risk Intelligence

& control

Nirav Shah ECG & IFY

Nilin Chugh Digital Banking

Parag Rao Card payment products, M erchant

Acquiring Service & M arketing

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Philip M athew Chief People Office

Rajesh Kumar Investment Banking, Capital M arket & FI

Ravi Narayana Branch Banking & Retail Trade Forex

Sashi Jagdishan Chief Financial Officer

8
 AWARDS AND HONORS WON BY THE HDFC BANK

HDFC Bank began operations in 1995 with a simple mission: to be a "World-class Indian

Bank".

Best Banking performer, India in 2016 by Global Brands M agazine Award.

Best Performing Branch in M icro finance among Awards for Best performing in micro

private sector Banks by NABARD, 2016 finance

KPM G study of India's Best Bank Bank of the year and Best Digital

Banking initiative award 2016

AIM A managing India Award 2015 Business leader of the year Aditya Puri

BandZ Ranking M ost valued Brand in India for third

successive year

Finance Asia poll on Asia's Best Companies 2015 Best M anaged Public Company – India

J.P. M organ Quality Recognition Award Best in Class Straight through

processing rates.

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 Integrated Financial Services

HDFC HDFC
Home Loans Deposits

Centre
HDFC realty.com Housing Finance

HDFC Standard Life HDFC

Insurance M utual Fund

HDFC
`
HDFC Bank Securitisation

HDFC Securities Internet

CIBIL Future Activities

10
 RESEARCH REPORT

FINANCING OF FOREIGN TRADE

FIANANCE BY HDFC BANK

IN MORADABAD

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 INTRODUCTION TO TRADE FIN ANCE

INTRODUCTION TO TRADE FI NANCE

Chapter two is all about how trade finance activities are carried out in the HDFC Bank. It

consists of all the things about the trading terms. Like every trade involves import, export,

letter of credit, bank guarantee, inward remittance and outward remittance.

Along with discussing the banks trading activities the concept of all the trading terms has

been discussed below.

TRADE FI NANCE:

Trade is an important part of commerce. It refers to the sale, transfer or exchange of goods

and services for a certain price. Exchange of goods and services is the basis of trade.

Trade can be classified into two parts:

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 1. Foreign trade

2. Internal trade

Foreign trade :

Foreign trade or foreign trade involves trading of goods among countries of the world. Every

country buys and sells different goods from and to other countries. Goods worth crores are

bought and sold. Foreign trade is an important economic activity because it enables the

countries participating in it to secure resources for economic development as well as for

balance of payment. For some countries foreign trade is the most important economic activity

because most of their industrial activities are dependant on it.

Nature of foreign trade

It consists of export trade and import trade. Export trade involve sale of goods of purchases to

other countries. Imports consist transactions from other countries. When goods are traded

then it is called visible trade. Foreign trade in services is called invisible trade. When goods

are imported into a country with the purpose of re-exporting them to some country, it is

known as entrepot trade.

There are two types of foreign trade:

1. Import of goods and services

2. Export of goods and services

Foreign trade Services (in context to HDFC Bank):

As a business professional they need flexibility, which helps in closing a deal faster, and

maintaining goodwill with business associates. At HDFC Bank, they have always been

committed to understand customers’ needs.

A. Export of goods and services

HDFC Bank offers a wide range of export services designed to assist the business and its

opportunities around the world. Routing all the export related transactions it helps in

facilitating all the export related hassles of the customers. The customers can get the

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 following facilities with the expertise and experience of the bank:

1. Faster payment

2. Competitive exchange rates

3. Increased control over foreign receivables

4. Improved cash flows

5. Competitive charges.

All the above mentioned facilities are available for the following export bills:

1) Export documents against payment

2) Export documents against acceptance

3) Export bills under letter of credit

4) They also provide packing credit and bill discounting facilities.

B. Import of goods and services

HDFC Bank offers its customers a comprehensive range of import services. HDFC bank is

highly respected in the world of in international finance a cross border transaction. The bank

has correspondent relationship with other reputed international banks throughout the world

can provide all the services to importers who may be importing from any part of the world.

The following facilities are available for importers

1. Direct remittance

The customer may require the exporter overseas to dispatch the goods first and then remit the

payment for the goods. The exporter would then dispatch the goods to the customer. The

overseas exporter will then send the documents directly to customer. When customer

approaches bank along with the documents for sending remittance to the exporter, bank

ensures that the remittance is done promptly.

Documentation for Direct Remittance:

a) Request Letter with Debit Authority

b) FEMA declaration

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c) Copy of IEC Certificate

d) KYC Report

e) Transport Docs in original - Bill of Lading / Airway Bill / Courier Receipt

f) Copy of invoice

g) Bill of Entry (Exchange Control Copy)

h) Payment Instruction details Viz. Beneficiary Bank, account No. and intermediary

Bank etc.

i) Form A1

2. Advance remittances

Overseas exporter may require customer to make full payment in advance for the goods to be

exported. The exporter would dispatch the goods to customer after he receives full payment

from importer.

For this purpose, HDFC Bank will make remittance in foreign currency to the exporter at a

very competitive rate.

Documentation for sending Advance Remittance

a) Request Letter cum Debit Authority cum OGL cum FEM A Declaration

b) IE Code Number Certificate

c) Form A1. (Duplicate)

d) KYC Report

e) Purchase Order / Proforma Invoice with Advance payment term.

f) Bill of Entry Declaration with Commercial Invoice

g) Bank Guarantee from the Exporters Bank if Advance amount is > $ 1, 00,000

1. Import bills under letter of credit

In a business cycle, as buyer needs to pay for his purchases in international and domestic

markets. Letter of credit helps to facilitate purchase of goods in international and domestic

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trading operations.

All HDFC Banks letters of credit issued are valued and accepted worldwide.

When the importer opens an LC through HDFC Bank for imports of goods, it is an

undertaking by HDFC Bank that if the exporter exports the goods and produces the

documents as stipulated in the Letters of Credit, then HDFC Bank would honor the draft(s).

Documentation for Sending Import letter of credit

 LC application form

 General undertaking on stamp paper

 Recommendation Board Resolution

 OGL cum FEM A declaration

 IE Code

 Insurance copy only on CSF/FOB basis

 KYC Report

 Annexures to the LC

2. Import collection

The exporter from overseas exports the goods the customer. The overseas exporter /

exporter's bank sends the documents to HDFC Bank on collection. Bank will then intimate

the customer about the receipt of the documents. All customer need to do is to authorize us to

debit your a/c and send the remittance to the exporter’s bank.

If it is a sight bill (Documents against Payment), then the necessary documents and debit

authority is collected from customer (importer) and remittance is paid to the exporters bank

and the documents are released to him. If it is a usance bill (Documents against Acceptance),

then the acceptance letter is taken from customer and the documents are released. On the due

date remittance is made to the exporter’s bank by debiting customers account.

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Documentation for sending import collection

 Accepted Bill of Exchange with Debit authority

 KYC Report

 Copy of IEC

 FEMA declaration

 Bill of Entry declaration

 Form A1 with OGL

5. Letter of credit

The letter of credit is demanded by the exporter to ensure its payment through a reliable

source. The letter of credit is then issued by the importers’ bank that ensures the exporter that

if the importer delays or fails to make the payment within stipulated period of time then the

bank itself will make the payment. That is in any case the exporter will not be a sufferer and

payment will be made to him. Being India’s leading private sectors bank, it assures its

customers that all the letters of credit issued will be valued and accepted by all the business

counterparts overseas.

Document for sending import letter for credit

 LC application form

 General undertaking on Stamp paper

 Recommended Board Resolution

 IE Code

 Purchase Order

 Insurance copy only on C & F / FOB Basis

 KYC Report

 Annexures to the LC

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 6. Bank guarantee

The bank issues bank guarantees on behalf of its customers to fulfill any obligation under the

business contracts with the help of which the business can improve along with relationships

with the bank.

TYPES OF INTERNATIONAL/FOREIGN TRADE SETTLEMENT

In international business the settlement can be done by the following ways:

1) Advance payment.

2) Open account.

3) Bill on collection basis.

4) Follow up of overdue bills (when the terms are not under LC).

5) Documentary credit

Advance payment

When the buyers’ credit is doubtful or the seller wants the payment before dispatching the

goods then he asks for the advance payment where the money is paid before taking the

ownership of the goods.

Open account

By an agreement between buyer and the seller manufactured goods will be delivered to the

buyer directly or to his order and the buyer will pay at the end of the agreed period.

Bill on collection basis

It is an agreement by which the seller after shipping the goods submits the documents to his

bank as agent for collection.

Bill of exchange may be defined as an order given by the exporter to the importer to pay the

amount of sale value mentioned in it. It is sent along with the other documents by the

exporter bank within 21 days of shipment of the goods (if the documents are under LC term

then the bank may deny to make the payment to the exporter’s bank if the documents are

received after 21 days, since it will treat it as a discrepancy. Once discrepancies have been

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 found the exporter will get the amount only if the importer wishes. The issuing bank has no

obligation in the case where any discrepancy is found) to the importer bank so that he can

give it to importer. Bill of exchange is first among all the documents given to the importer

and when importer makes the payment then only he is entitled to receive other documents

with the help of which he can release his goods from the dock.

Bill of exchange is of two types:

1. Sight bill

2. Usance bill

When sight bill is presented to the importer he has to make the payment immediately to the

exporter within a period of 7 days. At maximum 3 more days are given to him if he is unable

to make the payment within 7 days. This method of payment is called D/P documents against

payment.

When agreement between exporter and importer provides for credit to be extended by the

exporter for a certain period of time, a usance bill is prepared. It ranges between 10 days to

179 days. In such a case the method of payment is called D/A documents against acceptance.

The bill of exchange is thus kept with the importer’s bank and is presented to the importer at

the time of payment.

Follow up of overdue bills (when the terms are not under LC)

It is the duty of the importer’s bank that if the payment by the importer is not made to the

exporter after the due date then he must return the documents back to the exporter’s bank

within 180 days so that the exporter’s bank can crystallize the bill. If importer’s bank has not

send the documents after 180 days then the exporter reports this to RBI(in case if the exporter

is in India).RBI then prepares a list of defaulters. It will also make necessary adjustments in

the balance of payments. When exporter gets his documents back he will call his goods also

back to him. After this no transaction is possible. In such a case exporter has to look for

alternate buyer.

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Documentary credit

It provides complete financial security to the seller of the goods. Once a letter of credit is

established by the buyers’ bank on the behalf of the buyer in favour of the seller and the seller

submits the set of required documents to the opening bank or to the nominated bank seller is

assured of the payment.

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COMPANY PROFILE

21
 FOREIGN TRAD E FINAN ANCE S ERVICES PROVIDED BY HDFC BANK

We can discuss the Trade finance services provided by HDFC Bank into 4 parts:

1. Import of goods and services including letter of credit and bank guarantee

2. Export of goods and services

3. Inward remittance

4. Outward remittance

IMPORT OF GOODS AND S ERVIC ES

Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign

Exchange M anagement Act 1999 (42 of 1999), read with Notification No. GSR 381(E) dated

M ay 3, 2000 as amended from time to time.

IMPORT TRADE

INTRODUCTION

The Directorate General of Foreign Trade (DGFT) under M inistry of Commerce & Industry,

Department of Commerce, and Government of India regulates import trade. Authorized

dealers, while undertaking import transactions, should ensure that the imports into India are

in conformity with the Export Import Policy in force and Foreign Exchange M anagement

(Current Account Transactions) Rules, 2000 framed by Government of India vide

Notification No. G.S.R.381 (E) dated M ay 3, 2000 and the directions issued by Reserve Bank

under Foreign Exchange M anagement Act from time to time.

Authorized dealers should follow normal banking procedures and adhere to the provisions of

Uniform Customs and Practices for Documentary Credits (UCPDC), etc. while opening

letters of credit for import into India on behalf of their constituents.

IMPORT OF GOODS

General: -- Rules and Regulations from the Exchange Control angle to be followed by the

authorized dealers while undertaking import payment transactions on behalf of their clients

are set out in the following paragraphs. Where specific regulations do not exist, authorized

dealers may be governed by normal trade practices. Authorized dealers may particularly note

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to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department

of Banking Operations & Development) in all their dealings.

Form A 1: -- Applications by persons, firms and companies for making payments, exceeding

USD 500 or its equivalent, towards imports into India must be made on appropriate form A 1.

Import Licenses: -- Authorized dealers may freely open Letters of credit and allow

remittances for import of goods unless they are included in the negative list requiring licence

under the EXIM Policy in force. In such cases, licenses marked ‘For Exchange Control

purposes’ should be called for and special conditions, if any, attached to such licenses

adhered to Exchange Control copy of the import licence submitted by importer for opening of

Letter of Credit or making remittance, when fully utilized, should be retained by authorized

dealers and may be preserved till its scrutiny by the internal auditors or inspectors is

completed.

Interest on Import Bills:-- Authorized dealers may allow payment of interest on usance bills

or overdue interest for a period of less than three years from the date of shipment at the

rates prescribed in the M aster Circular on trade credits.

INTERNATIONAL TRAD E:

DOCUMENTRY CREDITS :

S TAGES OF DOCUMENTARY C REDIT:

S TAGE 1.

Buyer and Seller arrive at a contract for sale, specifying the terms of sale. Both the parties

may not know the financial capacity of each other. As for the Seller is concerned he may

prefer a bank should undertake the payment obligation of the buyer and payment should be

made available to him immediately on dispatch of on the goods from his country. On the

basis of this agreement Buyer (Applicant) requests his bank (issuing Bank) for undertaking

the payment obligation on his behalf in favour of the Seller (beneficiary). The arrangement

under which a bank on behalf of the buyer (lmporter) undertakes the payment which a bank

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on behalf of certain documentary conditions, is known as Documentary Credit. As per the

requirement of the contract and on the basis of the application given by the applicant, issuing

Bank establishes the Letter of Credit and forwards the Letter of Credit to its Correspondent

Bank (Advising Bank) in the Seller’s country, which advises the Letter of Credit to the

Beneficiary. At times, at the insistence of the Seller, Buyer requests Issuing Bank to make

suitable arrangement with a bank in the Seller’s country for releasing payment immediately

to the Seller on submission of shipping documents per Sellers requirement. In such cases, the

lssuing Bank requests a bank in the Sellers country or in any third country, to undertake the

payment obligation on their behalf under this transaction. A bank in the Seller’s country may

agree for this arrangement subject to their Correspondent relationship with the Opening

Bank.

S TAGE 2:

The beneficiary after shipping the goods will good will present the documents to his bank

(Negotiating Bank) or he may have a choice of presenting the documents to the confirming

bank directly.

On receipt of the documents, the Negotiating Bank / Confirming bank will scrutinize it

thoroughly and pay value to the exporter/beneficiary of the LC against the shipping

documents.

They will claim reimbursement from the bank notified by the issuing bank in the letter of

credit. Simultaneously, negotiating bank will forward the documents to the issuing bank,

which will hand over the document to the applicant after recovering the bill value.

Applicant/importer will accept/pay for the bills if the documents are as per requirement.

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IMPORT LETTER OF CREDIT

Parties to a letter of credit transaction:

Applicant/
buyer-
On whose
behalf LC is
opened
Beneficiary/ Opening bank-
seller- This opens LC
In whose favour
LC is opened

Parties to a
letter of credit
transaction
Ad vising bank- Reimbursing
Which advices bank-
the LC Nostro bank

Confirming Negotiating
bank- bank-
Which confirms Beneficiary’s
the LC bank

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Applicant:-- The applicant should give a precise detail for the opening of the letter of credit.

The applicant should indemnify banks against rules and regulations imposed by the foreign

countries. (Article 5 & 18)

Beneficiary:-- The beneficiary in whose favour the credit is established can in no case avail

himself of the contractual relationship existing between the banks or between the applicant

for the credit and the issuing bank. (Article 3).

Issuing bank:-- The issuing bank gives a conditional undertaking and reimburses the

negotiating bank against submission of the prescribed documents. It should verify the

documents presented under the credit within 7 banking days following the day of receipt of

the documents and if any discrepancy is found it will refuse reimbursement.

Advising bank:-- The bank advising the letter of credit acts without any engagement on its

part but will take reasonable care to check the authenticity of the Credit. If incomplete or

unclear instructions are received, it will give the preliminary information to the Beneficiary

without any responsibility on its part. (Article 7, 12)

Confirming Bank:-- When the confirmation to a credit is added by a confirming bank at the

specific request of the opening bank it constitutes a definite, equitable undertaking on the part

of the Confirming Back in addition to the Opening Back, provided the stipulated documents

are presented in accordance with the terms and conditions of the Credit with in the due date.

(Article 9 & 13)

Negotiating Bank:-- The nomination of a bank by the opening bank for negotiation of

documents under a credit does not constitute any undertaking on the nominated bank unless

the credit is confirmed by it. Negotiating bank may be the bank of the beneficiary of the

credit and / or a bank, which pays value against a set of documents drawn under a credit.

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Issuing bank will reimburse the nominated bank if it has negotiated the documents as per the

letter of credit terms. (Article 9&10)

Reimbursing bank:-- Reimbursing bank will reimburse the claim made by the negotiating

bank or by any claiming bank under a documentary credit under the authority of the opening

bank. It need not insist for submission of any certificate of compliance from the negotiating

bank along with their claim if it was not specifically insisted in the credit. Issuing bank will

have prior arrangement or provide sufficient funds with the reimbursing bank for honoring

the reimbursing claim as and when it is made. (Article19)

Types of documentary credit

(a) Revocable- irrevocable credit

A revocable letter of credit may be amended or cancelled at any moment without the prior

notice to the beneficiary. The Bank will not have any liabilities to the Beneficiary after

revocation of the LC.

Irrevocable credit has to be amended or cancelled with the consent of Applicant and

Beneficiary.

(b) Confirmed credit:

When a bank in the exporter’s country has added its confirmation by way of an additional

undertaking to make payment at the specific request of the issuing bank, it becomes a

confirmed credit (article 9), the Bank confirming LC is liable for performances of

obligations.

(c) Back to back credit:

In the case where exporter is not the actual manufacturer and he gets his work done by the

sub - suppliers and if the sub – suppliers demand letter of credit in their favour, the exporter

approaches his banker to establish second set of letters of credit on the basis of export letter

of credit received by him. The second set of credit opened by the bank at the request of the

exporter is known as back to back credit.

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 (d) S tand By LC :
A standby letter of credit (SLOC) is a guarantee of payment issued by a bank on behalf of a

client that is used as "payment of last resort" should the client fail to fulfill a contractual

commitment with a third party.

(e) Unconfirmed Credit :

Unconfirmed Letter of Credit. A letter of credit which has not been guaranteed or

confirmed by any bank other than the bank that opened it. The advising bank merely informs

the beneficiary of the letter of credit terms and conditions.

(f) Transferable LC :

A Transferable Letter of Credit (LC) is a documentary credit under which the Beneficiary

(first Beneficiary) may request the bank specifically authorised in the credit to transfer the

credit, available in whole or part, to one or more secondary Beneficiary(ies).

(g) Payment at Sight LC :

An LC at sight is a letter of credit (LC) that ispayable immediately – within five to ten days

– after the seller meets the requirements of the letter of credit. This type of LC is the

quickest form ofpayment for sellers, who are often selling to overseas buyers.

(h) Deferred Payment LC :

A letter of credit that is paid a fixed number of days after shipment or presentation of

prescribed documents. A deferred payment letter of credit differs from a sight draft or time

draft in that no drafts are involved but the payment is guaranteed on the stated date.

(i) Red Clause LC :

A Red Clause Letter of Credit is a specific type of letter of credit in which a buyer extends

an unsecured loan to a seller. Red Clause Letters of Credit permit documentary credit

beneficiaries to receive funds for any merchandise outlined in the letter of credit.

Application for letter of credit:

Application for the letter of credit requires the following information:

1. Revocable/irrevocable

2. Without recourse

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3. Amount (state currency)

4. By cable/ airmail/swift

5. Beneficiary’s full name and address

6. M erchandise

7. Shipment by steamer/post-parcel/airfreight

8. Country of origin

9. Usance of draft

10. Freight prepaid/paid at destination

11. Insurance by beneficiaries/covered here

12. Part shipment/permitted /prohibited

13. Transhipment permitted/prohibited

14. Shipment from………… shipment to…………….

15. Latest date of shipment

16. Latest date of presentation of documents

17. Documents must be presented for negotiation within…days from shipment date

18. Licence no.

19. Import permitted under pare no………Exim policy 2002-07

20. We confirm described merchandise can be imported against above mentioned

licence/para… of foreign trade policy 2004-09 (OGL)

21. Special instructions, if any

Documents under the letter of credit

 Draft:

The beneficiary should draw it as per the tenor stipulated in the letter of credit.

It should be drawn either on the issuing bank or on the confirming bank or on the nominated

bank as per the stipulations of the documentary credit.

It should indicate the LC no. and the name of the bank.

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 Packing list:
It contains buyer’s name, items, dimensions, weight (gross and net both) of the goods, the

quantity which is to be delivered.

Certificate of origin:
The goods, value, shipper, bill of lading number etc. should be verified of their originality.

This should be issued by the chamber of commerce or any other authority as indicated in the

letter of credit. (Article 21)

 Work test certificate

It certifies that the goods are well tested of their function as per the demand of the buyer.

 Certificate of warranty:

It certifies regarding the warranty period of the goods.

 Purchase order:

It is the very first document between both the parties. It contains the details regarding the

goods required to be purchased.

 Certificate of compliance

It certifies that the terms of the purchase order has been well taken care of regarding well

functioning of the goods and quickly dispatched.

 Commercial invoice:

a. The beneficiary as mentioned in the letter of credit should draw the invoice.

b. It should be drawn in the name of the opener of the credit.

c. The description of the merchandise should be exactly in agreement with that mentioned in

the letter of credit.

d. The reference number of the letter of credit and the bank, which has opened, should be

mentioned in the invoice.

e. The invoice value should not exceed the value of letter of credit.

f. Terms of the contract such as CIF, CFR, and FOB should be clearly indicated in the

invoice as mentioned in the credit.

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 g. Other particulars such as bill of lading, shipping marks, Import Licence number, gross

weight, net weight etc.

h. The invoice should conform to article 37 of the UCPDC.

 Bill of lading:

a. The bill of lading should be in sets with the number of non-negotiable copies as

stipulated in the letter of credit.

b. The shipping company or its authorized agents should sign on it.

c. It should be marked clean and should not have any indication to the defective conditions

of packages or goods, etc.

d. The description of the goods should be as per the letter of credit requirement and should

agree with the description in the invoice.

e. The letter of credit should call for ‘shipped on board’ bill of lading. Bill of lading should

evidence goods having being loaded on the vessel and also the date on which it was loaded.

f. ‘Freight prepaid’ or ‘freight to be paid at destination’ should be clearly indicated in the

bill of lading as per the letter of credit terms (article 33)

Trade Service fees & Charges (Effective from 1 Sept. 2014)

Letter of credit Charges/commission/ HDFC 1 Sept. 2014

S wift / Courier
Letter of Credit Fcy issuance Charges Documentation Charges –
(Fcy/Lcy ) INR 1500 (If applicable)
Commission Fedai Charges
M in. INR. 2000
Swift/Courier Fcy – INR 2000
SFM S / Lcy – INR 1000
Letter of Credit Fcy Charges Nil
amendment (Fcy/Lcy)
Commission Fedai/IBA, M in. INR 1500
Extension Same as LC
Issuance

31
 Swift/Courier Fcy – INR 750
SFM S / ICY – INR 500
Cancellation of LC (Both Charges INR, 1000
Before after and Expiry)
Commission Nil

Swift/Courier Nil

SBLC amendment (Fcy/Lcy) Charges Documentation Charges –

INR 1500
Commission 1.8% per annual,
M in. INR 1500
Swift/Courier Fcy – INR 750
SFM S/Lcy – INR 500
LC Confirmation Charges Nil

Commission Same as LC

Swift/Courier Same as LC

LC advising (Fcy/Lcy) Charges Nil

Commission Customer LC INR 1500/

INR100 and INR 1000/
INR 750, Non-Customer
INR 2500/INR 1500 And
INR 1500/INR 1000
Swift/Courier Local LC Courier
INR 100
LC Transfer Charges LC trf INR 2000
LC Amendment INR 1000
Commission –

Swift/Courier Swift Charges of LC to be

recovered in case of
involvement of swift
Guarantee Charges/commission HDFC Bank
Revised trade charges
/swift / courier
(wef 1st Sept. 14)

32
Delivery Order Charges INR 1000

Guarantee Issuance Charges Documentation Charges

INR 1500
Commission 1.8% per annum
M in INR 2000
Swift/Courier INR 1000

Guarantee amendment Charges Nil

Commission 1.8% per annum,

M in INR 2000
Swift/Courier INR 1000

Guarantee advising Charges INR 1500

Commission Nil

Swift/Courier Nil

Shopping Guarantee Charges INR 1000

Commission Nil

Import Bills Collection / Under Charges/Commission HDFC – Bank

LC / Buyer's Credit Revised trade changes
/Swift Courier

Import Bills under LC Charges If discrepant overdue import

processing Bill paid after due date add
charges of non-import
remittance to be recovered
Commission 0.25% min INR 2000

Swift/Courier INR 1000

Discrepancy fees Charges USD 75 or its Equivalent

Penalty for Non submission of Charges INR 500 Half Yearly Per
Bills of Entry BOE
Delivery Order Charges INR 1000

Commission Nil

Swift/Courier Nil

33
Buyer's Credit Processing Charges Nil
Charges
Commission Loc/Lou charges @ 1.80%
p.a. M in.
Swift/Courier INR 5000
INR 2000
NOC Issued to other Bank or Charges INR 5000
Buyer's Credit
Counter Sign/Co-acceptance/ Charges Nil
avail station of import Bills
Commission 1.8% per annum
M in INR 1000
Swift/Courier Nil

Export Bills for Collection / Charges/Commission HDFC Bank

Discount GR waiver Revised Trade Charges
Swift/Courier

Export Bill dispatch Charges Nil

Commission 0.0625% M in. INR 5000

Swift/Courier INR 1000

Export Bills discounting / Charges Nil

purchase
Commission 0.1% M in INR 2000

Swift/Courier INR 1000

Export collection to discount Charges INR 750

Commission Nil

Swift/Courier Nil

Inward Remittance Charges/Commission HDFC Bank

Revised
Swift/Courier

Inward Remittance Charges Nil

Commission Nil

34
 Swift/Courier Nil

Inward Remittance Return of Charges 05050

funds
Commission Nil

Swift/Courier Nil

Service Tax as per sub Rule For amount of currency

(7B) of Rule B of the Service exchange up to Rs. 100
Tax Rules 204 – 0.14% of amount,
M in. Rs. 35/- for
amount of currency
Exchanged above Rs.
100 up to Rs. 1000 Rs.
140 – 0.07% of
incremental and above
Rs. 100,000
For amount of currency
exchanged above Rs.
100000 – Rs. 770 +
0.014% of amount
above Rs. 1000000
subject to maximum of
Rs. 7000
Education Cess Exempted with Effort
form 1st June, 2015

PART TWO

SWOT ANALYSIS OF THE TRADE FINANCE OPERATIONS

THE SWOT ANYLYSIS CAN BE EXPLAINED AS—
 STRENTHS
 WEAKNESS
 OPPORTUNITIES
 THREATS

35
 S TRENGTHS OF THE HDFC BANK-

1. HDFC Bank has 32 softwares as a whole for their various operational purposes, in
which currently 22 are in use. The number of softwares in HDFC Bank is comparatively very
high in comparison to other banks.
In trade of HDFC Bank there are at least six softwares used:
 Capture
 Branch operation
 BG Professor
 SWIFT Alliance

 Flexcube corporate
 LSS
These softwares are helpful in facilitating the work of the bank and if one Software is
disturbed due to some or the other reasons then other can be helpful. This will ensure the
continuity of the work without disturbance.

Goodwill of the bank attracts lots of customers from various parts of the city. The awards and
honors won by the bank are very helpful in increasing the faith of the traders in the bank.

There are lots of trade services provided by the bank as per the requirement of the customer.
Export, import, bank guarantee, letter of credit. The aim is that a trader must be able to find
all the facilities of his requirement in the bank itself only then he will find a reason to come to
bank again and again. This gives an image of one stop shop of the Bank.

Efficient employees are the assests of any company. Unless and until the employees are not
efficient, the company cannot perform efficiently. The employees of the bank are efficient
enough to perform the assigned task well and take the emerging challenges of the market.

Centralized banking facilitates smoothen and centralized flow of all the transactions related to
trade. All the trade related transactions are informed to Mumbai head office before
proceeding further. The head office has to know the nature and frequency and all the
transactions happening at various branches.
The mode of payment, which is used by HDFC BANK, is not only used by this bank but it is
used all over the country by all the other banks to settle international payment. Hence we can
say that this mode of payment is internationally accepted and well recognized. It is the

36
SWIFT (Society for Worldwide Inter Bank Financial Telecommunication). All the
international level transactions are carried on with the help of SWIFT. This helps the bank to
carry out its transactions very well within TAT. Hence, it is one of the strength of the bank,
which is helping it to grow, and proving it within international standards.
WEAKN ESS OF THE HDFC BANK
They have reduced their trade charges due to present level of competition. The competition is
low in comparison to any other big city but the bank itself faces huge competition with the SBI
& PNB, which is spread like grains at every part of the city. The trade charges of the other
relative banks are low so HDFC Bank also needs to keep the charges low to compete well with
the other banks.

HDFC Bank follows centralized banking due to which proper reporting has to be done to
central office at each and every moment. These frequent reporting cause unnecessary delay in
the
workings of the bank.
e.g. Any nationalized bank takes half an hour to open any BG but HDFC Bank takes four hours
for the same thing.

Lots of softwares are very difficult to be handled by the employees, since one employee cannot
be efficient in handling all the 32 softwares.

OPPORTUNITIES OF THE BANK:

Lots of traders are still untapped whom the bank can trap. There is a great opportunity in front
of the bank to trap these traders, by offering them through telecalling, e-mails or any other
ways, they can be very profitable for the bank.

Regular and loyal customers can help in building goodwill and more customers. In trade also
like in other business customer loyalty is very important. There are many opportunities with the
bank in the form of loyal customers.
THREAT OF THE BANK:

The most important threat which appears in HDFC Bank are the competitors in which the
major competitors are State Bank of India, Punjab National Bank, ICICI Bank and Central
Bank of India who have many branches and that’s why it is more convenient for the p eople to

37
approach that bank. Apart from that they have their own goodwill which is a threat for the trade
of HDFC Bank.

Since new Private Sector Banks like UTI Bank and Kotak M ahindra Bank and some foreign
bank like ABN Amro Bank are also planning to start their operations with their expertise, the
future seems to be highly uncertain for HDFC Bank.
Competitors

 SBI Bank
 ICICI Bank
 Bank of Baroda
 PNB
 Kotak M ahindra
 IDBI Bank
 Axis Bank
Banking in India

Banking in India originated in the first decade of 18th century with The General Bank of

India coming into existence in 1786. This was followed by Bank of Hindustan. The oldest

bank in existence in India is the State Bank of India being established as "The Bank of

Calcutta" in Calcutta in June 1806. Couple of decades later, foreign banks like H SBC and

Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta

was the most active trading port, mainly due to the trade of the British Empire, and due to

which banking activity took roots there and prospered. The first fully Indian owned bank was

the Allahabad Bank set up in 1865.

By the 1900s, the market expanded with the establishment of banks like Punjab National

Bank, in 1895 in Lahore; Bank of India, in 1906, in M umbai - both of which were founded

under private onwership. Indian banking sector was formally regulated by Reserve Bank of

India from 1935. After India's independence in 1947, the Reserve Bank was nationalized and

given broader powers.

38
Nationalization

The next significant milestone in Indian Banking happened in the late 1960s when the then
Indira Gandhi government nationalized, on 19th July, 1969, 14 major commercial Indian
banks, followed by nationalization of 6 more commercial Indian banks in 1980. The stated
reason for the nationalisation was more control of credit delivery. After this, until the 1990s,
the nationalised banks grew at a leisurely pace of around 4%-also called as the Hindu growth
of the Indian economy.
The Indian Banking Sector is broadly classified into schedule and non-schedule Banks. The
scheduled banks are those included under the 2nd schedule of the RBI act 1934. The
Scheduled Banks are further classified into nationalized Banks. SBI and its associated
Regional Rural Banks, foreign Banks and other Indian private sector Banks.
The term commercial Bank refers to Both scheduled and non-scheduled commercial banks
regulated under the Banking Regulation Act 1949.
To understand the indian banking sector more easily a diagram is shown regarding the name
as the bank, its numbers shown in the bracket and also the category of bank under which it
falls.
Structure

39
 FINANCIAL PERFORMANCE OF HDFC BANK

(Rs. in crores)
M arch 31, 2017 M arch 31, 2016

Deposits and Other 717668.5 631393.2

Borrowings
Advances 554568.2 464.594

Total Income 81602.5 70973.2

Profit before Depreciation 22972.2 19343.8

and Income Tax
Profit of the Tax 14549.6 12296.2

Profit brought forward 23527.7 18627.8

Total Profit available for 38077.3 30924

Appropriation

Appropriations M arch 31, 2017 M arch 31, 2016

3637.4 3074.1
Transfer to Statutory
Reserve
Transfer to General Reserve 1455 1229.6
Transfer to Capital Reserve 313.4 222.2
Transfer from Investment 4.3 (8.5)
Fluctuation Reserve
Proposed Dividend – 2401.8
– 488.9
Tax Including Surcharge
and
Education Cess on Dividend
Dividend (including tax/cess (1.7) (11.7)
thereon)
pertaining to previous year
paid
during the year
32668.9 23527.6
Balance carried over to
Balance Sheet

* Change pursuant to reclassification

40
The BOD, at the meeting held on April 21, 2017 has proposal a dividend of Rs. 11.00 per

equity share aggregating Rs. 3392.7 cr. inclusive of tax on dividend. The proposal is subject

to the approval of shareholders at the annual general meeting. In terms of Revised

Accounting Standard (As)4 – contingencies and events occurring after the Balance – Sheet as

notified by the ministry of corporate affairs through amendments to compares Amendment

Rules, 2016, The Bank has not appropriated proposed dividend from statement of P & L for

the year ended M arch 31, 2017.

The Bank's total Income rose to Rs. 81,602.5 cr. for the year under review from

Rs. 70973.2cr. in the previous year. It's not profit increased by 18.3% to Rs. 14549.7 cr. from

Rs. 12296.2cr.

41
 BALANC E S HEET OF HDFC BANK

( in crores)

M ar 17 M ar 16

12 mths 12 mths

Capital and Liabilities:

Total Share Capital 512.51 505.64

Equity Share Capital 512.51 505.64

Reserves 88949.84 72172.13

Net Worth 89462.35 72677.77

Deposits 643639.66 546424.19

Borrowings 74028.87 53018.47

Total Debt 717668.53 599422.66

Other Liabilities & 56709.32 36725.13

Provisions

Total Liabilities 863840.20 708845.56

42
 Mar '17 Mar '16

12 mths 12 mths

Cash & Balances with RBI 37896.88 30058.31

Balance with Banks, M oney 11055.22 8860.53

at Call

Advances 554568.20 464593.96

Investments 214463.34 163885.77

Gross Block 3626.74 3343.16

Net Block 3626.74 3343.16

Other Assets 42229.82 38103.84

Total Assets 863840.20 708845.57

Contingent Liabilities 848717.62 876808.11

Book Value (Rs) 349.12 287.47

43
 EXPORT OF GOODS AND S ERVICES

INTRODUCTION:

As far as export is concerned the bank provides export finance to the exporting country as

and when required. Export finance is a short term, working capital finance allowed to an

exporter. Funds should be available to the exporter the required time.

EARN
FOREIGN
EXCHANGE

IMPORT HELP IN
PAYMENT MEETING
INTER-
NATIONAL
OBLIGATION

BENEFITS
OF EXPORT

FAVOUR- INCREASE
ABLE GDP
BALANCE OF
PAYMENT

GENERATE
EMPLOY-
MENT

44
TYPES OF EXPORT FIN ANCE:

A. PRE-S HIPMENT FINANCE

 It helps in financial assistance for the execution of an export order from the date of receipt

of an export order till the date of shipment

 It is a type of loan or advance granted to an exporter for financing the purchase,

processing or packing of goods on the basis of confirmed and irrevocable order or any

other evidence including Letter of Credit.

1. Extended Packing Credit Loan :

The scheme is intended to make short-term working capital finance available to exporters at

internationally comparable interest rates.

Types of Export Credit: (1) Pre-shipment Export Credit/ Packing Credit (RPC/PCFC), (2)

Post-shipment Export Credit – both in Foreign Currency (FCY) and Rupees.

Pre-shipment / Packing Credit also known as 'Packing credit' is a loan/ advance granted to an

exporter for financing the purchase, processing, manufacturing or packing of goods prior to

shipment. Packing credit can also be extended as working capital assistance to meet expenses

such as wages, utility payments, travel expenses etc; to companies engaged in export or

services. Packing credit is sanctioned/granted on the basis of letter of credit or a confirmed

and irrevocable order for the export of goods / services from India or any other evidence of

an order for export from India.

'Post-shipment Credit' means any loan or advance granted or any other credit provided by a

bank to an exporter of goods / services from India from the date of extending credit after

shipment of goods / rendering of services to the date of realisation of export proceeds as per

the period of realization prescribed by Reserve Bank of India (RBI) and includes any loan or

advance granted to an exporter, in consideration of, or on the security of any duty drawback

allowed by the Government from time to time. As per extant guidelines of RBI, the period

prescribed for realisation of export proceeds is 12 months from the date of shipment.

45
2. Packing Credit Loan (Hypothecation) :

Packing Credit is a pre-shipment credit extended to the exporters to facilitate him for

meeting several financial requirements such as purchase of raw materials and its

processing, packing, storing and shipping of goods. It is a short term credit available to all

exporters. Hence, this is called pre-shipment credit which is essentially working capital

financemade available to the exporters to arrange for goods as per the export. It is generally

granted in the form of loans or cash credits. It may also be granted in the form of overdraft

facilities. The exporter who wants to avail the pre-shipment credit facility should make a

formal application to his bank along with the firm contract with the buyer or a copy of the

export order or a copy of the letter of credit.

3. Packing Credit Loan (Pledge) :

It is extended for the acquisition of seasonal raw materials or raw materials in odd or bunched

lots. Export takes place in due course after processing as per the shipping and delivery

schedule agreed upon by the overseas buyer. The documents relating to raw materials are

pledged with the bank while the possession remains with the exporter.

4. Secured S hipping Loan :

Secured shipping loan can be obtained once the goods are handed over to the transport

operator or clearing and forwarding agent for shipment. It is released against lorry receipt or

railway receipt. It is extended for a very short duration considering the time taken for

dispatch of goods to the port and completion of shipping and customs formalities.

5. Advanced against Red clause L/C :

If the exporter desires to obtain packing credit then he should request the importer to open red

clause L/C. Red clause L/C authorises the local banks to grant advances to exporters to meet

their working capital requirement for the processing of export order. Such advances are

guaranteed by the issuing bank.

46
 6. Advanced against cheque or credit :

If exporter has received direct payments from abroad by means of cheques or drafts, then the

bank may grant expo credit at concessional rate to the exporters having a good track record,

till the time of realisation of the proceeds of the cheques or draft. The banks however, must

satisfy themselves that the proceeds are against an export order.

7. Packing credit facilities for consultancy Services :

In case of consultancy services, exports do not involve physical movement of goods out of

Indian customs territory. In such cases, pre-shipment finance can be provided by the bank to

allow the exporter to mobilise resources like technical personnel and training them.

8. Packing credit facilities to Deemed Exports :

Deemed exports made to multilateral funds aided projects and programmes, under orders

secured through global tenders for which payments will be made in tree foreign exchange, are

also eligible for concessional rate of interest facility both at pre and post-supply stages.

9. Pre-shipment credit in foreign currency :

EXIM bank has introduced a scheme for Indian exporters to enable them to avail pre-

shipment credit in foreign currencies to finance the cost of imported inputs for manufacture

of export products. The credit period for an advance under PCFC cannot exceed 180 days.

Types of pre-shipment finance

1) Packing credit:

Follow up of packing Credit Advances:

a) Submission of Stock Statement: Exporter should submit stock statement reporting the

stocks, which are under pledge or hypothecation to the bank for securing the Packing Credit

Advance. Frequency of submission of stock statement must be decided by the Authorized

Dealer at the time of sanctioning the packing Credit and should be adhered to, by the

exporter.

b) Physical inspection of stocks: Stocks pledged/hypothecated by the exporter must be duly

inspected by the Authorized Dealer at regular interval.

47
Liquidation of Packing Credit advances:

Packing credit advance will always be liquidated with the export proceeds of the relevant

shipment. At this stage the pre-shipment liability of the exporter will be converted into post

shipment liability.

For any reasons, if export does not take place at all, the entire advance will be recovered at

commercial rate penal interest as decided by the banks.

With the recent liberalization and deregulation of interest rates, banks will have operational

flexibility for liquidating packing credit advances as per RBI’s guidelines issued with effect

from 14.12.1994.

Criteria to be applied for allowing above relaxation:

Even though Reserve Back has now permitted the above relaxation for liquidating a Packing

credit advance, each Bank has got their own conditions to extend this facility to the exporter-

customer. In general, the following conditions are observed while extending this facility to

the exporter:

Bank should ensure that substitution is commercially necessary and unavoidable. The

sanctioning authority must also satisfy him about the valid reasons as to why packing credit

extended for shipment of a particular commodity cannot be liquidated in the normal. It is

suggested that as far possible, the substitution of contract should be allowed if the exporter

maintains account with the same bank or it has the approval of the members of the

consortium.

Overdue Packing Credits and ECGC procedures:

If the borrower fails to pay the amount on due date / extended due date and bank considers it

as overdue, an overdue report of advance should be made to concerned Regional / Branch

office of ECGC in prescribed form within 30 days.

If the overdue position persists, back should take necessary steps to realize dues as per its

usual recovery procedure and the default to ECGC. This default report should be sent to

concerned Regional / Branch office of ECGC in prescribed form within one month from date

48
 of recalling the advance or within 4 month from date / extended due date of the loan amount

whichever is earlier. Payment of ECGC premium may be discontinued after the month in

which the default is reported to the month in which insolvency of the exporter is reported

ECGC.

Back should recover the overdue by liquidating the securities, if any, available. Nursing

programme can be initiated, if found feasible, with the consent of ECGC. If recovery is not

possible, bank can prefer Claim under the WTPC Guarantee within 6 months from the date of

report of default.

Pre-shipment credit in foreign currency (PCFC)

• PCFC was introduced on 8 November 1993.

FEATURES :

• All convertible currencies

• Similar terms and conditions like P/C-L/C or Order

• Running Account also available

• Only for cash exports

• Banks may source the funds either by using the offshore funds available with them

such as balances in EEFC /RFC/ ESCROW accounts

• Source of funds -Any foreign currency funds

• Prior permission of RBI not required

• Liquidated by discounting of bills under rediscounting of Export Bills abroad –

SELFLIQUIDATING.

• Cost of borrowing abroad not to exceed1% over LIBOR by the Banks (Competitive

international rates).

• Exporters at a cost not exceeding 2% over the appropriate LIBOR excluding the

holding tax by Banks having Overseas Branches and 2.5%by other banks.

• Normally for 180 days.

49
• If no export within 360 days PCFC adjusted at TT selling rate for currency concerned

- Interest will be charged at appropriate rates on rupee equivalent of the principal amount at

ECNOS (plus a penal rate as per bank’s discretion).

• Running account facility can be given.

• Forward Contracts can be booked for future drawls account facility.

• It would be in order for banks to liquidate PCFC granted to a Diamond Dollar account

holder by dollar proceeds from sale of cut and polished diamonds to another DDA holder.

• Diamond Dollar Accounts can be maintained by Firms/ Cos. With a track record of at

least three years and having an average annual turnover of Rs.5 crores or above during the

preceding three licensing years.

Running Account facilities

• Effective 14 M arch 1992, banks can grant pre-shipment advances for exports of any

commodity, without prior lodgment of L/C, export orders under Running Account.

Conditions for Running Account

• Need-based facility

• Exporters with good track record

• L/Cs firm orders can be produced within reasonable time (for products under SCC

L/Cs firm orders to be produced within one month

• Exporters in EOUs, EPZs and SEZs also eligible

• No such facility for sub-suppliers.

B. POST SHIPMENT FI NANCE

It is an advance against receivables which is in the form of shipping documents. If the bank

has given the pre-shipment credit to the bank then he cannot deny the post-shipment credit, if

asked.

50
 Types of post-shipment finance:
1. Export bills purchased/negotiated/discounted: The risk of non-payment is

there if letter of credit is not there. The risk is more pronounced if documents are under

acceptance. In order to safeguard the interest of the bank and also the exporter, ECGC offers

coverage of credit risks through their guarantees/policies at the post-shipment stage. The

general banks cover the advance under the Whole Turnover Post Shipment Guarantee

scheme. But the HDFC Bank never trusts the ECGC. In addition to this the exporter is

advised to go for separate buyer wise policy also.

2. Export bills negotiated: All the documents presented to the bank for negotiation

should be strictly in accordance with the L/C terms. Even the slightest deviation from those

terms and conditions specified in the L/C can give an excuse to the issuing bank for non-

payment .

3. Advances against bills sent on collection basis: In some cases the exporter

himself may requests for sending the bills for collection basis. Bank may allow advance

against these collection bills to an exporter. Concessive rate of interest is charged for this

advance from the exporter according to the period.

4. Advances against exports on consignment basis: Goods are exported on

consignment basis at the risk of the exporter. Eventual remittance of sale proceeds will be

made by agent. The overseas branch of the bank will be instructed to deliver the documents

against trust receipt.

5. Advances against undrawn balances : In certain line of trade it is the practice

of the exporter to leave a part of the amount as undrawn balance. Authorized dealers can

handle such bills provided the undrawn balance is inconformity with the normal level of

balance left undrawn in the particular line of export trade subject to a maximum of 10% of

the full export value. Advances against undrawn balance can be made at a concession rate of

interest for a maximum period of 90 days.

51
6. Advances against duty drawback: Where the domestic cost of production of

certain goods is higher in relation to international price, the exporter may get support from

the government so that he may compete effectively in the overseas market. The government

of India and other agencies provides export incentives under the export promotion scheme.

this can only be in the form of refund of excise and customs known as duty drawback.

Bank grants advances to exporter against their entitlements under above category at low

interest rate for a maximum period of 90 days .

GENERAL GUIDELI NES OF THE BANK FOR SANCTIONI NG

EXPORT FI NANCE TO CUSTOMERS:

1. Banks should meet the genuine credit requirements of the export sector promptly and

in full. They should review their internal arrangements and take such action as is necessary,

including delegating enough powers to Branch M anagers/Regional M anagers to export

sector. Queries should not be raised in piecemeal or information sought at various stages,

leading to delays in extending credit.

2. Bank may adopt a flexible attitude with regard to debt – equity ratio; margin and

security norms but there could be no compromise in respect of viability of the proposal and

the integrity of the borrower.

3. Exporters should be able to satisfy their banker about their capacity to execute the

orders within the stipulated time and have proper expertise to manage the export business.

4. The quantum of finance sought should commensurate with the expected export

turnover and the cost of inputs required.

5. If the exports will be covered under letters of credits, banks would need to be satisfied

about the standing of the credit opening bank and also the acceptability of the conditions

specified in the credit.

6. Where exports are not covered by Letters of Credit and will be on the basis of firm

contracts, banks may insist for obtaining a satisfactory status report on the overseas buyer.

52
 EXPORT PROCESS:

1. Exporter gets the export order.

2. He demands letter of credit or bank guarantee if he has any doubt regarding the

credibility of the importer.

3. The exporter sends 3 copies of GR form to the custom authority. Custom keeps 1

copy with itself, 1 copy is returned to the exporter and 1 copy is sent to RBI.

4. He prepares the goods and takes it to the dock for shipment.

5. He prepares the bill of lading if he is sending the goods through ship. In such a case

he sends the documents (packing list, invoice, bill of exchange, original bill of lading,

certificate of origin, work test certificate, purchase order etc) to his bank which sends the

documents to importer’s bank.

The documents should be sent within 21days of shipment of goods.

6. The copy which is received by him by the custom is sent to the bank, the bank then

sends the copy to the RBI again to tally both the copies of GR Form.

PART THREE
BANK GUARANTEE:
The term bank guarantee can be defined as:

‘a guarantee given by a bank to a third person, to pay him a certain sum on behalf of the

bank’s customer, on the customer failing to fulfill any contractual or legal obligations

towards the third person.’

Various types of bank guarantees:

Financial guarantee : These are the guarantee issued by bank on behalf of the customers,

in lieu of the customer being required to deposit cash security or earnest money. These kinds

of guarantees are mostly issued on behalf of customers dealing with government departments.

If the contractor does not fulfill his obligation then the government department invokes the

guarantee and collects the money from the bank.

53
 Performance guarantee: These are the guarantees issued by the bank on behalf of its

customer whereby the bank assures a third party that the customer will perform the contract

entered into by the customer as per the condition stipulated in the contract, failing which the

bank will compensate the third party up to the amount specified in the guarantee.

Banks’ obligation to pay primary

Bank guarantees are called the life blood of international commerce and even though they are

an off shoot of a primary contract between the debtor and the creditor, these guarantees are

independent commitments taken by bank on behalf of the customers.

The obligation of the bank is irrespective of the disputes between the beneficiary and the

debtor.

Precautions which bank takes while issuance of bank guarantee:

The bank’s criteria taken into consideration while issuance of bank guarantee on the

following basis:

1) Amount guaranteed: when the bank issues a guarantee, first and the foremost

consideration that it takes is the amount he is called upon to issue. In the guarantee agreement

the amount has to be specifically stated both in figures and words. Care should be taken to

state whether the amount is inclusive of all interest, charges, taxes and other levies. This is

important to avoid unnecessary disputes regarding the liability of the bank.

2) Period of guarantee: Bank always specifies the period for which their guarantee

subsists and an additional period during which a claim has to be made on the bank to make

payment. The former period during which the guarantee subsists is called the validity period

and the latter the claim period. If any default has been committed by the debtor (i.e. the

bank’s customer) it should be within the validity period. It is thus necessary as a matter of

great caution that this period e specified to the exact date.

Once this outer limit for the bank to guarantee default of the debtor is fixed then the creditor

can make a claim only if the default has occurred within this period, an for any default

beyond this date the bank cannot be held liable.

54
Claim period in a guarantee: in a guarantee it is necessary to provide for a period

slight longer than the validity period for the beneficiary to make a claim. The claim period is

usually a few months more than the validity period of the guarantee.

3. Counter guarantee and other security: Though a bank guarantee is a contingent liability

it is always prudent for a banker to secure this contingent liability in case it is enforced. This

can be done by obtaining a counter guarantee –cum-indemnity executed by the customer in

favour of the bank.

PART FOUR

INWARD REMITTANC E AND OUTWARD REMITTANCE IN TRAD E IN HDFC

BANK

OUTWARD REMITTANC E:

It is the way in which money from a country goes to another country in some other way than

export or import of goods. Outward Remittances (M iscellaneous) for other purposes can be

remitted with ease. Remittances by way of DD / TT / Swift can be affected through banks

strong network of correspondent banks to any part of the world. All transactions are subjected

to FEMA regulations.Outward Remittance (M iscellaneous) ListBTQ / Business Travel / Gift

Remittances / M edical Treatment / Student Remittances / Donations / Immigration /

Employment Abroad / M aintenance of Family / Subscription fees / Examination fees of

Foreign Universities / Repatriation of all NRI accounts of Individual customers / Exhibition

Fee / Conference Invitation / Credit Card Payments / Subscription of M agazines and

periodicals / Repatriation of sale proceeds of property / Repatriation from NRO a/c /

Repatriation of funds relating to OCB / Repatriation under the Liberalized remittance scheme

of USD 25,000/- per calendar year for Resident Individuals.

INWARD REMITTANCE:

GEN ERAL:

Foreign exchange due or accrued as remuneration for services rendered in or outside India, or

in the settlement of any lawful obligation, or an income on asset held outside India, or as

55
 inheritance, settlement or gift is to be sold to an authorized person within 7 days from the

date of receipts.

FOREIGN INWARD REMITTANCE PAYMENT S YS TEM (FIRPS ):

Foreign exchange dealers’ association of India (FEDAI) has evolved FIRPS to facilitate

quick transmission of funds to beneficiaries in India against inward remittance received from

abroad through banking channels in rupees as well as in foreign currency.

ISS UE OF BANK C ERTIFICATE:

Authorized Dealers should issue bank certificates against receipt of inward remittance or

realization of foreign exchange on security papers if the amount exceeds Rs. 15000/- in value,

bearing distinctive serial numbers and reference numbers.

REMITTANC E THROUGH HDFC BANK TO OTHER BANKS (OUTWARD):

Rs. 0.25/- per. 1000/- per transaction

(M inimum- Rs50,

M aximum- Rs.1000)

VARIOUS TOOLS ADOPTED BY HDFC BANK TO FACILITATE

INTERNATIONAL TRANS ACTIONS

HDFC Bank has adopted the following tools to facilitate the international trade:

1) Foreign Exchange.

2) Tools to avoid most common discrepancies in international trade.

3) Nostro Account

1) Foreign Exchange:

Conversion of one currency to another currency is referred to as Foreign Exchange. HDFC

provide the facility to conversion of one currency into another currency.

56
 Types of Transactions: In Forex market there many ways to accomplish the

transactions.

1) Cash In this case, the transaction is settledthe same day.

2) Value Tomorrow (Tom) In this case, the transaction is settled

on the first, succeeding working day.

3) S pot In this case, the Transaction is settled on the second succeeding working day.

4) Forward In this case, the transaction is settled after the second succeeding working day

of the predetermined date with the predetermined sum of money authorized Dealers (Banks)

can undertake all types of activities in FOREX/Foreign Trade e.g. Banks. Generally banks

perform the intermediary task and categorized as authorized dealers.

 Exchange rate quotations: It is to express the value of one currency in terms of another

currency.

There are two ways of quoting exchange rates:

1. Direct quote:

In this case the variable currency is home currency.

e.g., 1U SD = Rs. 45.10

2. Indirect quote: In this case, the variable is foreign currency

e.g., Rs. 100 = USD 2.2525

 TYPES OF RATES :

1. BUYING RATE:

 TT buying rate:

This rate is used for transactions where there is no delay in the realization of FOREX or

where the nostro account of the bank has been credited e.g. cleans inward remittance for

which the nostro account has already been credited.

 Bill buying rate:

57
 This rate is used for transactions where proceeds are realized at a future date e.g. purchase/

discount of bills.

 TC Buying rate:

This rate is used for encashment of travelers’ cheques.

 Currency buying rate:

This rate is used for encashment of currency notes.

S ELLING RATE:

 TT selling rate:

This rate is used for transactions not involving handling of documents, e.g. outward

remittance.

 Bill selling rate:

This rate is used for transactions involving handling of documents e.g. payment of import

bills.

 TC selling rate:

This rate is used for issue of traveler cheques.

 Currency selling rate:

This rate is used for issue of currency notes.

2) Tools to avoid most common discrepancies in international trade

Most commonly observed discrepancies in international trade:

1. Credit expired

2. Late shipment

3. Late presentation of document

4. Documents not marled original

To avoid the above-mentioned discrepancies it is the duty of the employee that he must check

the documents at every stage of proceeding.

58
 HOW THE TRAD E DOCUMENTS ARE CHECKED IN THE BANK?

 Checking documents under LC

Document checking is the most critical task, as the beneficiary’s payment assurance depends

on documents complying with the credit.

Discrepant documents are very common. It is estimated that 50%

to 70% of documents are discrepant upon first presentation to the bank.

Document checking strategy

 Check that all required documents have been presented.

 Check that each document complies with the L/C

 Check that documents are consistent with on another.

Checking the bill of exchange

1. Drawer as specified on L/C.

2. Amount same in words and figures and accords with L/C.

3. Tenor of bill accords with credit.

4. Signed and endorsed by drawer.

5. Any references to credit correct.

Checking the commercial invoice

1. Name and address of traders exactly as L/C.

2. Signed if required.

3. Goods description exactly as on L/C.

4. Amount accords with L/C and is exactly the same as B/E (if presented).

5. Quantity of goods and unit price accords with L/C.

6. Shipment terms as per L/C.

59
Checking the transport document

1. Signed by named carrier or their agent.

2. Not issued by fright forwarder unless signed by them as carrier/ agent*.

3. Not charter party B/L.

4. Clean, not claused.

5. Consignee details as per L/C, B/L consigned to order and endorsed as

required.

6. If required, notify party exactly as on L/C.

7. Loading and destination ports accord with credit.

8. B/L evidences goods shipped on board named vessel; not on deck unless allowed.

9. Goods shipped on or before latest shipment date

10. Transhipment only if permitted

11. M arked ‘freight paid’ it required

12. Goods description and details consistent with L/C

*unless specifically allowed by L/C

Checking the insurance document

1. Issued and signed by insurance company, underwriter or agent. Certificates countersigned

by beneficiary

2. Acceptable type (not insurance note, unless specifically allowed by L/C)

3. Not issued after shipment date unless warehouse-to-warehouse

4. Endorsed, if required

5. Amount in same currency as L/C and at least 110% of CIF/CIP invoice value*

6. All specified risks covered

7. Goods description and details consistent with L/C

*unless otherwise stipulated by L/C

60
 Checking other documents:

1. Issued by appropriate authority and, if necessary, signed by them.

2. Evidence compliance with any special L/C conditions.

3. Goods description and details consistent with the L/C.

NOSTRO ACCOUNT

Nostro account is that account of one bank, which is opened in the other foreign bank to

facilitate trade, related activities.

The HDFC Bank has also opened its account in various foreign banks, which are as follows:

S IGN OF THE
CURRENCY BANK NAME PLAC E
CURRENCY
J.P.M ORGAN CHASE
US DOLLAR US D NEW YORK
BANK
US DOLLAR BANK OF AM ERICA NEW YORK
US DOLLAR BANK OF NEWYORK NEW YORK
UNION BANK OF
US DOLLAR NEW YORK
CALIFORNIA
FIRST UNION
US DOLLAR NEW YORK
NATIONAL BANK
AM ERICAN EXPRESS
US DOLLAR NEW YORK
BANK

J.P.M ORGAN CHASE

EURO EUR FRANKFURT
BANK
EURO ABN AM RO BANK FRANKFURT
AM ERICAN EXPRESS
EURO FRANKFURT
BANK

POUND J.P.M ORGAN CHASE

GBP LONDON
STERLING BANK
POUND
LLOYDS BANK LONDON
STERLING
POUND ROYAL BANK OF

61
STERLING SCOTLAND

J.P.M ORGAN CHASE

JAPANESE YEN JPY TOKYO
BANK

SINGAPORE J.P.M ORGAN CHASE

S GD SINGAPORE
DOLLARS BANK

UNION BANK OF
SWISS FRANK CHF ZURICH
SWITZERLAND

SWEDEN,
SWISS KRONER S EK NORBANKEN
STOCKHOLM

AUSTRALIAN EM IRATES BANK

AUD DUBAI
DOLLAR INTERNATIONAL

DKK UNI BANK COPENHAGEN

AUSTRALIAN
AUD ANZ BANK M ELBOURNE
DOLLAR

CANADIAN BANK OF NOVA

CAD
DOLLAR SCOTIA

HONG KONG STANDARD

HKD HONG KONG
DOLLARS CHARTERED

62
OBJECTIVES OF THE

STUDY

63
 OBJECTIVES OF THE STUDY

Trading is the important part of commerce. The foreign trade finance becomes important for

any developing country. In international trade the role of intermediaries (authorized dealers

or banks) is increditable, as they provide financial services to do the trade internationally.

The main objective of the research is to understand the customer’s requirements, who

are engaged with international trade.

Other objectives of the research are as follows:

1. To understand various financial services and their activities available to the customers

in HDFC Bank.

2. To analysis the strengths, weakness, opportunities and threats of the HDFC Bank in

international trade.

64
 RESEARCH

METHODOLOGY

65
 RESEARCH METHODOLOGY

 RES EARCH DES IGN:

The research describes the operations of trade finance in HDFC Bank, which is based on

primary data. Thus it is a analytical research design.

The research also carries the analysis of secondary data, so it follows the descriptive

design.

Hence, the research design is descriptive as well as analytical both

 S AMPLING:

DESIGN: Non-probability and convenience sampling.

SAM PLE SIZE: 100

 DATA COLLECTION:

S ources of Primary data:

1. QUESTIONAIRE

2. Data provided by EM PLOYEES OF BANKS

S ources of Secondary data:

3. Internet.

4. Conceptual books.

Sample Area : Moradabad

RES EARC H D ESI GN

Research design is defined as the specification of method and procedures for

acquiring the information needed. It is a plant or organizing framework for doing the study

and collecting the data. Designing a research plan requires decision regarding all the data

sources, research approaches, research instruments, sampling plan and contact methods. M ore

explicitly, we can say that research design decisions happen to be in respect of:-

 What is the study all about?

 Why is the study being made?

66
  What type of data is required?

 Where can be the required data be found?

 What periods of time will be included?

 How will be the data collected?

 How will be the data analyzed?

 In what style the report will be prepared?

Research designs are mainly of following types:

1. Exploratory Research

2. Descriptive Studies

3. Causal Studies

Exploratory Research - The major purposes of exploratory research are the

identification of the problems, the more precise formulation of problem and the formulation

of new alternatives courses of action. The design of exploratory research is characterized by a

great amount of flexibility and ad-hoc veracity.

Descriptive Study - It is an in contrast to exploratory research is marked by the prior

formulation of specific research questions. The investigator already knows substantial

amount about the research problem. Perhaps as a result of an exploratory study, before the

project is initiated. Descriptive research is also characterized by a pre planned and structured

design.

Causal or Experimental Design - A causal design investigates the cause and effect

relationship between two or more variables. The hypothesis is tested and the experiment is

done. There are following types of causal design:

a. After only design

b. Before After Design

c. Before After with control group Design

d. Four groups, six studies design

67
 e. After only with control group design

f. Consumer panel design

g. Exposit fact to design

DA TA COLL EC TI O N
The data collected for the purpose of research can be classified into primary and

secondary data.

DATA COLLECTION

PRIMARY
SECONDARY
DATA
DATA
Direct Personal Interview
Indirect Personal Interview
Information from correspondent
M ailed Questionnaires
Questionnaire filled by Ennumerator

PUBLISHED UNPUBLISHED

Govt. Publication
Report Committees & Commission
Private Publication
Research Institute

68
Primary data means data that are collected from the people i.e. the data which is collected by

self.

Secondary data means data that are already available i.e. they refer to the data which have

already been collected and analyzed by someone else. It can be collected through

journals, reports & various publications.

DA TA COLL EC TI O N I NS TR UMENTS
The instrument used for collecting primary data was QUES TIONNAIRE. Questionnaire

consists of set of questions presented to respondents for their answers.

The following procedures are recommended for a questionnaire survey:

Picture: 6

1. Determine the major questions - One must begin by understanding the major

questions or issues, which are to address. These will generally be reflected in the

69
questionnaire sections, as typical sections, which would contain background information and

other considerations.

2. Draft questionnaire items - One must draft actual questionnaire items within each of

the sections of the questionnaire. It is difficult to vary the types of questions too often, so

economize within each section by asking similar types of questions.

There are six types of questionnaire item before one can invent his own. They are:

 M ult ip le-choice it em

 Fill-in-t he-blank it em

 Rat ing-sca le it em

 List it em

 Comment -on it em

 Likert -scale it ems

3. Design the questionnaire – Before writing the items, one should begin considering

an overall design for the questionnaire. Follow these rules:

 Lay out items to avoid confusion

 Use the formats shown in the examples

 Don’t allow a question to cross over two pages

 Instruct the respondent in what you want him or her to do for each type of

question

 Number the questions consecutively.

4. Pilot test the questionnaire - Even the best questionnaire needs testing. Here are

some tips to test the questionnaire.

 Show t he quest ionnaire t o crit ical coll ea gues.

 T est t he quest ionnaire wit h a few client s.

70
  In comp let ing t his st ep , ask such quest ions as Was the item clear, and could it

be answered? Or Did the question hit the important aspect of the issue? Or What has been left

out? And so on.

5. Develop a data-collection strategy - One will now need to work out a strategy for

how and where to send it. The first part of the strategy is to select a sample of people who

fairly represent all your clients. Prepare a list of your sample clients. The second part of the

strategy is to decide on the technology which will be used to send out the questionnaire.

6. Develop a cover letter and send the questionnaire- Each client in your sample

should receive

 A cover letter;

 A professionally developed questionnaire; and

 A self-addressed return envelope, unless one use e-mail.

7. Monitor the response- Count on 4 to 6 weeks to get responses to the questionnaire.

 Use follow-up strategy: send reminder letters or put your network into action; and

 Start analysis when responses dry up.

8. Analyze the survey data - Questionnaire analysis generally means dealing with large

numbers or with a variety of numbers. This usually requires you to use statistical concepts

and computers. M any simple statistics programs are available to help analyze the data. The

methodology used to collect data involved taking appointments with managers or senior

executives in the HR department, which will be followed by a visit to the concerned IT

Company. The research will cover 5 companies. The primary data was collected through a

questionnaire; which was followed by a discussion between the researcher and respondent on

issues.

The total time taken for filling up the questionnaire was 30 minutes, which included

20 minutes of filling up of questionnaire and 10 minutes of discussion.

71
FINDINGS

72
 FINDINGS

FINDINGS FROM THE QUES TIONNAIRE

The clients are the very important aspect of any business transactions. On the basis of their

requirements they opt for export or import. The charges by the bank also vary from customer

to customer depending on their goodwill, their amount of transaction, frequency of

transaction etc. In order to know more about the customers I prepared a questionnaire to

extract in detail what customers felt about the services provided by the bank and how much

they know about their bank.

Purpose of the questionnaire:

I prepared the questionnaire with the purpose of knowing the customers frequency of doing

trade with HDFC Bank, their problems faced, their suggestions to the bank, how much they

are aware of the trade finance and international business, how much they know about the

facilities provided to them by the bank and the government, and how much they prefer HDFC

Bank services in comparison to other banks.

Various questions of the questionnaire and their findings after make them fill from the

customers, customer’s opinion and what I concluded from these findings has been discussed

below.

My findings from the questionnaire can be summed up as follows:

Total number of customers who filled the questionnaire and who are clients of the hdfc bank

moradabad: 100

73
Q1). Nature of business of the trader----S ole Proprietorship/Partnership / Limited

Company.

The occupation of the trader is very important. It determines the nature and frequency of

doing international trade. The sample size of the trader was 23. The nature of occupation can

be broadly divided into 3 categories sole proprietor, partnership and the trader limited

company.

The following are the graphical presentation of the nature of business of the trader:

5
22%

10 s oleproprietor
43%
partnership
limited company

8
35%

74
Q2). What is the annual Turnover of your business?

a) Below 5 lakhs b) 5 lakhs- 10 lakhs

c) 10 lakhs- 15 lakhs d) above 15 lakhs

9
8
7
6
number of 5
traders 4
3 Series1
2
1
0
below 5 5lakhs- 10lakhs- above
lakhs 10lakhs 15lakhs 15lakhs
turnover

75
Q 3).Apart from HDFC Bank which other bank you prefer for trade?

a) SBI b) PNB

c) UBI d) ICICI

e) Others

13%

SBI
13%
ICICI
47%
UBI
PNB
OTHERS

20%

7%

SBI: 7

ICICI: 1

PNB: 2

UBI: 3

76
OTHERS: 2

Among the total customers 23, 8 customers are totally loyal to the HDFC Bank. 15 customers

do trade with other banks also along with HDFC Bank. The diagram is showing the

preferences for those 15 customers only.

The traders are interested in SBI in other banks. The reason being it is public bank and is

located in every nook and corner of the city, its charges are also lower.

The second preference of the traders is UBI. It is also cheap and its location covers all the

areas of the city.

ICICI, PNB and other banks are also preferred by some customers .

77
Q4). With which foreign bank do you prefer to deal with as issuing bank or beneficiary bank?

a) Bank of America b) Wachovia bank

c) J.P.M organ chase d) others

10
9
8
7
6
5 Series1
4
3
2
1
0
BANK OF WACHOVIA J.P.MORGAN OTHERS
AMERICA BANK CHASE

J.P. M ORGAN CHASE: 4

WACHOVIA BANK: 9

BANK OF AM ERICA: 8

OTHERS: 2

The exporter bank also plays an important role in international business. The customers

prefer the above mentioned banks due to the efficient level of services provided by these

foreign banks. There are minimum errors within the documents provided by these banks and

services are also timely .

78
Q 5). In which type of trade you are involved with HDFC Bank?

a) Export b) Import

c) Inward remittance d) Outward remittance

TOTAL NUMBER OF EXPORTERS: 08

TOTAL NUMBER OF IMPORTERS: 13

TOTAL NUMBER OF TRADER INVOLVED IN INWARD REM ITTANCE: 1

TOTAL NUMBER OF TRADER INVOLVED IN OUTWARD REM ITTANCE: 1

EXPORT
4% 4%
35% IMPORT

INWARD REMITTANCE

57%
OUTWARD
REMITTANCE

Among the 23 traders there are customers who sometimes do export, sometimes import and

sometimes remittances depending on their nature of requirement. It cannot be hard and fast

that a person can import only and cannot do other things. The above mentioned diagram

shows the number of trades done by the trader which is often done and preferred by them.

79
Q6). What do you prefer as a customer?

a) Letter of credit b) Bank Guarantee

LC: 18

BG: 5

5; 22%

LC
BG

18; 78%

18 customers said they prefer LC. The letter of credit is demanded by the exporter to ensure

its payment through a reliable source.

5 customers said they prefer BG, since opening BG is cheaper than opening LC in HDFC

Bank.

80
Q7).How do you find the charges of the HDFC Bank different from the other banks?

a) Expensive b) equal

c) Cheaper

1
15

10

5
EXPENSIVE
0 EQUAL
CHEAPER

M ajority of the customers felt that the charges are competitive and acceptable in comparison

to the services provided by the bank. They are satisfied with the charges charged by the bank.

The bank itself has adopted flexible approach in charges. It varies the charges according to

the customers’ reputation, competition and other factors. It does not want to loose any

genuine customer due to unfair charges .

81
CONCLUSION

AND

SUGGESTION

82
 CONCLUSION AND SUGGESTION
The SWIFT should be allocated within the branch level; this can make the trading more

convenient and easier.

The branches located in various parts of India are still unable to complete the work

maintaining low TAT. They should try to keep the TAT as low as possible.

HDFC Bank like any other Indian bank has adopted SWIFT to facilitate quick payments. It

should also try other internationally acceptable modes of payment e.g. ABA, CHIPS ABA

which are adopted by foreign banks abroad.

It should increase the number of branches in the country. It is still very lower in comparison

to other banks such as SBI, UBI (1315 branches), H SBC (9500 branches in 76 countries) etc.

the low number of branches does not cover whole area where there is still a huge scope of

trade.

The branches opened abroad will be helpful in building good relationship and brand goodwill

in foreign countries.

Although the branch tries to decrease the TAT (turn around time) level as low as possible but

if the TAT level is higher then it could be decreased in the following ways:

M IS to be sent to branches to ensure basic scrutiny and customer education.

M IS to be sent to branches to ensure basic scrutiny and to ensure images are clear when

scanned.

Work allocated so that routine transactions are not affected.

When TOD in A/C- LC Bills then M IS to be sent to the respective business group.

83
LIMITATIONS

84
 LIMITATIONS

Although I have tried to cover all the facts related to external trade finance operations, yet

there are some limitations also due to time constraints and other factors, these limitations are

as follows:

1. Trading is the vast area. Thus the research is limited to external trade financial

services only.

2. The research is limited with the reference of the MORADABAD branch of HDFC

Bank.

3. The report covers only main activities involved in the trade finance, because the

whole activities would make this report very complex.

4. The sample size is 100 because of time constraints

85
BIBLIOGRAPHY

86
 BIBLIOGRAPHY

1. Books:

 C. R. KOTHARI (2004), “RESEARCH M ETHODOLOGY”, New Age

International , Second International, P – 55 to 69

 MACHIRAJU .H.R, INDIAN FINANCIAL SYSTEM Prentice Hall Publisher,

Fifth Edition, P - 3 to 7

 BHALLA.V.K ,INTERNATIONAL FINANCIAL MANAGEM ENT

2. Other material provided by employees of the bank

3. Websites:

www.hdfcbank.com

www.google.com (search engine)

www.ask.com (search engine)

www.bankingindia.com

www.wikipedia.org

87
QUESTIONNNAIRE

88
 QUESTIONNNAIRE

Name of customer___________________________________________________________

Address____________________________________________________________________

___________________________________________________________________________

Contact No.________________________________________________________________

Email Id __________________________________________________________________

1. Nature of business of the trader -----------Sole Proprietorship / Partnership /

Limited Company.

2. What is the annual Turnover of your business?

a) Below 5 lakhs

b) 5 lakhs- 10 lakhs

c) 10 lakhs- 15 lakhs

d) above 15 lakhs

3. Apart from HDFC Bank that other banks you prefer for trade?

a) SBI

b) PNB

c) UBI

d) ICICI

e) Others

4. With which foreign bank do you dealt with maximum as issuing bank or beneficiary bank

and why?

a) Bank of America

b) Wachovia bank

c) J.P.M organ chase

d) others

89
5. In which type of trade you are involved with HDFC Bank?

a) Export

b) Import

c) Inward remittance

d) Outward remittance

6. How many times you have done trade with HDFC Bank in 6 M onths? ----------------------

(optional)

7. How many times you have done import trade with HDFC Bank in 6 M onths? ------------------

----(optional)

8. How many times you have done export trade with HDFC Bank in 6 M onths? ------------------

----(optional)

9. How many times you have done remittance with HDFC Bank Varanasi in 6 M onths? ----------

------------(optional)

10. What do you prefer as a customer:

a) Letter of credit

b) Bank Guarantee

11. How do you find the charges of the HDFC Bank different from the other banks?

a) Expensive

b) equal

c) Cheaper

90
12. Any suggestions for the bank

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

___________________________________

13. Are you satisfied with the trade services provided by the HDFC Bank?

YES NO

14. Where do you see your Company in next Three Years Turnover wise given the incentives by

the Indian Govt.?

___________________________________________________________________________

___________________________________________________________________________

___________________________________________________________________________

______________________________________________________________________

* Thank you for your Participation*

91