The KYRGYZSTAN Bank signed an agreement on opening a trade finance line with the International Islamic Trade and Finance Corporation (ITFC)
On May 14, 2019, in the city of Jeddah, Saudi Arabia, the KYRGYZSTAN Bank and the International Islamic Trade and Finance Corporation signed an agreement on opening a trade finance line in the amount of $ 2 million. This line will be aimed at financing external and internal trade transactions for the acquisition of goods.
Within the framework of the program, ITFC organizes financing for customers-importers of the Bank under contracts (both external and internal) with settlements by letter of credit or direct payment in accordance with ITFC procedures. Financing is provided for the full amount of the letter of credit / payment or for its part. Moreover, in order to reduce customer costs, the Bank offers cheaper financial resources of a foreign bank.
Advantages of the ITFC-funded settlement form:
- When applying a credit line on letters of credit, the credit resources of a foreign confirming bank are used, the credit rate of a confirming foreign bank is lower than in Kyrgyzstan.
- Under this scheme, a deferred payment is possible under a letter of credit or a payment also at a reduced rate.
- The terms of lending to a client under such a scheme can vary.
- The client should not divert funds from circulation at the time of opening the letter of credit or in full payment for goods and services.
- Foreign supplier receives funds immediately after the submission of documents to the confirming bank.
- Payment of the cost of sales by our client upon maturity according to the loan repayment schedule.
At this time, the Bank has already begun financing projects.
Note: Trade financing is the financing of foreign trade and domestic operations of clients by providing guarantees for credit resources from international markets and today it is considered one of the most dynamically developing types of banking product.
The popularity of trade finance instruments in international practice is precisely due to the fact that they allow companies to increase the efficiency of using their own funds without diverting resources from their working capital.
Documentary operations conducted by the Bank contribute to reducing the risks of its customers in conducting foreign trade operations, increasing cash flows, developing and strengthening solid trusting relationships with foreign banks.
