What is Structured Trade Finance (STF)?
Structured Trade finance (STF) represents monetary activities related to commerce and international trade. Trade finance includes lending, the issuance of letters of credit, factoring, export credit and insurance. Companies involved with trade finance include importers and exporters, banks and financiers, insurers and export credit agencies, and service providers.
The function of trade finance is to introduce a third-party to transactions to remove the payment risk and the supply risk while providing the exporter with receivables according to the agreement and the importer with extended credit. Suppliers, banks, syndicates, trade finance houses and buyers all provide trade financing. Ametheus helps bring all of these pieces together through our technology and support services, ensuring effective funding and settlement of loans over the life of the financing agreement.
What we do?
Ametheus Holdings Pvt Ltd is a structured trade finance service aggregator. We are a facilitator not a lender, working with selected companies and incorporated bodies. We assist companies to structure import credit line. While we can access many traditional forms of finance, we are specialized in alternative finance and complex funding solutions related to international trade. We help companies to structure import finance in ways that is sometimes out of reach for mainstream lenders. Our extensive connection with premier business houses allows us to organise LC.
Letter of Credit (LC):
Our goal is to engage genuine Buyers and Sellers of various commodities and to provide them Letter of Credit facilities. Our product line offers a variety of leased products from the top financial institutions. What we offer are for corporations in B2B basis who require credit line to import commodities. We arrange LC for client’s supplier upon a deposit of 15% to 20% depending on commodities and a service fee which varies depending on amount and tenure of LC. Client requires to settle the balance payment and charges 10 days before the shipment arrives at the destination port.
For reference, the following are our issuance procedures:
1. Client submits a proforma invoice (PI) or Application Form for the underlying deal.
2. Ametheus (our firm) creates a draft and issuance PI for client’s review.
3. Client signs the draft, wires issuance fees, and submits due diligence documents.
4. Ametheus releases the instrument to Bank for issuance.
5. Assuming no questions, Bank issues SWIFT within 7 Days maximum.
6. Ametheus emails a copy of SWIFT to client.
Import Finance Work flow:
A. LC applicant will open LC on behalf of importer to the exporter (LC Beneficiary). After shipment against documents LC applicant will issue acceptance subject to conditions basis.
B. Containers will arrive in port with 30 days free detention. Containers will be booked by the LC Applicant.
C. Shipment Documents will be sent to the importer’s or consignee’s bank on 30/45 days DA basis . So the ultimate importer can collect/retire documents from bank and can release containers.
How the transaction will work:
A. LC applicant first will open LC .
B. LC can be at sight for 30/45 days Usance. LC will be valid for 90 days.
C. Beneficiary of LC or exporter will make shipment.
D. Beneficiary or exporter will submit documents in his bank .
E. Beneficiary bank will send documents to LC applicant’s bank for acceptance against documents.
F. LC applicant will issue acceptance of payment at sight or will give acceptance that after 30/45 days LC issuing bank will pay .
G. LC applicant will send documents to the consignee’s bank asking for acceptance .
H. Consignee’s bank will issue at sight payment to LC applicant’s bank against the documents or they will also send acceptance of payment to LC applicant’s bank that on 30/45 days maturity date they will pay LC applicant’s bank and then importer’s/ consignee’s bank will finally release the documents to consignee.
Benefit: Importers can import without engaging FDR or limit. Exporters can recommend importer to utilize this LC facility.
1. How will the importer get the product and how will the importer pay back to you?
Answer : DA means documents against acceptance . So when the importer’s bank will receive documents they have to issue acceptance to LC applicant’s bank to release the BL copy from the bank to release the containers . In that way LC issuing bank will get payment from the importer’s bank against the acceptance they gave to retire the documents .
2. What is the security of the importer?
Answer: consignment is coming in the name of importer so the transaction is secured. Additionally importers can take business insurance coverage from Allianz Trade (Euler Hermes) or Coface through us.
3. What volume can you do?
Answer : Minimum 200,000 USD to any amount of LC we can arrange .
4. Any Hidden Charges ?
Answer: only one hidden charge is money movement charges which is negligible and on actual cost basis.
5.Who will do the quality inspection ?
Answer: SGS, Bureau Veritas, Cotecna etc.
6.Who are the parties here?
Answer: LC applicant is financier and notify party. Exporter or shipper is LC beneficiary. Consignee is the ultimate importer. Ametheus Fintech & Offshore logistics Pvt Ltd is the facilitator of this entire transaction.
7.Is there any upfront charges?
Answer: Client has to pay LC issuing charges upfront.
8. Which products are allowed to do ?
Answer: Commodities and other non perishable items which has index basis price indication.