What is Buyer's Credit?
Buyer's Credit is a short-term trade finance facility that allows an importer to raise funds from an overseas bank/financial institution to pay their overseas supplier, typically at a more competitive interest rate than domestic borrowing. The Indian bank facilitates the arrangement by issuing a Letter of Undertaking/Letter of Comfort in favor of the overseas lender, while the importer repays the buyer's credit lender on the due date.
This facility helps importers manage their cash flows better, availing competitive international interest rates while ensuring timely payments to overseas suppliers.
How Buyer's Credit Benefits Your Business
- Access to competitive international interest rates for import payments
- Better cash flow management by deferring outflow for imports
- Immediate payment to overseas suppliers, improving trade relationships
- Can be availed for both capital goods and raw material imports
- Flexible tenure aligned with the operating cycle
Basic Eligibility for Buyer's Credit
- Business engaged in genuine import trade transactions
- Satisfactory banking relationship and import track record
- Valid import documentation (Bill of Entry, invoice, purchase order)
- Sound financial standing and repayment capacity
- Compliance with RBI/FEMA guidelines for external trade credit
Facility Details
| Parameter | Details |
|---|---|
| Rate of Interest | Benchmark rate (SOFR) + margin, typically 1% to 3% p.a. over benchmark |
| Professional Segment | Benchmark + 0.75% to 2% p.a. |
| Minimum & Maximum Loan Amount | ₹10 lakhs to ₹25 crores+ (equivalent) |
| Minimum Business Vintage | Minimum 2–3 years of import business experience |
| Age Limit | Min 25 years – Max 65 years |
Documents Generally Required
- KYC of business and promoters
- Import documents (Purchase Order, Invoice, Bill of Entry)
- Last 2–3 years' financial statements
- Bank statements (last 12 months)