Import and export payment methods
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The World Bank regulates international imports and exports through guidelines that facilitate payment procedures for developing countries. Its primary roles include promoting foreign investment and international trade, as well as providing capital investment facilities via two branches: IBRD for middle-income countries and IDA for the poorest countries. Key financing methods include banker's acceptance, working capital financing, medium-term capital goods financing, and countertrade.
Import and export payment methods
- 1. World Bank regulates imports and exports in between various countries. It sets certain mandatory guidelines to follow for easing payment procedures via IBRD and IDA. Import and Export Payment Methods
- 2. An international creditor to developing countries It’s Goal: Making the world free of poverty. Three Prime Roles: Promote foreign investment Promote international trade Provide facility of capital investment World Bank
- 3. Two Branches of World Bank International Bank of Reconstruction & Development (IBRD) • Provides loans to under-developing countries’ middle-income group International Development Association (IDA) • Lends money to the poorest countries as grants and credits at no interest rate
- 4. Four methods are used in import and export business: 1. Banker’s Acceptance (BA) 2. Working Capital Financing 3. Medium-Term Capital Goods Financing 4. Countertrade Methods of Finance
- 5. Role of Banker’s Acceptance (BA) For making payment to the importer. Time bound draft Importer’s bank clear it at maturity date BA can be encashed in the money market by selling it. Acceptor bank charges all-in-rate, including discount rate and commission.
- 6. It is short terms loan. Helps in moving on working capital Done by purchasing inventory until it gets converted in cash Role of Working Capital Financing
- 7. Role of Medium-Term Capital Goods Financing It is a promissory note. Issued for 3 to 7 years. Issued to pay for importing capital goods Exporter sells it to banks without delay.
- 8. Interlinking financial transaction It links export of goods to import of goods from the same country Types: Barter, Compensation and Counterpurchase Occurs between the government and the multinational traders Role of Countertrade
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