Introduction
It is the trade finance business under trade settlement carried out for our customers with the cargo acceptable to Bank of China as the pledge. Business varieties are limited to the financing services under such businesses of import L/C issuance/documentary bill, inward collection documentary bill, outward remittance (only for payment on delivery) as well as domestic comprehensive factoring. When the time is ripe, the business can be gradually extended to some other types.
Functions
It's another credit guarantee other than the traditional measures of pledge of immovable properties and third party guarantee, and can meet the financing demands for customers who have credit bottleneck.
Features
1. The product sets up new credit channels for customers and solves financing difficulties for small and medium enterprises (SMEs). Meanwhile, it helps large enterprises in its customer maintenance and in enhancing the overall competitiveness of their supply chains.
2. It revitalizes customers' goods and reduces occupation rate of other pledges.
Target Customers
Customers with urgent need for financial support because of larger goods turnover and good market, but have limited pledges besides their stock of goods, thus are not able to acquire enough credit line from the bank for its financing demand.
Relevant Charges
It is charged on the basis of handling fees and financing interests of various products.
Application Qualifications
1. Basic Qualifications of Customers
(1) Customers should be verified and registered with the industrial & commercial administration authorities above county level, having corporate business license after annual inspection, or other valid certificates which is sufficient in proving its operation legitimacy and business scope, as well as valid loan card after annual inspection, and account opening permit. Customers should also have the import/export operation qualification if they are conducting goods-pledged financing business under such items as import L/C issuance/documentary bill, inward collection documentary bill, outward remittance (limited to payment on delivery).
(2) Operational term should be over two years for goods to be pledged. Customers should have stable channels for purchasing and marketing, middle- and upper-level operational performance in the local industry and have relatively stronger capability of risk resistance;
(3) Customers shall obtain credit rating from Bank of China and have no bad records, and shall have no bad credit record within the credit reference system of the People's Bank of China.
2. The underlying transaction should have an authentic trade background. It is strictly prohibited by Bank of China that group customers obtain funds from the bank by making use of the relationship between associated companies through pledging goods.
3. Rights of goods pledge can be set legally and effectively and can be acquired by Bank of China.
4. The financing funds are used for payments through Bank of China.
5. The finance term is limited to one year (including one year).
Process
1. L/C issuance/documentary bill are carried out under import L/C business and spot D/P is carried out under inward collection service
(1) Customers provide necessary materials to Bank of China for business processing.
(2) Bank of China occupies credit quota and signs the General Agreement of Deposit Pledge with customers and the part other than the pledge guarantee sum is charged with additional margin.
(3) Customers sign the Contract of International L/C Issuance (for Goods-Pledged Financing) or Import Bill Advance Contract (for Goods-Pledge Financing) with Bank of China. As for the part of goods-pledged guarantee, the Pledge Contract (Exclusive for Goods-pledged Financing Business) is signed.
(4) Under import L/C service, Bank of China issues payment L/C to customers with Bank of China as the paying bank or deferred payment bank, or signs Import Bill Advance Contract (for Goods Pledge Financing Service) with customers, conducts bill advance service and processes payment. It is required that the beneficiary should inform Bank of China by fax or e-mail about the shipment and provide relevant certificates within two working days after shipment. Under inward collection (D/P), Bank of China provides customers with documentary bill service and conducts outward payment.
(5) In principle, the beneficiary is required to submit the cargo examination proofs issued by some authoritative examination institutions.
(6) Upon the cargo's arrival, customers and Bank of China will sign the Moveable Property Pledge Supervision Agreement with the cooperative supervision unit.
(7) Bank of China delivers the documents to customers, who submit the bills of lading to cooperative storage supervision unit designated by Bank of China. The supervision unit conduct the procedures of pick-up of goods, examination, customs clearance, warehousing, etc, on behalf of the customers.
(8) Bank of China keeps the pledge until the customers have paid back the principal and interest of the financed funds or until customers complement the deposit for letter of credit issuance under usance L/C. If the goods arrive prior to the document, on goods arrival the customers can apply for goods pledge guarantee and can conduct pledge by signing relevant contracts or agreements.
2. Financing Services under Outward Remittance
(1) On goods' arrival, customers should submit necessary materials for the remittance service to Bank of China.
(2) Bank of China occupies customers' credit quota, and customers themselves should implement the remittance of the part other than the pledge guarantee sum.
(3) Customers and Bank of China sign the Outward Remittance Finance Contract (for Goods- Pledged Financing Business) and the Pledge Contract (for Goods-Pledged Financing Business), and meanwhile customers and Bank of China sign the Moveable Property Pledge Supervision Agreement with the cooperative supervision unit designated by Bank of China.
(4) Bank of China conducts the financing service under the outward remittance for customers and makes outward payments.
(5) Bank of China keeps the pledge until customers pay back the principal and interest of financing business.
3. Domestic Comprehensive Factoring Service
(1) The buyer and the seller sign the sales contract.
(2) The seller applies to Bank of China for domestic comprehensive factoring service.
(3) Bank of China occupies goods pledge credit quota of the buyer and charges an additional margin on the part other than the pledge guarantee sum.
(4) Bank of China signs the Agreement on Domestic Factoring Risk Undertaking and Pledge Contract (for Goods-Pledged Financing Business) with the buyer in advance.
(5) The seller signs the Domestic Comprehensive Factoring Agreement with Bank of China.
(6) The seller delivers goods to the storage supervision unit designated by Bank of China, transfers the accounts receivable to Bank of China and submits corresponding invoices.
(7) The storage supervision unit issues an in-warehouse list to Bank of China confirming that the actual warehousing contents conform to that on the invoices.
(8) Bank of China fills the List of Collaterals for moveable properties pledge in the Pledge Contract (for Goods-Pledged Financing Business), and sign the Moveable Property Pledge Supervision Agreement with the buyer and the storage supervision unit.
(9) Bank of China provides the seller with the domestic comprehensive factoring finance.
(10) Bank of China keeps pledge until the buyer makes full payment.
(11) After the payment is completely made to Bank of China, the seller's previous principal and interest of financing will be deducted and the balance will be transferred to the seller.
Case
As a medium-size foreign trade company, Company A focuses on the operation of chassis and accessories of fire emergency vehicles. The company has the stable channel for purchasing and marketing, it imports vehicle chassis from overseas according to the orders from a leading domestic fire emergency vehicle manufacturer, as well as conducts import settlement by means of L/C. Since the Chinese Government pays higher attention to public safety this year, demand for fire emergency vehicles thrives. Therefore, Company A has no worry about its sales and enjoys good earnings. However, it is confronted with following problems at the same time: the company has a stable channel for purchasing and marketing with large quantity of goods turnover, and the company urgently needs financial support from banks. But due to its limited fixed assets, plus its average financial condition, it is difficult for the bank to offer a sufficient credit line according to usual standards and channels.
Company A turns to Bank of China for solutions to problems above. After researching the company's condition, Bank of China recommends Company A with the "Rong Huo Da" product and designs a solution scheme as follows:
1. Company A pledges the imported goods under L/C to Bank of China, which entrusts Company C to be in charge of the storage supervision, meanwhile Bank of China conducts the import bill advance financing business for foreign payment for Company A according to some certain pledge rate and identified goods value, and the gap is paid by Company A with its own funds.
2. Company A makes payments to Bank of China in batch for goods redemption, which is used for domestic sale. Company C delivers goods to Company A in batches as per Bank of China's instruction.
3. Company A pays Bank of China all the principal and interest of financing, Bank of China instructs Company C to release the remaining pledged goods, which concludes the business. Thanks to Bank of China "Rong Huo Da" product, the problems confronted by Company A have been completely solved:
(1) Bank of China opens a new credit channel for Company A, efficiently solves its financing problem and meets its finance demands, with goods as the pledge;
(2) The product helps Company A in revitalizing its goods and reducing its occupation of other pledges.
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