A PROJECT REPORT ON OPERATIONS OF EXTERNAL TRADE FINANCE IN ING VYSYA BANK LTD.

submitted in the partial fulfilment of the requirement of award of the degree:Master In Foreign Trade

Under supervision of: Mr Heera singh Operation manager ING vysya bank ltd. Varanasi branch

submitted by: Monika Manglani

Submitted to:

Banaras Hindu Universty

(FACULTY OF COMMERCE)

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DECLARATION
I hereby to declare that the work for the Dissertation report entitled retail banking operation in ING vysyabank is completely done by me, based on my work conducted in ING vysya bank Varanasi branch I also declare that this project work has not been submitted to any other university or Institution for the award of any degree, diploma, fellowship or other similar title. Admittedly, I have received suggestions and guidance from my guides for the partial fulfillment of M.F.T

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ACKNOWLEGEMENT
The satisfaction Euphoria that accompany the successful completion of any work would be incomplete unless we mention the name of the person, who made it possible, who constant guidance and encouragement served as a beckon of light and crowned our efforts with success. I consider it a privilege to express through the pages of this report, a fewwords of gratitude and respect to those who guided and inspired in the completion of this project. I am deeply indebted toMr. Joy prakashdutta(Branch Head)for giving me the opportunity to undergomy project in their esteemed organization and the theirtimely suggestions & Valuable guidance. I also want to give thanks to Mr Heerasingh (operation manager ) and Mr MohdShakeelahmad (customer care manager)They constantly encouraged me and showed the right path from day first till the completion of my project I would like to confer the flower of acknowledgement to Mr.prashan kumar(coordinator MFT) who taught me that how to do project through appropriate tools and techniques. Because ING VYSYA BANK has given me a chance to do my integrated project report. Last but not the least I am indebted to my parents & my friends who provided me their time, support and inspiration needed to prepare this report. Date Place Signature Monika Manglani

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PREFACE
With the enactment of foreign exchange management act (FEMA) 1999 there has been considerable relaxation in regulatory provisions in trading activities. In tune with the objective of facilitating external trade and payments and for promoting orderly development and maintenance of foreign exchange market in India, the delegatory powers vested with the Authorized Dealers have been augmented considerably. In the upshot both banks and customers desiring to carry out foreign exchange transactions need to keep themselves abreast of the applicable regulatory requirements and guidelines. Regulatory requirements relating to trade applicable to different target group of individuals, corporates, and other entities are spread over various sources. Trade is an important part of commerce. It refers to the sale, transfer or exchange of goods and services for a certain price. Exchange of goods and services is the basis of trade. At ING VYSYA Bank, they have always been committed to understand customers needs. ING VYSYA Bank offers a wide range of export services designed to assist the business and its opportunities around the world. Routing all the trade related transactions it helps in facilitating all the export related hassles of the customers.

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EXECUTIVE SUMMARY
This report is an attempt to study external trade finance as a whole, especially in ING VYSYA Bank. In this report the activities related to export, import, letter of credit, bank guarantee, inward remittance and outward remittance have been highlighted which propose to strengthen and foster economic growth in Indian subcontinent. The contribution of banks in the development of international trade is remarkable. In this report the trade dealings of ING VYSYA Bank has been tried to be covered. Since trade finance in itself is a very vast topic and it cannot be covered in just 80-90 pages I centered highly on the external trade finance dealings. The report contains various information on trade finance. For convenience the report has been divided in five parts, introduction of banking, introduction to trade finance, external trade finance services provided by ING VYSYA Bank, various tools adopted b ING VYSYA Bank to facilitate international transactions and findings. Introduction consists of a brief introduction of history of banking. Apart from that it explains the history, policies and various achievements of ING VYSYA Bank.
The second chapter consists of part one port external trade and its type named; import and export. The second part consist of various types of international trade settlements, which are the way in which money from a country goes to another country.

The third chapter consists of external trade finance services provided by ING VYSYA Bank. These services are divided into four parts such as: import of goods and services including letter of credit and bank guarantee, export of goods, inward remittance and outward remittance. it covers documentations, procedures and charges. The fourth chapter describes the various tools adopted by ING VYSYA Bank to facilitate
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international trade. It includes foreign exchange, nostro account, and tools to avoid most common discrepancies in international trade.
The fifth chapter describes about my findings. The chapter consists of three parts viz., basic findings which consist of analysis of the questionnaire which I got filled up by the customers of the bank, SWOT analysis of trade in ING VYSYA Bank and conclusion or the third part of the findings contains my suggestions which is based on my research of the trading activities in the bank.

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OBJECTIVE
Trading is the important part of commerce. The external trade becomes important for any developing country. In international trade the role of intermediaries (authorized dealers or banks) is increditable, as they provide financial services to do the trade internationally.

The main objective of the research is to understand the customers requirements, who are engaged with international trade.

Other objectives of the research are as follows:

To understand various financial services and their activities available to the customers in ING VYSYA Bank.

To analysis the strengths, weakness, opportunities and threats of the ING VYSYA Bank in international trade.

There was a time when corporations played a minor part in our business affairs, but now they are playing the chief part, and most men are the servants of corporations. - Woodrow Wilson, the new freedom

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CHAPTER-1

INTRODUCTION

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BANKING HISTORY IN INDIA

The story of banking starts from Bank of Hindusthan established in 1779 and it was first bank at Calcutta under European management.In 1786 General Bank of India was set up.Since Calcutta was the most active trading port in India, mainly due to the trade of the BritishEmpire, it became a banking center. Three Presidency banks were set up under charters from the British East India Company- Bank of Calcutta, Bank of Bombay and the Bank of Madras. These workedas quasi central banks in India for many years. The Bank of Calcutta established in 1806 immediately became Bank of Bengal. In 1921 these 3 banks merged with each other and Imperial Bank of India got birth. It is today's State Bank of India. The name was changed after India's Independence in 1955. So State bank of India is the oldest Bank of India.In 1839, there was a fruitless effort by Indian merchants to establish a Bank called Union Bank. It failed within a decade. Next came Allahabad Bank which was established in 1865 and working even today. The oldest Public Sector Bank in India having branches all over India and serving the customers for the last 145 years is Allahabad Bank. Allahabad bank is also known as one of India's Oldest Joint Stock Bank. The Oldest Joint Stock bank of India was Bank of Upper India established in 1863 and failed in 1913. The first Bank of India with Limited Liability to be managed by Indian Board was Oudh Commercial Bank. It was established in 1881 at Faizabad. This bank failed in 1958.The first bank purely managed by Indian was Punjab National Bank, established inLahore in 1895. The Punjab national Bank has not only survived till date but also is one of the largest banks in India. However, the first Indian commercial bank which was wholly owned and managed by Indians was Central Bank of India which was established in 1911.

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INDIAN BANKING SYSTEM

RESERVE BANK OF INDIA

SCHEDULE BANKS

NON- SCHEDULE BANKS

STATE CO-OP BANK

COMMERCIAL BANK

CENTRAL CO-OP BANKS AND PRIMARY CR.SOCIETIES

COMMERCIAL BANK

INDIAN

FOREIGN

1 ING VYSYA PUBLIC SECTOR BANK PRIVATE SECTOR BANK 2 ING VYSYA 3 ICICI BANK

STATE BANK OF INDIA AND ITS OTHER SUBSIDIES OTHER NATIONALISED BANK

REGINAL RURAL BANK

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INDIAN BANKING INDUSTRY

The banking scenario in India has been changing at fast pace from being just the borrowers and lenders traditionally, the focus has shifted to more differentiated and customized product/service provider from regulation to liberalization in the year 1991, from planned economy to market. Economy, from licensing to integration with Global Economics, the changes have been swift. All most all the sector operating in the economy was affected and banking sector is no exception to this. Thus the whole of the banking system in the country has undergone a radical change. Let us see how banking has evolved in the past 57 years of independence. After independence in 1947 and proclamation in 1950 the country set about drawing its road map for the future public ownership of banks was seen inevitable and SBI was created in 1955 to spearhead the expansion of banking into rural India and speed up the process of magnetization. Political compulsions brought about nationalization of bank in 1969 and lobbying by bank employees and their unions added to the list of nationalized banks a few years later. Slowly the unions grew in strength, while bank management stagnated. The casualty was to the customer service declined, complaints increased and bank management was unable to item the rot. In the meantime, technology was becoming a global phenomenon lacking a vision of the future and the banks erred badly in opposing the technology up gradation of banks. They mistakenly believed the technology would lead to retrenchment and eventually the marginalization of unions.

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The problem faced by the banking industry soon surfaced in their balance sheets. But the prevailing accounting practices unable banks to dodge the issue. The rules of the game under which banks operated changed in 1993. Norms or income Recognition, Assets classification and loan loss provisioning were put in place and capital adequacy ratio become mandatory. The cumulative impact of all these changes has been on the concept of state ownership in banks. It is increasingly becoming clear that the state ownership in bank is no longer sustainable. The amendment of banking regulation act in 1993 saw the entry of new private sector banks and foreign banks.

MAJOR PLAYER IN INDIA

ING VYSYA BANK LTD ICICI BANK LTD STATE BANK OF INDIA LTD PUNJAB NATOINAL BANK LTD BANK OF BARODA LTD FEDERAL BANK LTD AXIS BANK LTD ING VYSYA BANK LTD IDBI BANK LTD INDUSIND BANK LTD YES BANK LTD

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Company Overview
ING Vysya Bank Ltd., is an entity formed with the coming together of erstwhile, Vysya Bank Ltd, a premier bank in the Indian Private Sector and a global financial powerhouse, ING of Dutch origin, during Oct 2002. The origin of the erstwhile Vysya Bank was pretty humble. It was in the year 1930 that a team of visionaries came together to form a bank that would extend a helping hand to those who weren't privileged enough to enjoy banking servies It's been a long journey since then and the Bank has grown in size and stature to encompass every area ofpresent-day banking activity and has carved a distinct identity of being India's Premier years of service to the nation and post 1985; the Bank made rapid strides to reach the coveted position of being the number one private sector bank. In 1990, the bank completed its Diamond Jubilee year. At the Diamond Jubilee Celebrations, the then Finance Minister Prof. MadhuDandavate, had termed the performance of the bankStupendous. The 75th anniversary, the Platinum Jubilee of the bank was celebrated during 2005.

The origin of ING Group

On the other hand, ING group originated in 1990 from the merger between Nationale Nederlanden NV the largest Dutch Insurance Company and NMB Post Bank Group NV. Combining roots and ambitions, the newly formed company called Internationale Nederlanden Group. Market circles soon abbreviated the name to I-N-G. The company followed suit by changing the statutory name to ING Group N.V..

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Profile
ING has gained recognition for its integrated approach of banking, insurance and asset management. Furthermore, the company differentiates itself from other financial service providers by successfully establishing life insurance companies in countries with emerging economies, such as Korea, Taiwan, Hungary, Poland, Mexico and Chile. Another specialization is ING Direct, an Internet and direct marketing conceptwith which ING is rapidly winning retail market share in mature markets. Finally, ING distinguishes itself internationally as a provider of employee benefits, i.e. arrangements of non wage benefits, such as pension plans for companies and their employees.

Mission
ING`s mission is to be a leading, global, client-focused, innovative and low-cost provider of financial services through the distribution channels of the clients preferencein markets where ING can create value.

Strategy
INGs overall mission is to help customers manage their financial future. Capitalizing on changing customer preferences and building on o ur solid business capabilities, INGs strategic focus is on banking, investments, life insurance and retirement services. They provide retail customers with the products they need during their lives to grow savings, manage investments and prepare for retirement with confidence. With wide range of products, innovative distribution models and strong footprints in both mature and developing markets, ING has the long-run economic, technological and demographic trends on their side. ING aligns its business strategy around a universal customer ideal: saving and investing for the future should be easier. While steering the business
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through turbulent times, ING will execute efforts across all its business lines to strengthen customer confidence and meet their needs, preserve a strong capital position, further mitigate risks and bring its costs in line with revenue expectations.

Corporate Responsibility
ING wants to pursue profit on the basis of sound business ethics and respect for its stakeholders. Corporate responsibility is therefore a fundamental part of INGs strategy: ethical, social and environmental factors play an integral role in business decisions

The new identity

The immediate benefit to the bank, ING Vysya Bank, has been the pride of having become a Member of the global financial giant ING. As at the end of the year December 2011, ING's total assets exceeded 39000 crand ,employed over 125000 people, served over 85 million customers, across 50 countries. This global identity coupled with the back up of a financial power house and the status of being the first Indian International Bank,would also help to enhance productivity, profitability, to result in improved performance of the bank, for the benefit of all the stake holders.

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Milestones in the long journey of ING VYSYA Bank

1930 Set up in Bangalore

1948

Scheduled Bank

1985

Largest Private Sector Bank

1987

The Vysya Bank Leasing Ltd. Commenced

1988

Pioneered the concept of Co branding of Credit Cards

1990

Promoted Vysya Bank Housing Finance Ltd

1992

Deposits cross Rs.1000 crores

1993

Number of Branches crossed 300

1996

Signs Strategic Alliance with BBL., Belgium. Two National Awards by Gem &Jewellery Export Promotion Council for excellent performance in Export Promotion

1998

Cash Management Services, & commissioning of VSAT. Golden Peacock Award - for the best HR Practices by Institute of Directors. Rated as Best Domestic Bank in India by Global Finance (International Financial Journal June 1998)

2000

State

-of

the

-art

Date
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Centre

at

ITPL,

Bangalore.

RBI clears setting up of ING Vysya Life Insurance Company 2001 ING-Vysya commenced life insurance business.

2002

The Bank launched a range of products & services like the VysVyapar Plus, the range of loan schemes for traders, ATM services, Smartserv, personal assistant service, Save & Secure, an account that provides accident hospitalization and insurance cover, Sambandh, the International Debit Card and the mi-b@nk net banking service

2002

ING takes over the Management of the Bank from October 7th , 2002

2002

RBI clears the new name of the Bank as ING Vysya Bank Ltd, vide their letter of 17.12.02

2003

Introduced customer friendly products like Orange Savings, Orange Current and Protected Home Loans

2004

Introduced Protected Home Loans - a housing loan product Introduced Solo - My Own Account for youth and Customer Service Line Phone Banking Service

2005

2006

Bank has networked all the branches to facilitate AAA transactions i.e. Anywhere, Anytime & Anyhow Banking

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ING VYSYSA BANK TOP MANAGEMENT

Names Designation SBU/Function Place

Ashok Rao B Chief of Staff Jan Van Wellen Janak Desai Jayant Mehrotra Chief Risk Officer, Country Head Wholesale Banking Chief Financial Officer Legal and Compliance, Vigilance and Special Projects Credit Operational & Market Risk Treasury & Wholesale Banking Finance & Accounts Operations Internal Audit Department Information & Technology Human Resources Private Banking Retail Banking Bangalore Bangalore Mumbai Bangalore Bangalore Bangalore Bangalore Bangalore Mumbai Bangalore Bangalore

Meenakshi A Head - Operations MSR Manjunatha Prasad C V G Prasad J M Samir Bimal Shailendra Bhandari Uday Sareen Chief Audit Executive Chief Information Officer Chief - Human Resources Country Head - Private Banking Managing Director & Chief Executive Officer Country Head - Retail Banking

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Working result of the bank for the quarter ended 30 june 2012
ING Vysya Bank Q1 Net Profit up 38% and Operating Profit up 48% Performance at a Glance: Q1 FY 13 v Q1 FY 12 Net Profit up 38% to Rs. 130.1 crores Net Interest Income up 31% to Rs. 343.3 crores Net interest margin improved to 3.29% from 3.02% Operating profit up 48% to Rs. 217.5 crores Cost income ratio lower at 57.7% from 63.5% Return on Assets improves to 1.11% from 0.95% Gross Advances up 23% to Rs. 29,801 crores Deposits up 15% to Rs. 35,878 crores CASA Ratio at 33.3%. Core CASA ratio stood at 32.0% Provision cover up to 90.4% from 83.9% Net NPA improves to 0.19% from 0.35% & Gross NPA improves to 1.97% from 2.15% Commenting on the results, Managing Director, Shailendra Bhandari said:We have started the year on a strong note, advance growth is at 22.9% and deposits at 14.6%. NIMs are substantially higher at 3.29% over the corresponding quarter of the previous year and our cost income ratio has improved to 57.7% from 63.5% resulting in a significant increase in operating profit growth of 48.1%. Our asset quality continues to remain healthy with Gross NPA at 1.97% and Net NPA at 0.19%. We did not restructure any assets during the quarter. We have also achieved an important milestone in the quarter, total outlets of the Bank have crossed 1,000 and as of 30 June 2012 we have 1,001 outlets comprising of 527 branches and extension counters, 28 satellite offices and 446 ATMs.

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Financial Indicators
In Rs. Crores Q1 2012-13
343.3 171.0 514.2 296.7 217.5 26.7 190.8 60.7 130.1

Q1 2011-12
262.0 140.5 402.5 255.7 146.8 6.2 140.6 46.6 94.0

% growth
31.0% 21.7% 27.8% 16.1% 48.1% 329.7% 35.7% 30.3% 38.4%

Net Interest Income Other Income Total Income Operating Costs Operating Profit Provision & Contingencies Profit before Tax Provision for Taxes Profit after Tax

Business Highlights
Total Deposits were Rs. 35,878 crores at the end of June 2012, up from Rs. 31,313 crores as at the end ofJune 2011. Current and Savings (CASA) deposits grew by 13% to Rs. 11,936 crores from Rs. 10,588 croresas at end of June 2011. CASA ratio was at 33.3% of total deposits as at the end of June 2012 as against33.8% at the end of June 2011. However, after adjusting for certain large CASA deposits which flowed intowards the end of period, core CASA would have stood at 32.0% of total deposits. Gross Advances grew by 23% to Rs. 29,801 crores at the end of June 2012 from Rs. 24,256 crores as at endof June 2011. The Credit Deposit Ratio stood at 81.6% as at June 2012 as against 76.1% as at June 2011. The Capital Adequacy Ratio (CAR) of the Bank as at 30 June 2012 was 13.35% (as per Basel-II).
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Other Developments
The Bank continued to expand its footprint with the number of branches at 527 up from 515 same time lastyear and ATMs at 446 up from 409 same time last year. As of June 2012, the Bank has a total of 527branches and extension counters, 28 satellite offices and 446 ATMs. During the quarter, the Bank launched a first-of-its-kind savings product ING FD+, a fixed deposit schemeembedded with several innovations and high interest rates. The scheme, initially rolled out in Bangalore,enables customers to book an FD by sending an SMS; link FD with savings account and activate automaticsweep of funds if required; as well as withdraw cash from an ATM or write cheques to access their FD incase of shortfall in their savings account. The Bank also undertook outdoor marketing and radio campaignsin Bangalore to promote the product.

The Banks fixed deposits has been rated FAAA by national rating agency CRISIL with stable outlook.The rating agency substantiated these ratings taking note of Netherlands-based ING Groep NVs continuedsupport in providing management, funding, and operational support to ING Vysya. The ratings alsofactored in the banks comfortable capitalization and adequate resource profile. The Bank, along with its technology partner Infosys, won the coveted Asian Banker award for the BestCorporate Internet Banking Initiative category. ING Converge, the Banks corporate internet bankingportal, enables customers avail multiple products and services experiencing the convergence of multiple features and functionalities on a single-window platform with a single sign-on. Over 45 financial institutions from 14 countries across the Asia Pacific, and the Gulf region were evaluated for this award,instituted by Singapore-based Asian Banker.

The Bank, also won awards and recognition for its pre-paid forex travel card ING Multi-Currency Card andcustomer feedback programme Net Promoter Score (NPS). ING Multicurrency Card won the Best AdmiredService category while NPS won the Best Support Service category in the Banking Finance Services andInsurance Awards organized by the IPE-Stars of the Industry Group.

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Balancesheet - ING Vysya Bank Ltd.

Mar'12 Mar'11 Mar'10 12 12 12 Liabilities Months Months Months Share Capital 151.71 122.87 122.95 Reserves & Surplus 3,724.64 2,397.19 2,099.94 Net Worth 3,979.79 2,624.28 2,330.92 Secured Loans 5,696.49 4,146.91 3,671.39 Unsecured Loans 35,195.42 30,194.25 25,865.30 TOTAL LIABILITIES 44,871.70 36,965.44 31,867.60 Assets Gross Block 1,067.52 1,020.20 773.73 (-) Acc. Depreciation 577.31 530.94 485.40 Net Block 386.78 385.03 180.31 Capital Work in Progress. 10.58 13.58 207.60 Investments. 12,715.50 11,020.67 10,472.92 Inventories 0.00 0.00 0.00 Sundry Debtors 0.00 0.00 0.00 Cash And Bank 3,230.56 2,521.42 3,027.04 Loans And Advances 30,553.68 24,969.05 19,884.34 Total Current Assets 33,784.24 27,490.47 22,911.39 Current Liabilities 1,983.42 1,932.02 1,911.83 Provisions 145.42 116.51 100.81 Total Current Liabilities 2,128.84 2,048.53 2,012.64 NET CURRENT 31,655.40 25,441.94 20,898.75 ASSETS Misc. Expenses 0.00 0.00 0.00 TOTAL ASSETS 44,871.70 36,965.44 31,867.60 (A+B+C+D+E) Particulars Mar'09 12 Months 107.07 1,487.05 1,702.90 2,152.42 24,889.92 28,745.24 754.09 468.77 176.55 151.88 10,495.54 0.00 0.00 2,282.25 18,642.00 20,924.25 3,111.75 0.00 3,111.75 Mar'08 12 Months 102.47 1,323.67 1,535.66 1,249.81 20,498.06 23,283.52 706.82 429.31 167.99 121.70 6,293.32 0.00 0.00 3,184.76 15,662.61 18,847.37 2,256.39 0.00 2,256.39

17,812.50 16,590.98 0.00 0.00

28,745.24 23,283.52

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CHAPTER 2
Introduction to trade finance
Chapter two is all about how trade finance activities are carried out in the ING VYSYA Bank. It consists of all the things about the trading terms. Like every trade involves import, export, letter of credit, bank guarantee, inward remittance and outward remittance. Along with discussing the banks trading activities the concept of all the trading terms has been discussed below.

TRADE FINANCE
Trade is an important part of commerce. It refers to the sale, transfer or exchange of goods and services for a certain price. Exchange of goods and services is the basis of trade. Trade can be classified into two parts: External trade Internal trade

External trade
External trade or foreign trade involves trading of goods among countries of the world. Every country buys and sells different goods from and to other countries. Goods worth crores are bought and sold. Foreign trade is an important economic activity because it enables the countries participating in it to secure resources for economic development as well as for balance of payment. For some countries foreign trade is the most important economic activity because most of their industrial activities are dependant on it.

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Nature of external trade

It consists of export trade and import trade. Export trade involve sale of goods of purchases to other countries. Imports consist transactions from other countries. When goods are traded then it is called visible trade. External trade in services is called invisible trade. When goods are imported into a country with the purpose of re-exporting them to some country, it is known as entrepot trade. There are two types of external trade Import of goods and services Export of goods and services

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External Trade Services (in context to ING VYSYA Bank):

As a business professional they need flexibility, which helps in closing a deal faster, and maintaining goodwill with business associates. At ING VYSYA Bank, they have always been committed to understand customers needs.

Export of goods and services

ING VYSYA Bank offers a wide range of export services designed to assist the business and its opportunities around the world. Routing all the export related transactions it helps in facilitating all the export related hassles of the customers. The customers can get the following facilities with the expertise and experience of the bank: Faster payment Competitive exchange rates Increased control over foreign receivables Improved cash flows Competitive charges. All the above mentioned facilities are available for the following export bills: Export documents against payment Export documents against acceptance Export bills under letter of credit They also provide packing credit and bill discounting facilities.

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Import of goods and services

ING VYSYA Bank offers its customers a comprehensive range of import services. ING VYSYA bank is highly respected in the world of in international finance a cross border transaction. The bank has correspondent relationship with other reputed international banks throughout the world can provide all the services to importers who may be importing from any part of the world.

The following facilities are available for importers

Direct remittance
The customer may require the exporter overseas to dispatch the goods first and then remit the payment for the goods. The exporter would then dispatch the goods to the customer. The overseas exporter will then send the documents directly to customer. When customer approaches bank along with the documents for sending remittance to the exporter, bank ensures that the remittance is done promptly.

Documentation for Direct Remittance:

Request Letter cum Debit Authority cum OGL cum FEMA Declaration IE Code Number Certificate Form A1 KYC Report Transport Docs in original - Bill of Lading / Airway Bill Invoice Bill of Entry (Exchange Control Copy)

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Advance remittances
Overseas exporter may require customer to make full payment in advance for the goods to be exported. The exporter would dispatch the goods to customer after he receives full payment from importer.For this purpose, ING VYSYA Bank will make remittance in foreign currency to the exporter at a very competitive rate.

Documentation for sending Advance Remittance

Request Letter cum Debit Authority cum OGL cum FEMA Declaration IE Code Number Certificate Form A1. (Duplicate) KYC Report Purchase Order / Proforma Invoice with Advance payment term. Bill of Entry Declaration with Commercial Invoice Bank Guarantee from the Exporters Bank if Advance amount is > $ 1, 00,000.

Import bills under letter of credit

In a business cycle, as buyer needs to pay for his purchases in international and domestic markets. Letter of credit helps to facilitate purchase of goods in international and domestic trading operations.All ING Banks letters of credit issued are valued and accepted worldwide. When the importer opens an LC through ING Bank for imports of goods, it is an undertaking by ING VYSYA Bank that if the exporter exports the goods and produces the documents as stipulated in the Letters of Credit, then ING VYSYA Bank would honor the draft(s).

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Import collection
The exporter from overseas exports the goods the customer. The overseas exporter / exporter's bank sends the documents to ING VYSYA Bank on collection. Bank will then intimate the customer about the receipt of the documents. All customer need to do is to authorize us to debit your a/c and send the remittance to the exporters bank. If it is a sight bill (Documents against Payment), then the necessary documents and debit authority is collected from customer (importer) and remittance is paid to the exporters bank and the documents are released to him. If it is a usance bill (Documents against Acceptance), then the acceptance letter is taken from customer and the documents are released. On the due date remittance is made to the exporters bank by debiting customers account.

Letter of credit:
The letter of credit is demanded by the exporter to ensure its payment through a reliable source. The letter of credit is then issued by the importers bank that ensures the exporter that if the importer delays or fails to make the payment within stipulated period of time then the bank itself will make the payment. That is in any case the exporter will not be a sufferer and payment will be made to him. Being Indias leading private sectors bank, it assures its customers that all the letters of credit issued will be valued and accepted by all the business counterparts overseas.

Bank guarantee:
The bank issues bank guarantees on behalf of its customers to fulfill any obligation under the business contracts with the help of which the business can improve along with relationships with the bank.

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TYPES

OF

INTERNATIONAL/EXTERNAL

TRADE

SETTLEMENT
In international business the settlement can be done by the following ways:
Advance payment. Open account. Bill on collection basis. Follow up of overdue bills (when the terms are not under LC). Documentary credit

Advance payment:
When the buyers credit is doubtful or the seller wants the payment before dispatching the goods then he asks for the advance payment where the money is paid before taking the ownership of the goods.

Open account:
By an agreement between buyer and the seller manufactured goods will be delivered to the buyer directly or to his order and the buyer will pay at the end of the agreed period.

Bill on collection basis:

It is an agreement by which the seller after shipping the goods submits the documents to his bank as agent for collection. Bill of exchange may be defined as an order given by the exporter to the importer to pay the amount of sale value mentioned in it. It is sent along with the other documents by the exporter bank within 21 days of shipment of the goods (if the documents are - 30 -

under LC term then the bank may deny to make the payment to the exporters bank if the documents are received after 21 days, since it will treat it as a discrepancy. Once discrepancies have been found the exporter will get the amount only if the importer wishes. The issuing bank has no obligation in the case where any discrepancy is found) to the importer bank so that he can give it to importer. Bill of exchange is first among all the documents given to the importer and when importer makes the payment then only he is entitled to receive other documents with the help of which he can release his goods from the dock.

Bill of exchange is of two types:

Sight bill Usance bill When sight bill is presented to the importer he has to make the payment immediately to the exporter within a period of 7 days. At maximum 3 more days are given to him if he is unable to make the payment within 7 days. This method of payment is called D/P documents against payment. When agreement between exporter and importer provides for credit to be extended by the exporter for a certain period of time, a usance bill is prepared. It ranges between 10 days to 179 days. In such a case the method of payment is called D/A documents against acceptance. The bill of exchange is thus kept with the importers bank and is presented to the importer at the time of payment.

Follow up of overdue bills (when the terms are not under LC): It is the duty of the importers bank that if the payment by the importer is not made to
the exporter after the due date then he must return the documents back to the exporters bank within 180 days so that the exporters bank can crystallize the bill. If importers bank has not send the documents after 180 days then the exporter reports this to RBI(in case if the exporter is in India).RBI then prepares a list of defaulters. It will also make necessary adjustments in the balance of payments. When exporter gets his documents back he will call

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his goods also back to him. After this no transaction is possible. In such a case exporter has to look for alternate buyer.

Documentary credit:
It provides complete financial security to the seller of the goods. Once a letter of credit is established by the buyers bank on the behalf of the buyer in favour of the seller and the seller submits the set of required documents to the opening bank or to the nominated bank seller is assured of the payment.

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CHAPTER THREE EXTERNAL TRADE FINANCE SERVICES PROVIDED BY ING VYSYA BANK

Training is everything. The peach was once a bitter almond; cauliflower is nothing but a cabbage with a college education. - Mark Twain

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EXTERNAL TRADE FINANCE SERVICES PROVIDED BY ING VYSYA BANK

We can discuss the Trade finance services provided by ING VYSYA Bank into 4 parts:
Import of goods and services including letter of credit and bank guarantee Export of goods and services Inward remittance Outward remittance

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PART ONE
IMPORT OF GOODS AND SERVICES
Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. GSR 381(E) dated May 3, 2000 as amended from time to time.

IMPORT TRADE
INTRODUCTION
The Directorate General of Foreign Trade (DGFT) under Ministry of Commerce & Industry, Department of Commerce, and Government of India regulates import trade. Authorized dealers, while undertaking import transactions, should ensure that the imports into India are in conformity with the Export Import Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the directions issued by Reserve Bank under Foreign Exchange Management Act from time to time. Authorized dealers should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), etc. while opening letters of credit for import into India on behalf of their constituents.

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IMPORT OF GOODS
General: Rules and Regulations from the Exchange Control angle to be followed by the
authorized dealers while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, authorized dealers may be governed by normal trade practices. Authorized dealers may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Operations & Development) in all their dealings.

Form A 1: Applications by persons, firms and companies for making payments, exceeding
USD 500 or its equivalent, towards imports into India must be made on appropriate form A 1.

Import Licenses: Authorized dealers may freely open Letters of credit and allow
remittances for import of goods unless they are included in the negative list requiring licence under the EXIM Policy in force. In such cases, licenses marked For Exchange Control purposes should be called for and special conditions, if any, attached to such licenses adhered to Exchange Control copy of the import licence submitted by importer for opening of Letter of Credit or making remittance, when fully utilized, should be retained by authorized dealers and may be preserved till its scrutiny by the internal auditors or inspectors is completed.

Interest on Import Bills: Authorized dealers may allow payment of interest on usance
bills or overdue interest for a period of less than three years from the date of shipment at the rates prescribed in the Master Circular on trade credits.

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INTERNATIONAL TRADE
DOCUMENTRY CREDITS
STAGES OF DOCUMENTARY CREDIT
STAGE 1:
Buyer and Seller arrive at a contract for sale, specifying the terms of sale. Both the parties may not know the financial capacity of each other. As for the Seller is concerned he may prefer a bank should undertake the payment obligation of the buyer and payment should be made available to him immediately on dispatch of on the goods from his country. On the basis of this agreement Buyer (Applicant) requests his bank (issuing Bank) for undertaking the payment obligation on his behalf in favour of the Seller (beneficiary). The arrangement under which a bank on behalf of the buyer (lmporter) undertakes the payment under which a bank on behalf of certain documentary conditions, is known as Documentary Credit. As per the requirement of the contract and on the basis of the application given by the applicant, issuing Bank establishes the Letter of Credit and forwards the Letter of Credit to its Correspondent Bank (Advising Bank) in the Sellers country, which advises the Letter of Credit to the Beneficiary. At times, at the insistence of the Seller, Buyer requests Issuing Bank to make suitable arrangement with a bank in the Sellers country for releasing payment immediately to the Seller on submission of shipping documents per Sellers requirement. In such cases, the lssuing Bank requests a bank in the Sellers country or in any third country, to undertake the payment obligation on their behalf under this transaction. A bank in the Sellers country may agree for this arrangement subject to their Correspondent relationship with the Opening Bank.

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STAGE 2:
The beneficiary after shipping the goods will good will present the documents to his bank (Negotiating Bank) or he may have a choice of presenting the documents to the confirming bank directly. On receipt of the documents, the Negotiating Bank / Confirming bank will scrutinize it thoroughly and pay value to the exporter/beneficiary of the LC against the shipping documents. They will claim reimbursement from the bank notified by the issuing bank in the letter of credit. Simultaneously, negotiating bank will forward the documents to the issuing bank, which will hand over the document to the applicant after recovering the bill value. Applicant/importer will accept/pay for the bills if the documents are as per requirement.

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IMPORT LETTER OF CREDIT

Parties to a letter of credit transaction

Beneficiary/ sellerIn whose favour LC is opened

Applicant/ buyerOn whose behalf LC is opened

Opening bankThis opens LC

Advising bankWhich advices the LC

Parties to a letter of credit transaction

Reimbursing bankNostro bank

Confirming bankWhich confirms the LC

Negotiating bankBeneficiarys bank

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Applicant:
The applicant should give a precise detail for the opening of the letter of credit. The applicant should indemnify banks against rules and regulations imposed by the foreign countries. (Article 5 & 18)

Beneficiary:
The beneficiary in whose favour the credit is established can in ncase avail himself of the contractual relationship existing between the banks or between the applicant for the credit and the issuing bank. (Article 3)

Issuing bank:
The issuing bank gives a conditional undertaking and reimburses the negotiating bank against submission of the prescribed documents. It should verify the documents presented under the credit within 7 banking days following the day of receipt of the documents and if any discrepancy is found it will refuse reimbursement.

Advising bank:
The bank advising the letter of credit acts without any engagement on its part but will take reasonable care to check the authenticity of the Credit. If incomplete or unclear instructions are received, it will give the preliminary information to the Beneficiary without any responsibility on its part. (Article 7, 12)

Confirming Bank:
When the confirmation to a credit is added by a confirming bank at the specific request of the opening bank it constitutes a definite, equitable undertaking on the part of the Confirming Back

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in addition to the Opening Back, provided the stipulated documents are presented in accordance with the terms and conditions of the Credit with in the due date. (Article 9 & 13)

Negotiating Bank:
The nomination of a bank by the opening bank for negotiation of documents under a credit does not constitute any undertaking on the nominated bank unless the credit is confirmed by it. Negotiating bank may be the bank of the beneficiary of the credit and / or a bank, which pays value against a set of documents drawn under a credit. Issuing bank will reimburse the nominated bank if it has negotiated the documents as per the letter of credit terms. (Article 9&10)

Reimbursing bank:
Reimbursing bank will reimburse the claim made by the negotiating bank or by any claiming bank under a documentary credit under the authority of the opening bank. It need not insist for submission of any certificate of compliance from the negotiating bank along with their claim if it was not specifically insisted in the credit. Issuing bank will have prior arrangement or provide sufficient funds with the reimbursing bank for honoring the reimbursing claim as and when it is made. (Article19)

Types of documentary credit

Revocable- irrevocable credit
A revocable letter of credit may be amended or cancelled at any moment without the prior notice to the beneficiary. Irrevocable credit has to be amended or cancelled with the consent of Applicant and Beneficiary. - 41 -

Confirmed credit:
When a bank in the exporters country has added its confirmation by way of an additional undertaking to make payment at the specific request of the issuing bank, it becomes a confirmed credit (article 9).

Back to back credit:

In the case where exporter is not the actual manufacturer and he gets his work done by the sub - suppliers and if the sub suppliers demand letter of credit in their favour, the exporter approaches his banker to establish second set of letters of credit on the basis of export letter of credit received by him. The second set of credit opened by the bank at the request of the exporter is known as back to back credit.

Application for letter of credit

Application for the letter of credit requires the following information:
Revocable/irrevocable Without recourse Amount (state currency) By cable/ airmail/swift Beneficiarys full name and address Merchandise Shipment by steamer/post-parcel/airfreight Country of origin Usance of draft Freight prepaid/paid at destination Insurance by beneficiaries/covered here - 42 -

Part shipment/permitted /prohibited Transhipment permitted/prohibited Shipment from shipment to. Latest date of shipment Latest date of presentation of documents Documents must be presented for negotiation withindays from shipment date Licence no. Import permitted under pare noExim policy 2002-07 We confirm described merchandise can be imported against above mentioned licence/para of foreign trade policy 2004-09 (OGL) Special instructions, if any

Documents under the letter of credit

Draft:
The beneficiary should draw it as per the tenor stipulated in the letter of credit.It should be drawn either on the issuing bank or on the confirming bank or on the nominated bank as per the stipulations of the documentary credit.It should indicate the LC no. and the name of the bank.

Packing list:
It contains buyers name, items, dimensions, weight (gross and net both) of the goods, the quantity which is to be delivered.

Certificate of origin:The

goods, value, shipper, bill of lading number etc.

should be verified of their originality. This should be issued by the chamber of commerce or any other authority as indicated in the letter of credit. (Article 21) - 43 -

Work test certificate:

It certifies that the goods are well tested of their function as per the demand of the buyer.

Certificate of warranty:
It certifies regarding the warranty period of the goods.

Purchase order
It is the very first document between both the parties. It contains the details regarding the goods required to be purchased.

Certificate of compliance
It certifies that the terms of the purchase order has been well taken care of regarding well functioning of the goods and quickly dispatched

Commercial invoice:
The beneficiary as mentioned in the letter of credit should draw the invoice. It should be drawn in the name of the opener of the credit. The description of the merchandise should be exactly in agreement with that mentioned in the letter of credit. The reference number of the letter of credit and the bank, which has opened, should be mentioned in the invoice. The invoice value should not exceed the value of letter of credit. Terms of the contract such as CIF, CFR, and FOB should be clearly indicated in the invoice as mentioned in the credit. Other particulars such as bill of lading, shipping marks, Import Licence number, gross weight, net weight etc. The invoice should conform to article 37 of the UCPDC. - 44 -

Bill of lading:
The bill of lading should be in sets with the number of non-negotiable copies as stipulated in the letter of credit. The shipping company or its authorized agents should sign on it. It should be marked clean and should not have any indication to the defective conditions of packages or goods, etc. The description of the goods should be as per the letter of credit requirement and should agree with the description in the invoice. The letter of credit should call for shipped on board bill of lading. Bill of lading should evidence goods having being loaded on the vessel and also the date on which it was loaded. Freight prepaid or freight to be paid at destination should be clearly indicated in the bill of lading as per the letter of credit terms (article 33).

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CHARGES BY ING VYSYA BANK:

Type Of Transaction 1.0 Export Bills And Other Outbound Items 1.1 1.2 1.3 1.4 Negotiation/discounting of export bills under LCs Negotiation of bills under LCs through other banks in India Indemnifying/guaranteeing discrepant documents to other banks Export collection bills presented for purchase/discount Export collection bills including bills against which advance has been granted and bills for which payment in full or part has been received in advance Overdue bills (outstanding beyond 180 days from shipment) including bills negotiated, purchased, discounted, collection bills and deferred payment bills Purchase/encashment of travelers' cheques Purchase of drafts/cheques 0.15% flat minimum Rs. 1000 + interest for outlay of funds 0.15% flat minimum Rs. 1000 + interest for outlay of funds 0.15% min of Rs.1000/Flat Rs. 1000/0.075% with a min of Rs.750/- per bill. Charges

1.5

1.6 1.7 1.8

Rs.250/- per quarter (reckoned from the date overdue) Free of charge 0.25%, min Rs 250/-, plus interest charges Rs. 250/Rs.500/0.25% commission minimum Rs 250/and postage Rs.500/0.075% with a minimum of 750/- per bill Rs.1500/-

1.9 Reminder Swifts for collections/negotiations 1.10 Bills Returned unpaid Instruments for collection (cheques, drafts, 1.11 international money orders inforeign currency payable abroad or in India) 1.12 Dishonored bills / instruments / return charges Handling GR of bills directly dispatched by 1.13 drawers (cases where inward has been received) Reimbursement commission: 1.14 Where reimbursement under a L/C is claimed by an AD in INDIA with another AD in INDIA,
- 46 -

Reimbursement commission shall be recovered by the reimbursing bank 2.0 Letters Of Credit / Guarantees (Inward) 2.1 a. b. c. d. e. Advising of inward letters of credit / Guarantees (including inland L/Cs/Guarantees) Pre advising of LC / Guarantees Advising LC / Guarantees Advising amendments Transfer of letter of credit Cancellation of L Cs / Guarantees - After Expiry - Before Expiry

Rs.500/Rs.1000/Rs.750/Rs.1000/- for transfer of LCs and Rs 750/- for transfer of amendments Free of cost Rs.1000/-

3.0 Letters Of Credit (Import & Domestic) (Outward - Issued By Us) And Co- Acceptances * 3.1 a. b. 3.2 Opening of letters of credit including revolving L/Cs Commitment charge + Usance Import Inland Establishment of L/Cs With 100% cash margin Reinstatement commission (for revolving L/Cs) to be recovered at the time of issuing each reinstatement advise) Countersigning/ Co-acceptance of bills of exchanges guaranteeing payment on due date Amendments to L/Cs (For both Import and Inland L/Cs) Extension of period Enhancement of value Other amendments Revival of expired LCs Documents recd after Expiry, To be charged

1.25% p.a min of Rs. 3500/1.25% p.a min of Rs. 3500/1% p.a. min Rs.1000/As per 3.1 plus Rs.1000/- for each reinstatement 1% p.a, minimum Rs.1000/-

3.3 3.4 a. b. c. d. e.

1.25 % p.a min of Rs. 1000/1.25 % p.a min of Rs. 1000/Rs.750/1.25 % p.a min of Rs. 1000/1.25 % p.a min of Rs. 1000/-

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f.

as per 3.4 a In case import LC allows TT reimbursement, interest from the date of payment by the bank till bill retirement date will be charged. Discrepancy fee per bill to be incorporated in LC Retirement of Import/Inland bills on collection Dishonored bills / return charges Import Documents received directly by Importers TTs, MTs, drafts on us in respect of which cover has been received in the nostro account or cover to be obtained by drawing on remitting bank/their agents Where the credit is to accounts maintained with any of our branches including EEFC account Where the payment is to be made to other banks Located in places where our branches are present Where the payment is to be made to other banks located in places where we do not have presence On all foreign currency remittances: Other than for payment of imports Towards advance payment for imports Foreign DD Issuance of indemnity for missing B/L Relating to LCs opened by us or collections handled by IVBL Commission on Guarantees with 100% margin
- 48 -

4.0 Commission On Import/ Inland Bills (Under L C And Collection) a. b. c. d. USD 50 0.25% min Rs. 750/Rs.1000/0.15% min of Rs.750/-

5.0 Remittances - Inward a.

b.

Free DD/PO/RTGS/NEFT Charges as applicable plus Rs.750/DD/PO/RTGS/NEFT Charges as applicable plus Rs.1000/-

c.

d.

6.0 Remittances - Outward 6.1 a. b. c. 7.1 0.15% minimum Rs.750/0.15% min of Rs.750/Flat Rs.500/-

7.0 Guarantees * (Inland & Foreign)

Rs.1000/1.2 % p.a. min Rs.1000/-

7.2

7.3

All other Guarantees (performance/ financial, SBLC etc) For application to RBI for extension of time for realization of export proceeds beyond prescribed period (ETX form)/Extension within the delegated For processing any other application to RBI For filing request to other banks Issue of delivery orders Issue of FIRCs / Certificates / Attestations of export / import transactions Stamp duty Commercial information on Indian companies Follow up of Bill of Entry (for each half year) ECB file maintenance charges Approval for setting up wholly owned subsidiaries /JV/ branch offices abroad Approval for establishing Warehouses abroad Approval for export bill write off GR Approval letters Out of pocket expenses Postage Courier SWIFT Service tax Tracer thru swift Charges on Handling FC GPR/FC TRS cases Handling of files relating to establishment of Offices/branch/project offices in India Charges on request of Retrieval of Records age wise - Current year -1 year to 3 years - Above 3 years
- 49 -

2.40 % p.a. min Rs. 1000/-

8.0 Miscellaneous Charges 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9 8.10 8.11 8.12 8.13 8.14 a. b. c. d. e. f. g. h. h(i) h(ii) Rs.500/Rs.500/Rs.500/Rs.500/Rs.250/- per certificate As applicable To be quoted on case by case basis Rs.500/Rs.2500/- per half year Rs.7500/Rs.3000/Rs.500/Rs.500/Rs.100/Rs.750/Rs.500/As applicable Rs.250/Rs.5000/Rs.2500/-

Free of Charge Rs.250/- per record Rs.500/- per record

h(iii) - Above 5 years h(iv) - Above 8 Years 9.0 EEFC Account Credits / Debits 9.0 EEFC Account Credits / Debits

Rs.750/- per record Rs.1000/- per record Nil Commission & charges to be applied the same as Imports and Exports Commission & charges to be communicated on a case to case basis Rs.500/- + Service Tax Rs.250/- + Service Tax Rs.250/- + Service Tax & in case of Profit - No Credit is passes on to Customer.In cse of Loss - Loss will be recovered from Customer

10.0 Merchant Trade 10.0 Merchant Trade 11.0 Trade Credits 11.0 Trade Credits 12.0 Forward Contracts 12.1 Forward Contract Booking 12.2 Forward Contract Cancellation 12.3 Overdue Forward Contract Cancellation

Forward Contract Franking paper charges (to 12.4 be attached with forward contract Rs.100/- + out of pocket expenses confirmation) 13.0 Inland Bills Inbound /Outbound (Non LC & LC) 13.1 Negotiation/discounting of Inland bills 13.2 Inland collection bills (Non LC & LC) 13.3 Bills Returned unpaid 13.4 Discrepancy fee per bill Rs.750/- per Bill + interest for outlay of funds 0.0625% with a min of Rs.750/- per bill. Rs.500/Rs.1,000/-

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PART TWO EXPORT OF GOODS AND SERVICES

INTRODUCTION
As far as export is concerned the bank provides export finance to the exporting country as and when required. Export finance is a short term, working capital finance allowed to an exporter. Funds should be available to the exporter at the required time.

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EARN FOREIGN EXCHANGE HELP IN MEETING INTERNATIONAL OBLIGATION

IMPORT PAYMENT

BENEFITS OF EXPORT
FAVOURABLE BALANCE OF PAYMENT GENERATE EMPLOYMENT INCREASE GDP

- 52 -

TYPES OF EXPORT FINANCE

PRE-SHIPMENT FINANCE
It helps in financial assistance for the execution of an export order from the date of receipt of an export order till the date of shipment It is a type of loan or advance granted to an exporter for financing the purchase, processing or packing of goods on the basis of confirmed and irrevocable order or any other evidence including Letter of Credit.

Types of pre-shipment finance

Packing credit:

Follow up of packing Credit Advances: a) Submission of Stock Statement: Exporter should submit stock statement reporting the stocks, which are under pledge or hypothecation to the bank for securing the Packing Credit Advance. Frequency of submission of stock statement must be decided by the Authorized Dealer at the time of sanctioning the packing Credit and should be adhered to, by the exporter.

b) Physical inspection of stocks:

Stocks pledged/hypothecated by the exporter must be duly inspected by the Authorized Dealer at regular interval

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C) Liquidation of Packing Credit advances:

Packing credit advance will always be liquidated with the export proceeds of the relevant shipment. At this stage the pre-shipment liability of the exporter will be converted into post shipment liability. For any reasons, if export does not take place at all, the entire advance will be recovered at commercial rate penal interest as decided by the banks. With the recent liberalization and deregulation of interest rates, banks will have operational flexibility for liquidating packing credit advances as per RBIs guidelines issued with effect from 14.12.1994.

Criteria to be applied for allowing above relaxation:

Even though Reserve Back has now permitted the above relaxation for liquidating a Packing credit advance, each Bank has got their own conditions to extend this facility to the exportercustomer. In general, the following conditions are observed while extending this facility to the exporter: Bank should ensure that substitution is commercially necessary and unavoidable. The sanctioning authority must also satisfy him about the valid reasons as to why packing credit extended for shipment of a particular commodity cannot be liquidated in the normal. It is suggested that as far possible, the substitution of contract should be allowed if the exporter maintains account with the same bank or it has the approval of the members of the consortium.

Overdue Packing Credits and ECGC procedures:

If the borrower fails to pay the amount on due date / extended due date and bank considers it as overdue, an overdue report of advance should be made to concerned Regional / Branch office of ECGC in prescribed form within 30 days. If the overdue position persists, back should take necessary steps to realize dues as per its usual recovery procedure and the default to ECGC. This default report should be sent to

- 54 -

concerned Regional / Branch office of ECGC in prescribed form within one month from date of recalling the advance or within 4 month from date / extended due date of the loan amount whichever is earlier. Payment of ECGC premium may be discontinued after the month in which the default is reported to the month in which insolvency of the exporter is reported ECGC. Back should recover the overdue by liquidating the securities, if any, available. Nursing programme can be initiated, if found feasible, with the consent of ECGC. If recovery is not possible, bank can prefer Claim under the WTPC Guarantee within 6 months from the date of report of default.

Pre-shipment credit in foreign currency (PCFC)

PCFC was introduced on 8 November 1993.

FEATURES:
All convertible currencies Similar terms and conditions like P/C-L/C or Order Running Account also available Only for cash exports Banks may source the funds either by using the offshore funds available with them such as balances in EEFC /RFC/ ESCROW accounts Source of funds -Any foreign currency funds Prior permission of RBI not required Liquidated by discounting of bills under rediscounting of Export Bills abroad SELFLIQUIDATING. Cost of borrowing abroad not to exceed1% over LIBOR by the Banks (Competitive international rates). Exporters at a cost not exceeding 2% over the appropriate LIBOR excluding the holding tax by Banks having Overseas Branches and 2.5%by other banks. Normally for 180 days. - 55 -

If no export within 360 days PCFC adjusted at TT selling rate for currency concerned Interest will be charged at appropriate rates on rupee equivalent of the principal amount at ECNOS (plus a penal rate as per banks discretion). Running account facility can be given. Forward Contracts can be booked for future drawls account facility. It would be in order for banks to liquidate PCFC granted to a Diamond Dollar account holder by dollar proceeds from sale of cut and polished diamonds to another DDA holder. Diamond Dollar Accounts can be maintained by Firms/ Cos. With a track record of at least three years and having an average annual turnover of Rs.5 crores or above during the preceding three licensing years.

Running Account facilities

Effective 14 March 1992, banks can grant pre-shipment advances for exports of any commodity, without prior lodgment of L/C, export orders under Running Account.

Conditions for Running Account

Need-based facility Exporters with good track record L/Cs firm orders can be produced within reasonable time (for products under SCC L/Cs firm orders to be produced within one month Exporters in EOUs, EPZs and SEZs also eligible No such facility for sub-suppliers.

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POST SHIPMENT FINANCE

It is an advance against receivables which is in the form of shipping documents. If the bank has given the pre-shipment credit to the bank then he cannot deny the post-shipment credit, if asked.

TYPES OF POST SHIPMENT FINANCE

Export bills purchased/negotiated/discounted: The risk of non-payment is there if
letter of credit is not there. The risk is more pronounced if documents are under acceptance. In order to safeguard the interest of the bank and also the exporter, ECGC offers coverage of credit risks through their guarantees/policies at the post-shipment stage. The general banks cover the advance under the Whole Turnover Post Shipment Guarantee scheme. But the ING VYSYA Bank never trusts the ECGC. In addition to this the exporter is advised to go for separate buyer wise policy also.

Export bills negotiated: All the documents presented to the bank for negotiation should
be strictly in accordance with the L/C terms. Even the slightest deviation from those terms and conditions specified in the L/C can give an excuse to the issuing bank for non-payment.

Advances against bills sent on collection basis: In some cases the exporter himself
may requests for sending the bills for collection basis. Bank may allow advance against these collection bills to an exporter. Concessive rate of interest is charged for this advance from the exporter according to the period.

Advances against exports on consignment basis: Goods are exported on

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consignment basis at the risk of the exporter. Eventual remittance of sale proceeds will be made by agent. The overseas branch of the bank will be instructed to deliver the documents against trust receipt.

Advances against undrawn balances: In certain line of trade it is the practice of

the exporter to leave a part of the amount as undrawn balance. Authorized dealers can handle such bills provided the undrawn balance is inconformity with the normal level of balance left undrawn in the particular line of export trade subject to a maximum of 10% of the full export value. Advances against undrawn balance can be made at a

concession rate of interest for a maximum period of 90 days.

Advances against duty drawback: Where the domestic cost of production of

certain goods is higher in relation to international price, the exporter may get support from the government so that he may compete effectively in the overseas market. The government of India and other agencies provides export incentives under the export promotion scheme. this can only be in the form of refund of excise and customs known as duty drawback. Bank grants advances to exporter against their entitlements under above category at low interest rate for a maximum period of 90 days.

General guidelines of the bank for sanctioning export finance to customers

Banks should meet the genuine credit requirements of the export sector promptly and in full. They should review their internal arrangements and take such action as is necessary, including delegating enough powers to Branch Managers/Regional Managers to export

- 58 -

sector. Queries should not be raised in piecemeal or information sought at various stages, leading to delays in extending credit.

Bank may adopt a flexible attitude with regard to debt equity ratio; margin and security norms but there could be no compromise in respect of viability of the proposal and the integrity of the borrower.

Exporters should be able to satisfy their banker about their capacity to execute the orders within the stipulated time and have proper expertise to manage the export business.

The quantum of finance sought should commensurate with the expected export turnover and the cost of inputs required.

If the exports will be covered under letters of credits, banks would need to be satisfied about the standing of the credit opening bank and also the acceptability of the conditions specified in the credit.

Where exports are not covered by Letters of Credit and will be on the basis of firm contracts, banks may insist for obtaining a satisfactory status report on the overseas buyer.

EXPORT PROCESS:
Exporter gets the export order. He demands letter of credit or bank guarantee if he has any doubt regarding the credibility of the importer. The exporter sends 3 copies of GR form to the custom authority. Custom keeps 1 copy with

- 59 -

itself, 1 copy is returned to the exporter and 1 copy is sent to RBI. He prepares the goods and takes it to the dock for shipment. He prepares the bill of lading if he is sending the goods through ship. In such a case he sends the documents (packing list, invoice, bill of exchange, original bill of lading, certificate of origin, work test certificate, purchase order etc) to his bank which sends the documents to importers bank.The documents should be sent within 21days of shipment of goods. The copy which is received by him by the custom is sent to the bank, the bank then sends the copy to the RBI again to tally both the copies of GR Form.

- 60 -

PART THREE BANK GUARANTEE

The term bank guarantee can be defined as: a guarantee given by a bank to a third person, to pay him a certain sum on behalf of the banks customer, on the customer failing to fulfill any contractual or legal obligations towards the third person.

Various types of bank guarantees

Financial guarantee: These are the guarantee issued by bank on behalf of the customers, in lieu of the customer being required to deposit cash security or earnest money. These kinds of guarantees are mostly issued on behalf of customers dealing with government departments. If the contractor does not fulfill his obligation then the government department invokes the guarantee and collects the money from the bank.

Performance guarantee: These are the guarantees issued by the bank on behalf of its customer whereby the bank assures a third party that the customer will perform the contract entered into by the customer as per the condition stipulated in the

- 61 -

contract, failing which the bank will compensate the third party up to the amount specified in the guarantee.

Banks obligation to pay primary: Bank guarantees are called the life blood of international commerce and even though they are an off shoot of a primary contract between the debtor and the creditor, these guarantees are independent commitments taken by bank on behalf of the customers. The obligation of the bank is irrespective of the disputes between the beneficiary and the debtor.

Precautions which bank takes while issuance of bank guarantee:

The banks criteria taken into consideration while issuance of bank guarantee on the following basis:

Amount guaranteed:
when the bank issues a guarantee, first and the foremost consideration that it takes is the amount he is called upon to issue. In the guarantee agreement the amount has to be specifically stated both in figures and words. Care should be taken to state whether the amount is inclusive of all interest, charges, taxes and other levies. This is important to avoid unnecessary disputes regarding the liability of the bank.

- 62 -

Period of guarantee:
Bank always specifies the period for which their guarantee subsists and an additional period during which a claim has to be made on the bank to make payment. The former period during which the guarantee subsists is called the validity period and the latter the claim period. If any default has been committed by the debtor (i.e. the banks customer) it should be within the validi ty period. It is thus necessary as a matter of great caution that this period e specified to the exact date. Once this outer limit for the bank to guarantee default of the debtor is fixed then the creditor can make a claim only if the default has occurred within this period, an for any default beyond this date the bank cannot be held liable.

Claim period in a guarantee:

in a guarantee it is necessary to provide for a period slight longer than the validity period for the beneficiary to make a claim. The claim period is usually a few months more than the validity period of the guarantee.

Counter guarantee and other security:

Though a bank guarantee is a contingent liability it is always prudent for a banker to secure this contingent liability in case it is enforced. This can be done by obtaining a counter guarantee cum-indemnity executed by the customer in favour of the bank.

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Process at the Retail Branch for Issuing BG with 100% Cash Margin Customer Customer approaches approaches the branch the manager Branch forManager the facility (BM) for the facility facility
BM checks the facility required approves it, if within his limit of 25 lacs or else Seeks approval from the relevant authority

The Performa BG given by the beneficiary is sent to TF desk by fax or email for approval.

Branch to obtain all the documents as per the checklist and circular

FD for 100% Cash Margin In case of non existing FD a) Branch to debit customers a/c & park in branch dummy a/c b) Mail to CPU & TF a. to book FD & mark a lien mentioning the branch dummy a/c no. b. Confirm the obtention of docs from customer with BG details with a request to release BG limit. In case of existing FD

a) Mail to CPU & TF a. To mark a lien mentioning the FD details. b. Confirm the obtention of docs from customer with BG details with a request to release BG limit

After receiving approval mail from TF with BG No, a) Two staff members of the Branch having POAs will sign the BG on the stamp paper. b) If Branch has only one POA, then the BM can get the signature of another POA from the nearest branch/ TBG desk which ever is closer c) Due to any reason, POA/s are not available in the branch or in the nearby branch, the branch should get the Bank Guarantee signed by 2 POAs from the TF Desk itself, by informing the TF desk about the same.

The original docs and copy of the BG to be forwarded to TF desk under ROD

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PART FOUR
INWARD REMITTANCE AND OUTWARD REMITTANCE IN TRADE

OUTWARD REMITTANCE:
It is the way in which money from a country goes to another country in some other way than export or import of goods. Outward Remittances (Miscellaneous) for other purposes can be remitted with ease. Remittances by way of DD / TT / Swift can be affected through banks strong network of correspondent banks to any part of the world. All transactions are subjected to FEMA regulations.

OUTWARD REMITTANCE MISCELLANEOUS LIST

BTQ / Business Travel / Gift Remittances / Medical Treatment / Student Remittances / Donations / Immigration / Employment Abroad / Maintenance of Family / Subscription fees / Examination fees of Foreign Universities / Repatriation of all NRI accounts of Individual customers / Exhibition Fee / Conference Invitation / Credit Card Payments / Subscription of Magazines and periodicals / Repatriation of sale proceeds of property / Repatriation from NRO a/c / Repatriation of funds relating to OCB / Repatriation under the Liberalized remittance scheme of USD 25,000/- per calendar year for Resident Individuals.

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INWARD REMITTANCE:

GENERAL: Foreign exchange due or accrued as remuneration for services rendered in or outside India, or in the settlement of any lawful obligation, or an income on asset held outside India, or as inheritance, settlement or gift is to be sold to an authorized person within 7 days from the date of receipts. FOREIGN INWARD REMITTANCE PAYMENT SYSTEM (FIRPS): Foreign exchange dealers association of India (FEDAI) has evolved FIRPS to facilitate quick transmission of funds to beneficiaries in India against inward remittance received from abroad through banking channels in rupees as well as in foreign currency. ISSUE OF BANK CERTIFICATE: Authorized Dealers should issue bank certificates against receipt of inward remittance or realization of foreign exchange on security papers if the amount exceeds Rs. 15000/- in value, bearing distinctive serial numbers and reference numbers.

REMITTANCE THROUGH ING VYSYA BANK TO OTHER BANKS (OUTWARD): Rs. 0.25/- per. 1000/- per transaction ( Minimum- Rs50; Maximum- Rs.1000 )

REMITTANCE INTO ING VYSYA BANK ACCOUNT (INWARD REMITTANCE: FREE

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CHAPTER FOUR
VARIOUS TOOLS ADOPTED BY ING VYSYA BANK TO FACILITATE INTERNATIONAL TRANSACTIONS

ING VYSYA Bank has adopted the following tools to facilitate the international trade: Foreign Exchange. Tools to avoid most common discrepancies in international trade. Nostro Account

Foreign Exchange:
Conversion of one currency to another currency is referred to as Foreign Exchange. ING VYSYA provide the facility to conversion of one currency into another currency. Types of Transactions: transactions. Cash :In this case, the transaction is settled the same day. In Forex market there many ways to accomplish the

Value

Tomorrow

(Tom):In

this

case,

the

transaction

is

settled

on the first, succeeding working day.

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Spot :In this case, the Transaction is settled on the second succeeding working day.

Forward:In this case, the transaction is settled after the second succeeding workingday of the predetermined date with the predetermined sum of money Authorized Dealers (Banks) can undertake all types of activities in

FOREX/Foreign Trade e.g. Banks. Generally banks perform the intermediary task and categorized as authorized dealers. Exchange rate quotations: It is to express the value of one currency in terms of another currency. There are two ways of quoting exchange rates: Direct quote: In this case the variable currency is home currency. e.g., 1USD = Rs. 45.10 Indirect quote: In this case, the variable is foreign currency e.g., Rs. 100 = USD 2.2525

TYPES OF RATES:
BUYING RATE: TT buying rate:

This rate is used for transactions where there is no delay in the realization of FOREX or where the nostro account of the bank has been credited e.g. cleans inward remittance for which the nostro account has already been credited.

Bill buying rate:

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This rate is used for transactions where proceeds are realized at a future date e.g. purchase/ discount of bills. TC Buying rate: This rate is used for encashment of travelers cheques. Currency buying rate: This rate is used for encashment of currency notes.

SELLING RATE:

TT selling rate:

This rate is used for transactions not involving handling of documents, e.g. outward remittance. Bill selling rate: This rate is used for transactions involving handling of documents e.g. payment of import bills. TC selling rate: This rate is used for issue of traveler cheques. Currency selling rate: This rate is used for issue of currency notes.

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Tools to avoid most common discrepancies in international trade

Most commonly observed discrepancies in international trade: Credit expired Late shipment Late presentation of document Documents not marled original

To avoid the above-mentioned discrepancies it is the duty of the employee that he must check the documents at every stage of proceeding.

HOW THE TRADE DOCUMENTS ARE CHECKED IN THE BANK?

Checking documents under LC Document checking is the most critical task, as the beneficiarys payment assurance depends on documents complying with the credit.Discrepant documents are very common. It is estimated that 50% to 70% of documents are discrepant upon first presentation to the bank. Document checking strategy Check that all required documents have been presented. Check that each document complies with the L/C
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Check that documents are consistent with on another.

Checking the bill of exchange Drawer as specified on L/C. Amount same in words and figures and accords with L/C. Tenor of bill accords with credit. Signed and endorsed by drawer. Any references to credit correct. Checking the commercial invoice Name and address of traders exactly as L/C. Signed if required. Goods description exactly as on L/C. Amount accords with L/C and is exactly the same as B/E (if presented). Quantity of goods and unit price accords with L/C. Shipment terms as per L/C.

Checking the transport document Not issued by fright forwarder unless signed by them as carrier/ agent*. Not charter party B/L. Clean, not claused. Consignee details as per L/C, B/L consigned to order and endorsed as required. If required, notify party exactly as on L/C. Loading and destination ports accord with credit. B/L evidences goods shipped on board named vessel; not on deck unless allowed. Goods shipped on or before latest shipment date Transhipment only if permitted

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Marked freight paid it required Goods description and details consistent with L/C *unless specifically allowed by L/C

Checking the insurance document Issued and signed by insurance company, underwriter or agent. Certificates countersigned by beneficiary Acceptable type (not insurance note, unless specifically allowed by L/C) Not issued after shipment date unless warehouse-to-warehouse Endorsed, if required Amount in same currency as L/C and at least 110% of CIF/CIP invoice value* All specified risks covered Goods description and details consistent with L/C *unless otherwise stipulated by L/C

Checking other documents: Issued by appropriate authority and, if necessary, signed by them. Evidence compliance with any special L/C conditions. Goods description and details consistent with the L/C.

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NOSTRO ACCOUNT
Nostro account is that account of one bank, which is opened in the other foreign bank to facilitate trade, related activities.The ING VYSYA Bank has also opened its account in various foreign banks, which are as follows:

BANK NAME USD GBP EUR CAD SGD AUD NZD SWISS FRANCS DANISH KRONE JPY SAR HKD SEK AED CITIBANK N A, USA STANDARD CHARTERED BANK, UK

CORRESPONDENT BANK SWIFT CODE ACCOUNT 36051862 01 2509083-01 CITIUS33 SCBLGB2L DEUTDEFF NOSCCATT HSBCSGSG CTBAAU2S BKNZNZ22

DEUTSCHE BANK AG, GERMANY 50070010/ 9534835 1000 THE BANK OF NOVASCOTIA, CANADA HONGKONG & SHANGHAI BANKING CORPORATION LTD., SINGAPORE COMMON WEALTH BANK OF AUSTRALIA, AUSTRALIA BANK OF NEW ZEALAND, NEW ZEALAND UNION BANK OF SWITZERLAND, SWITZERLAND DEN DANSKE BANK, DENMARK BANK OF AMERICA, TOKYO NATIONAL COMMERCIAL BANK, SAUDI ARABIA HSBC BANK, HONGKONG 0307912 141-049999-001 100545151AUD112601 265053-0000

023000000-86-279050000Y UBSWCHZH80A 3996019306 606430008018 55535109000109 500830666001 DABADKKK BOFAJPJX NCBKSAJE HSBCHKHH ESSESESS CBDUAEADXXX

SKANDINAVISKA ENSKILDA 55558502398 BANKEN, STOCKHOLM, SWEDEN COMMERCIAL BANK OF DUBAI, 1001311859 DUBAI

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CHAPTER FIVE
RESEARCH METHODOLOGY
RESEARCH DESIGN The research describes the operations of trade finance in ING VYSYA Bank, which is based on secondary data. Thus it is a descriptive research design. The research also carries the analysis of primary data, so it follows the analytical design.Hence, the research design is descriptive as well as analytical both SAMPLING:

DESIGN:

Non-probability and convenience sampling.

SAMPLE SIZE: 100

DATA COLLECTION:

Sources of Primary data: QUESTIONAIRE Data provided by EMPLOYEES OF BANKS

Sources of Secondary data: Internet. Conceptual books.

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PART ONE
FINDINGS FROM THE QUESTIONNAIRE
The clients are the very important aspect of any business transactions. On the basis of their requirements they opt for export or import. The charges by the bank also vary from customer to customer depending on their goodwill, their amount of transaction, frequency of transaction etc. In order to know more about the customers I prepared a questionnaire to extract in detail what customers felt about the services provided by the bank and how much they know about their bank.

PURPOSE OF QUESTIONNAIRE I prepared the questionnaire with the purpose of knowing the customers frequency of doing trade with ING VYSYA Bank, their problems faced, their suggestions to the bank, how much they are aware of the trade finance and international business, how much they know about the facilities provided to them by the bank and the government, and how much they prefer ING VYSYA Bank services in comparison to other banks. Various questions of the questionnaire and their findings after make them fill from the customers, customers opinion and what I concluded from these findings has been discussed below.

My findings from the questionnaire can be summed up as follows: TOTAL NUMBER OF CUSTOMERS WHO FILLED THE QUESTIONNAIRE AND WHO ARE CLIENTS OF THE ING VYSYA BANK VARANASI: 23

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Q 1). Nature of business of the trader----Sole Proprietorship/Partnership / Limited Company. The occupation of the trader is very important. It determines the nature and frequency of doing international trade. The sample size of the trader was 23. The nature of occupation can be broadly divided into 3 categories sole proprietor, partnership and the trader limited company. The following are the graphical presentation of the nature of business of the trader:

5 22% 10 43% soleproprietor partnership limited company 8 35%

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Q2). What is the annual Turnover of your business? a) Below 5 lakhs c) 10 lakhs- 15 lakhs b) 5 lakhs- 10 lakhs d) above 15 lakh

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Q 3).Apart from ING VYSYA Bank which other bank you prefer for trade? a) SBI c) UBI e) Others b) PNB d) ICICI

SBI: 7 PNB: 2 OTHERS: 2

ICICI: 1 UBI: 3

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Among the total customers 23, 8 customers are totally loyal to the ING VYSYA Bank. 15 customers do trade with other banks also along with ING VYSYA Bank. The diagram is showing the preferences for those 15 customers only.The traders are interested in SBI in other banks. The reason being it is public bank and is located in every nook and corner of the city, its charges are also lower.The second preference of the traders is UBI. It is also cheap and its location covers all the areas of the city.ICICI, PNB and other banks are also preferred by some customers.

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Q 4). With which foreign bank do you prefer to deal with as issuing bank or beneficiary bank? a) Bank of America c) J.P.Morgan chase b) Wachovia bank d) others

J.P. MORGAN CHASE: 4 BANK OF AMERICA: 8

WACHOVIA BANK: 9 OTHERS: 2

The exporter bank also plays an important role in international business. The customers prefer the above mentioned banks due to the efficient level of services provided by these foreign banks. There are minimum errors within the documents provided by these banks and services are also timely.

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Q 5). In which type of trade you are involved with ING VYSYA Bank? a) Export c) Inward remittance b) Import d) Outward remittance

TOTAL NUMBER OF EXPORTERS: 08 TOTAL NUMBER OF IMPORTERS: 13 TOTAL NUMBER OF TRADER INVOLVED IN INWARD REMITTANCE: 1 TOTAL NUMBER OF TRADER INVOLVED IN OUTWARD REMITTANCE: 1

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Among the 23 traders there are customers who sometimes do export, sometimes import and sometimes remittances depending on their nature of requirement. It cannot be hard and fast that a person can import only and cannot do other things. The above mentioned diagram shows the number of trades done by the trader which is often done and preferred by them. Q6). What do you prefer as a customer? a) Letter of credit LC: 18 b) Bank Guarantee BG: 5

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18 customers said they prefer LC. The letter of credit is demanded by the exporter to ensure its payment through a reliable source. 5 customers said they prefer BG, since opening BG is cheaper than opening LC in ING VYSYA Bank.

Q7).How do you find the charges of the ING VYSYA Bank different from the other banks? a) Expensive c) Cheaper b) equal

Majority of the customers felt that the charges are competitive and acceptable in comparison to the services provided by the bank. They are satisfied with the charges charged by the bank. The bank itself has adopted flexible approach in charges. It varies
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the charges according to the customers reputation, competition and other factors. It does not want to loose any genuine customer due to unfair charges.

PART TWO
SWOT ANALYSIS OF THE TRADE FINANCE OPERATIONS

THE SWOT ANYLYSIS CAN BE EXPLAINED AS STRENTHS WEAKNESS OPPORTUNITIES THREATS

STRENGTHS OF THE ING VYSYA BANK-

ING VYSYA Bank has 32 softwares as a whole for their various operational purposes, in which currently 22 are in use. The number of softwares in ING VYSYA Bank is comparatively very high in comparison to other banks. In trade of ING VYSYA Bank there are at least six softwares used: Capture Branch operation BG Professor SWIFT Alliance

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Flexcube corporate LSS

These softwares are helpful in facilitating the work of the bank and if oneSoftware is disturbed due to some or the other reasons then other can be helpful. This will ensure the continuity of the work without disturbance. Goodwill of the bank attracts lots of customers from various parts of the city. The awards and honors won by the bank are very helpful in increasing the faith of the traders in the bank. There are lots of trade services provided by the bank as per the requirement of the customer. Export, import, bank guarantee, letter of credit. The aim is that a trader must be able to find all the facilities of his requirement in the bank itself only then he will find a reason to come to bank again and again. This gives an image of one stop shop of the Bank. Efficient employees are the assets of any company. Unless and until the employees are not efficient, the company cannot perform efficiently. The employees of the bank are efficient enough to perform the assigned task well and take the emerging challenges of the market. Centralized banking facilitates smoothen and centralized flow of all the transactions related to trade. All the trade related transactions are informed to Mumbai head office before proceeding further. The head office has to know the nature and frequency and all the transactions happening at various branches. The mode of payment, which is used by ING VYSYA BANK, is not only used by this bank but it is used all over the country by all the other banks to settle international payment. Hence we can say that this mode of payment is internationally accepted and well recognized. It is the SWIFT (Society for Worldwide

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Inter Bank Financial Telecommunication). All the international level transactions are carried on with the help of SWIFT. This helps the bank to carry out its transactions very well within TAT. Hence, it is one of the strength of the bank, which is helping it to grow, and proving it within international standards.

WEAKNESS OF THE ING VYSYA BANKThey have reduced their trade charges due to present level of competition. The competition is low in comparison to any other big city but the bank itself faces huge competition with the SBI & PNB, which is spread like grains at every part of the city. The trade charges of the other relative banks are low so ING VYSYA Bank also needs to keep the charges low to compete well with the other banks.

ING VYSYA Bank follows centralized banking due to which proper reporting has to be done to central office at each and every moment. These frequent reporting cause unnecessary delay in the workings of the bank.

Lots of softwares are very difficult to be handled by the employees, since one employee cannot be efficient in handling all the 32 softwares.

OPPORTUNITIES OF THE BANK:

Lots of traders are still untapped whom the bank can trap. There is a great opportunity in front of the bank to trap these traders, by offering them through

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telecalling, e-mails or any other ways, they can be very profitable for the bank.

Regular and loyal customers can help in building goodwill and more customers. In trade also like in other business customer loyalty is very important. There are many opportunities with the bank in the form of loyal customers.

THREAT OF THE BANK:

The most important threat which appears in ING VYSYA Bank are the competitors in which the major competitors are State Bank of India, Punjab National Bank, ICICI Bank and Central Bank of India who have many branches and thats why it is more convenient for the people to approach that bank. Apart from that they have their own goodwill which is a threat for the trade of ING VYSYA Bank.

Since new Private Sector Banks like UTI Bank and Kotak Mahindra Bank and some foreign bank like ABN Amro Bank are also planning to start their operations with their expertise, the future seems to be highly uncertain for ING VYSYA Bank.

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PART THREE CONCLUSION OF THE REPORT

SUGGESTIONS: The SWIFT should be allocated within the branch level; this can make the trading more convenient and easier. The branches located in various parts of India are still unable to complete the work maintaining low TAT. They should try to keep the TAT as low as possible. ING VYSYA Bank like any other Indian bank has adopted SWIFT to facilitate quick payments. It should also try other internationally acceptable modes of payment e.g. ABA, CHIPS ABA which are adopted by foreign banks abroad. It should increase the number of branches in the country. It is still very lower in comparison to other banks such as SBI, UBI (1315 branches), HSBC (9500 branches in 76 countries) etc. the low number of branches does not cover whole area where there is still a huge scope of trade. The branches opened abroad will be helpful in building good relationship and brand goodwill in foreign countries. Although the branch tries to decrease the TAT (turn around time) level as low as possible but if the TAT level is higher then it could be decreased in the following ways: MIS to be sent to branches to ensure basic scrutiny and customer education. MIS to be sent to branches to ensure basic scrutiny and to ensure images are clear when scanned.

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Work allocated so that routine transactions are not affected. When TOD in A/C- LC Bills then MIS to be sent to the respective business group.

LIMITATIONS
Although I have tried to cover all the facts related to eternal trade finance operations, yet there are some limitations also due to time constraints and other factors, these limitations are as follows: Trading is the vast area. Thus the research is to limited to external trade financial services only. The research is limited with the reference of the Ghaziabad branch of ING VYSYA Bank. The report covers only main activities involved in the trade finance, because the whole activities would make this report very complex.

The sample size is 23 because of time constraints

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BIBLIOGRAPHY

1. Websites: www.ING VYSYAbank.com www.google.com (search engine) www.ask.com (search engine) www.bankingindia.com www.wikipedia.org

2. Books: INDIAN FINANCIAL SYSTEM BY H. R. MACHIRAJU INTERNATIONAL FINANCIAL MANAGEMENT BY V.K. BHALLA

3. Other material provided by employees of the bank

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