SOFR-Linked Pricing
Defer Import Payment
Pay Your Overseas Supplier Now, Settle Later
Independent Buyer's Credit advisory from Inwealfoney. We help importers arrange short-term foreign-currency financing — often cheaper than domestic working capital — to settle import bills on time while deferring actual repayment.
All-in cost from
SOFR + 2%*
Tenure up to
3 Years
What is Buyer's Credit
Short-term import financing in foreign currency
Buyer's Credit is a short-term loan arranged for an importer (buyer) by an overseas bank or financial institution, used specifically to pay the overseas exporter on the due date. Your Indian bank issues a Letter of Undertaking-equivalent instrument — typically a Standby Letter of Credit (SBLC) or bank guarantee today, since LOUs were withdrawn in 2018 — in favour of the foreign lender, who then remits funds to the exporter or their bank. You repay the foreign lender in foreign currency, with interest, on the agreed due date. It effectively converts a sight or near-term import payment into a deferred one, often at a lower all-in cost than domestic rupee borrowing.
Against LC
Buyer's Credit Against Import LC
Used to fund a sight or usance import LC — the exporter is paid on sight terms while you, the importer, effectively get usance financing from the foreign lender instead of the LC-issuing bank.
On Collection
Buyer's Credit on Open Account / Collection
Used for imports settled on a documentary collection or open-account basis (no LC), where your bank arranges the SBLC and foreign-currency loan directly against the import documents.
Capital Goods
Buyer's Credit for Capital Goods
Available for a longer tenure (up to 3 years, versus 1 year for trade/consumable goods) under RBI's trade credit framework — suited for financing plant, machinery, and equipment imports.
Multi-lender comparison
Your import file is matched against several foreign lenders/AD banks for the sharpest all-in cost.
Often cheaper than rupee WC
SOFR-linked pricing frequently undercuts domestic cash-credit or term-loan rates, even after hedging cost.
Better supplier terms
Pay your exporter on sight while you get deferred, extended repayment — improving your negotiating position.
End-to-end coordination
We coordinate between your AD bank, the foreign lender, and documentation — so nothing stalls at the SWIFT stage.
Eligibility
Do you qualify? Here's what lenders actually check
Eligibility and permitted tenure differ for trade/consumable goods versus capital goods imports under RBI's trade credit norms.
- ✓Valid Import Export Code (IEC)Issued by DGFT — mandatory for any cross-border import transaction.
- ✓Maximum tenure: up to 1 yearFrom the date of shipment, as per RBI's trade credit framework for non-capital-goods imports.
- ✓Existing AD Category-I bank relationshipYour authorised dealer bank issues the SBLC/guarantee and routes the transaction.
- ✓Genuine underlying import transactionBacked by a valid import LC, purchase order, or shipping/customs documents.
- ✓CIBIL/CMR of promoters: 700+Along with satisfactory conduct of existing banking and credit facilities.
- ✓Valid Import Export Code (IEC)Mandatory, along with end-use documentation for the capital goods being imported.
- ✓Maximum tenure: up to 3 yearsExtended tenure permitted specifically for import of capital goods/machinery under RBI norms.
- ✓Import invoice/proforma for capital equipmentClearly identifying the goods as capital goods and not consumables or raw material.
- ✓Business vintage: typically 2–3 yearsLonger-tenure credit generally needs a more established banking and financial track record.
- ✓Collateral/security as per bank's WC termsUsually secured within your existing working-capital or term-loan collateral structure.
Buyer's Credit at a Glance
TenureUp to 1 yr (3 yrs for capital goods)
Pricing benchmarkSOFR + spread
Typical all-in cost8% – 16% p.a.
SBLC/arranger fee0.5% – 2%
Hedging costMarket forward premium
The "all-in cost" includes interest, SBLC issuance charges, arranger fee, and (if hedged) the forward cover premium — always compare this total, not the headline SOFR spread alone.
Documentation
What you'll need to keep ready
Having these scanned and organised before you apply typically shaves days off SWIFT confirmation and disbursal time.
KYC & Business Documents
- PAN & Aadhaar of promoters/directors
- Certificate of incorporation / partnership deed / LLP agreement
- Import Export Code (IEC) certificate
- Board resolution authorising the credit (for companies)
Import Trade Documents
- Import Letter of Credit copy, if applicable
- Proforma invoice / purchase order from overseas supplier
- Commercial invoice, packing list, bill of lading/airway bill
- Bill of entry (post-clearance, for reconciliation)
Financial Documents
- Last 2–3 years' ITR/audited financials
- Last 12 months' current account bank statement
- Latest GST returns and GSTR-2A/2B for import reconciliation
Bank & SBLC Documents
- SBLC/guarantee application to your AD bank
- Bank's sanction letter for the buyer's credit limit
- FEMA declaration and Form A1/ECB reporting forms, as applicable
Existing Credit Facilities
- Sanction letters of existing WC/term facilities
- Latest CIBIL/CIR (company & promoters)
- NOC from existing lender, if the SBLC is being issued by a different bank
Repayment & Hedging
- Forward booking/hedging instructions, if opted for
- Form 15CA/15CB at the time of maturity repayment
- Nostro/remittance details for final settlement
Note: Exact requirements vary by AD bank, foreign lender, transaction size, and RBI's prevailing trade credit guidelines. Share your import LC/PO details with us and we'll send a checklist customised to the bank and foreign lender we're targeting for you.
Process
How Buyer's Credit actually works
Five parties are typically involved — you (importer), your bank, the foreign lender, and the overseas exporter — moving through a fixed sequence.
01
Import order placed
You place an import order and open an LC, or agree collection/open-account terms with your overseas supplier.
02
Buyer's credit requested
Your AD bank arranges buyer's credit quotes from foreign lenders/correspondent banks on your behalf.
03
SBLC issued
Your bank issues an SBLC/guarantee in favour of the foreign lender, backing the credit it's about to extend.
04
Exporter paid on sight
The foreign lender remits funds, and your exporter is paid promptly — often improving your terms with them.
05
You repay on due date
On maturity, you repay the foreign lender in foreign currency (principal + interest) through your AD bank.
Cost Estimator
Estimate your buyer's credit all-in cost
Interest is charged on the benchmark rate (SOFR) plus a spread, for the number of days the credit runs. Add hedging and bank charges to see the true all-in cost. Drag the sliders to estimate.
₹50,00,000
7.50%
180 days
2.00%
₹0
Est. Total Cost of Credit
Interest
Hedging & fees
Interest Cost
₹0
Hedging & Fee Cost
₹0
All-in Cost (p.a.)
0.00%
Amount Payable at Maturity
₹0
*Indicative estimate only. Actual cost depends on the live SOFR/benchmark rate, lender-specific spread, forex conversion margin, withholding tax, and prevailing forward premium on the date of transaction.
FAQs
Common Buyer's Credit questions
No. An LC is a payment undertaking that assures your exporter of payment. Buyer's Credit is the financing arranged separately to actually fund that payment — you can use Buyer's Credit to settle a sight LC, a usance LC, or even a collection/open-account import that has no LC at all.
A Standby Letter of Credit (SBLC) is a guarantee your Indian bank issues to the foreign lender, promising to pay if you default. It replaced the Letter of Undertaking (LOU) instrument after LOUs were withdrawn by RBI in 2018, and it's what allows the foreign lender to extend credit to an importer they don't otherwise have a relationship with.
Buyer's Credit is priced off international benchmark rates like SOFR plus a spread, which has historically run lower than domestic MCLR/repo-linked lending rates. Even after adding SBLC charges and hedging cost, the all-in cost frequently comes out below equivalent rupee working-capital borrowing — though this gap can narrow or widen with market conditions.
It's strongly recommended but not always mandatory. Since you repay in foreign currency on a future date, an adverse currency movement can add materially to your effective cost. Many importers book a forward cover to lock in the exchange rate and know their exact rupee outflow in advance.
Under RBI's trade credit framework, Buyer's Credit for normal trade/consumable goods imports is generally permitted up to 1 year from the shipment date. For capital goods imports, the tenure can extend up to 3 years, subject to the bank's and RBI's conditions.
There's no fixed minimum, but because SBLC and arranger charges are relatively fixed, Buyer's Credit tends to make economic sense mainly for larger import bills. Very large transactions may need additional RBI-level approval routing, depending on prevailing thresholds and guidelines.
Your Indian bank, having issued the SBLC, is obligated to honour the guarantee and pay the foreign lender — and will then recover that amount from you as a domestic liability, typically at a higher default rate. Timely planning for the maturity repayment is essential.
Let's structure the right Buyer's Credit for your import
Share your import LC/PO details and we'll compare foreign lenders and AD banks on your behalf — no cost, no obligation.
Inwealfoney · Loan advisory services. Buyer's Credit pricing, tenure, and eligibility are indicative, linked to international benchmark rates, and subject to lender and RBI policy at the time of application.