International
Operations insurance

Internet Banking Tutorial

For a better understanding of how the Internet Banking application works, we have prepared a short video tutorial for allNET presentation.

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FINTRA

Our financing offer for your overseas suppliers.

FINTRA represents the L/C discounting, that can bridge the funding gap between buyers and sellers, enabling the importers to maintain their payment commitments at maturity whereas the exporters are paid at sight.

Description & working mechanism:

• Thanks to BRD expertise, L/Cs can be discounted at attractive costs;
• If they are non-customers, the exporters present their documents to our desks via their own local house banks. Therefore, KYC and compliance tasks are undertaken by the beneficiaries’ banks;
• Exporting suppliers are timely paid at sight, upon presentation of complying documents accepted by the issuing bank (BRD);
• On import side, the applicants are debited only at maturity date (as initially agreed).

Two possible options.
Depending on the negotiation terms undertaken between buyers and suppliers, the financing costs can be borne either by the applicant or by the beneficiary:

1. If borne by the beneficiary, the exporter receives the L/C net amount (i.e. after deduction of financing costs).

2. If borne by the applicant, the importer is charged with L/C amount plus financing costs incurred on due date.

Stand-by letter of credit

The stand-by letter of credit is a bank guarantee issued in the form of a letter of credit, to guarantee the performance of a contractual obligation. The issuing bank undertakes to indemnify the beneficiary for any failure of the ordering party of meeting its obligations under the contract.

If you are an importer, the money retention stand-by letter of credit ensures that the down payment is returned by the exporter in case of failure under the contractual obligations.

If you are an exporter, the payment stand-by letter of credit guarantees the payment of the equivalent value of the delivered merchandise / services, if the importer does not pay.

How does the stand-by letter of credit work?

Step 1. The partners agree by contract on the terms of the operations and establish as means of payment the stand-by letter of credit.

Step 2. At the request of the ordering party, its bank (the issuing bank) opens the documentary letter of credit to the benefit its commercial partner (beneficiary), according to the conditions of the contract signed with the latter The issuing bank sends the text of the stand-by letter of credit to the correspondent bank in the exporter’s country (the bank of the beneficiary).

Step 3. The correspondent bank notifies the beneficiary on the opening, to its benefit, of a stand-by letter of credit.

Step 4. If the ordering party does not meet its contractual obligations, the beneficiary presents to the correspondent bank all the documents stipulated upon the opening of the stand-by letter of credit and demands that payment be made. After checking the documents, the correspondent bank sends them to the issuing bank for payment. The issuing bank makes the payment and debits the account of the ordering party.

The letters of credit provided by the bank are:

• Irrevocable letter of credit – which covers against commercial risks

• Confirmed letter of credit – which, in addition to covering the commercial risks, also covers the risk of insolvency of the issuing bank and the country risks – political and transfer, if the corresponding bank is in another country than the issuing bank.

Documentary credit

If the company operates in the field of export or import, contracting a documentary credit helps improving the commercial relations with the foreign partners.

For importers, BRD will ensure: the receipt of merchandise and/or the delivery of services according to the documents required under the documentary credit.

For exporters, BRD will guarantee: the collection of the equivalent value of the delivered merchandise and/or services according to the documents required under the documentary credit.

How does the documentary credit work?

Step 1. The buyer (importer) and the seller (exporter) perform the commercial operation by agreeing in the contract on the terms of the operation and by establishing as means of payment the documentary credit.

Step 2. At the request of the importer (ordering party), its bank (the issuing bank) opens the documentary credit in the favor of the exporter (beneficiary), according to the conditions of the commercial contract. The issuing bank sends the text of the documentary credit to the correspondent bank in the exporter’s country (the bank of the beneficiary).

Step 3. The correspondent bank endorses the opening of the documentary credit for the exporter.

Step 4. The exporter sends the merchandise to the importer and presents to its bank all the delivery documents specified in the documentary credit.

Step 5. The correspondent bank checks the documents and makes the payment (if it is a paying or confirming bank) or sends the payment documents to the issuing bank.

Step 6. The correspondent bank sends the documents to the issuing bank.

Step 7. The issuing bank checks the documents and makes the payment (or repays the paying bank) and delivers the documents to the importer against payment.

Step 8. The importer, based on the documents received from the bank, gets the customs clearance and accepts the merchandise.

What is the documentary credit?

The documentary credit is a payment commitment against documents, undertaken by the bank, for the proper development of the company’s relation with third parties. The parties involved in the ongoing execution of a documentary credit are: the ordering party, the issuing bank, the beneficiary’s bank and the beneficiary.

Types of documentary credit

• Irrevocable letter of credit – which covers against commercial risks
• Confirmed irrevocable letter of credit – which, in addition to covering the commercial risks, also covers the risk of insolvency of the issuing bank and the country risks – political and transfer, if the corresponding bank is in another country than the issuing bank.

Types of payment under a documentary credit

You can choose from the following types of payment, depending on the contractual provisions between the company and the commercial correspondent: at sight, at term, by acceptance or by negotiation.

International Letters of Guarantee

The guarantee letters issued by BRD are a proof of reliability for your business partners abroad. ​

The international letters of guarantee are the ideal solution for your business if the company participates in an international call for tenders or a foreign partner requests a performance bond.

The bank provides the following types of guarantees:

• Bid bond
• Advance payment guarantee
• Performance bond
• Payment bond

How are the letters issued?

These guarantee letters are issued individually or under guarantee ceilings, if the requests for guarantee are multiple and recurrent.

Letters can be issued electronically or through the SWIFT channel, in lei or in foreign currency. The validity of a guarantee is correlated with the contractual provisions concluded between the company and the partner.
The guarantees requested when issuing letters of bank guarantee can be deposits, mortgages on movable and immovable property, guarantees issued by guarantee funds, etc.