Trade financing as the successful deal for the customer!
30.03.2016

Trade financing as the successful deal for the customer!

Tajikistan's economy more and more increases foreign trade turnover with countries of the near and far abroad. Therefore, trade financing remains as one of the most important banking products in the international trade. Every year a number of customers grow, who are interested in the international documentary operations by the Bank Eskhata, such as trade financing, documentary letter of credit, bank guarantees, documentary collections and so on. Customers have come to realization; they began to understand deeply the mechanism and the structure of international transactions on the import widely use it to develop their business.
This year, the project proposed by the production company "Afzali Zarzamin" Ltd. with operations under the brand "Dairy Joy", became one of the brightest examples of trade financing through the issuance of an irrevocable letter of credit confirmed by the first class international bank. The company produces a wide range of dairy products widely known in the Sughd region, and as well all over the country.
The priority item in the plans of "Afzali Zarzamin" Ltd. was a purchase of heifers, the special breed of dairy cows in one of the German companies. That is the matter why the company's staff applied Bank Eskhata for a loan. In order to support local production, and after studying the company's project, the bank's experts suggested the most advantageous product for the customer: trade financing.
This project has commercial and social character. It is unique and exclusive. In other words, it is the first transaction in Tajikistan on the import of cattle animals by the specially equipped vehicle. Due to the fact that the distance between Germany and Tajikistan is quite significant, the parties involved in the contract maintenance of veterinarians at the delivery of pregnant heifers. At the same time, experts from Germany have previously prepared a specially equipped room for those cows; the only to do was to receive funding and support from the Bank Eskhata. It is also important to note that cattle was insured, that is evidenced by pre-prepared certificates for each animal.
"Every entrepreneur who gives importance to the development of his activities and to the increase in working capital uses loan products of financial institutions. I have started my cooperation with Bank Eskhata in 2012, and I have got only benefit from it. This time I used the product "Trade financing", namely a letter of credit with subsequent financing for the purchase of 62 heads of German dairy cows. One of these days, I would get a second tranche, after which I can increase the number of the cattle to 124 heads,"- said Abdullatif Rakhmonov, the head of "Afzali Zarzamin".
During the negotiations on the deal terms of representatives of LLC "Afzali Zarzamin" and the seller in Germany, the parties came to agreement on supply of animals in two parties against the respective tranches by issuing letter of credit with subsequent financing for each lot for a period of 1 year:
First - March-April 2015
Second - September-October 2015
In turn, Bank Eskhata filed a request to the international partners for funding; the Asian Bank of Development took the initiative to support the deal with the confirmation of the German bank Commerzbank AG Frankfurt / Germany. Let us note that the Commerzbank AG, Germany is the most active partner of Bank Eskhata in Germany for the implementation of innovative products, including a guarantee of the EBRD (London / WB), IFC (Washington / USA) and ADB (Manila / Philippines).
It is also important to say that the ability to attract funding from the first-class foreign financial institutions is an indication of high reputation and recognition of Bank Eskhata at the international level. At present OJSC "Bank Eskhata" features lines from the world's largest banks for documentary and guarantee operations, including trade financing. The Bank continues to steadily increase the pace and amount of financing import of goods under the guarantee of financial institutions and insurance coverage by insurance companies, maintaining a leading position in the number of realized transactions in different countries on the insurance product "Credit to the buyer."
Following the transaction, the letter of credit was issued in accordance with all terms and conditions. Animals were delivered to Tajikistan in its entirety and without any problems or even damage. Soon, in due time, they gave birth to 12 healthy calves in total. Now, the customer's farm receives milk of even higher quality, and people of Sughd region can get new high-quality products. After all, everyone knows that if dairy products are made of natural materials, it is an excellent indicator for the company and for its customers.
Parties of the agreement stayed satisfied with the results, which means that this deal is successfully performed!


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