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Import and Export Payment Methods

World Bank plays role as an admin and controls imports & exports among various countries. It sets certain required rules to be guided by facilitating payment procedures by means of IBRD and IDA.These are the two branches that control the transactions of funds very efficiently without causing any tiff between the importer and the exporters.

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Import and Export Payment Methods

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  1. Import and Export Payment Methods World Bank regulates imports and exports in between various countries. It sets certain mandatory guidelines to follow for easing payment procedures via IBRD and IDA.

  2. World Bank An international creditor to developing countries It’s Goal: Making the world free of poverty. Three Prime Roles: Promote foreign investment Promote international trade Provide facility of capital investment

  3. Two Branches of World Bank International Bank of Reconstruction & Development (IBRD) Provides loans to under-developing countries’ middle-income group International Development Association (IDA) Lends money to the poorest countries as grants and credits at no interest rate

  4. Methods of Finance Four methods are used in import and export business: Banker’s Acceptance (BA) Working Capital Financing Medium-Term Capital Goods Financing Countertrade

  5. Role of Banker’s Acceptance (BA) For making payment to the importer. Time bound draft Importer’s bank clear it at maturity date BA can be encashed in the money market by selling it. Acceptor bank charges all-in-rate, including discount rate and commission.

  6. Role of Working Capital Financing It is short terms loan. Helps in moving on working capital Done by purchasing inventory until it gets converted in cash

  7. Role of Medium-Term Capital Goods Financing It is a promissory note. Issued for 3 to 7 years. Issued to pay for importing capital goods Exporter sells it to banks without delay.

  8. Role of Countertrade Interlinking financial transaction It links export of goods to import of goods from the same country Types: Barter, Compensation and Counterpurchase Occurs between the government and the multinational traders

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