st

Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

Please find below are our answers to the client's frequently asked questions.

Question 1: Brief of Euro Exim Bank (who are Associated Banks with Euro Exim Bank)

Ans: Euro Exim Bank Ltd., is a Class A licensed bank based out of Saint Lucia with a
representative office in the United Kingdom and we have applied for representative office
licenses with RBI in India and Central Bank of UAE in Dubai. We are providing services to
Clients by way of Structured Trade Finance. Proud to share that worldwide we completed
more than 1500 transactions by providing Letter of Credits (LCs), Usance LCs, Bank
Guarantees (BGs), Performance Bank Guarantees (PBGs), Advance Mobilization Bank
Guarantees (ABGs), Bid Bonds etc. We have also issued several Bank Guarantees to
various Government Organizations in India and worldwide as well as, we have issued
several LCs, SBLCs to various Suppliers worldwide, on behalf of our Clients.

Euro Exim Bank is a proud member of Caribbean Association of Banks and has multiple
banks as advising partners in various countries like Bank of Maharashtra, Axis Bank,
Eco Bank, Exim Bank Tanzania etc., who advises our instruments.

Question 2: Who are the present clients of Euro Exim Bank in India and in other parts of
the world.

Ans: Our major clientele comprises of Contractors, Importers etc. We have structured
transactions for several Multi-National Companies. Similarly, we have structured
transactions for various clients around the globe. Please find below are few of our
International transactions and Few transactions done for Clients in India, for your
reference

Samples of our International Transactions: -

Please find below are few of our recent Bank Guarantees / LCs and SBLCs issued by
Euro Exim Bank to various Government Organizations and private companies around the
world.

1. A 1.34 M USD LC issued from Euro Exim Bank to Bank of China, for import of
Inverters

2. A 1 M USD SBLC issued from Euro Exim Bank to Standard Chartered Bank in Kenya

3. A 1.5 USD Performance Bank Guarantee issued from Euro Exim Bank to Rural
Energy Agency, a Government of Tanzania organization

4. A 25.5 M USD LC At Sight issued from Euro Exim Bank to a Bank in Dakar, to a Supplier
in Senegal, for importing UREA

5. A 10 M USD SBLC issued from Euro Exim Bank to JP Morgan Chase Bank, USA

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

6. A 4.75 M USD SBLC issued from Euro Exim Bank to Bank Rakyat Indonesia

7. A 17 M Yen LC, issued from Euro Exim Bank to Yamaha Motors in Japan

8. A 233 K USD Performance BG, issued from Euro Exim Bank to Toshiba, Japan

9. A 240 K USD Performance BG, issued from Euro Exim Bank to Energy
Development Corporation Limited, Rwanda

10. A 480 K USD LC, issued from Euro Exim Bank to Bank of China, for import of
Melamine Powder

11. A 400,000.00 USD Bid Bond Security issued by Euro Exim Bank to Regional
Directorate of a big Exploration and Production company in France

12. A 205,000.00 USD Usance LC issued from Euro Exim Bank to a Supplier in
Myanmar for importing of Green Mung Beans, an agricultural product

13. A 272,000.00 USD Usance LC issued from Euro Exim Bank to a Supplier in Togo
for importing of Raw Cashew Nuts

14. A 731,990.00 USD Usance LC issued from Euro Exim Bank to Emirates NBD
Bank, to a Supplier in United Arab Emirates, for importing Nitrogen Calcium
Compound and Potassium Nitrate Fertilizers

15. A 341,940.00 USD Usance LC issued from Euro Exim Bank to Bank of China, to a
Supplier in China, for importing Industrial Grade Melamine Powder

16. A 223,614.00 USD Usance LC issued from Euro Exim Bank to Bank of China, to a
Supplier in China, for importing Nylon Yarn

17. A 1 M AED Usance LC issued from Euro Exim Bank to National Bank of Ras Al
Khaimah, to a Supplier in UAE, for importing Portland Cement

18. A 836,146.00 USD Usance LC issued from Euro Exim Bank to Hang Seng Bank
Ltd, to a Supplier in Hong Kong, for importing Sony Viao Laptops

19. A 463,000.00 USD Usance LC issued from Euro Exim Bank to Bank of China, to a
Supplier in Hong Kong, for importing LED TVs

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

Sample Transactions Structured for Our Indian Clients:

Please find below are few of our recent Bank Guarantees / LCs and SBLCs issued by
Euro Exim Bank to various Government Organizations and private companies in India,
advised by Bank of Maharashtra

1. A 21.5 Crore INR SBLC issued from Euro Exim Bank to an Apparels Business in
India

2. A 2.99 Crore INR Performance BG issued from Euro Exim Bank to Central
Electronics Limited, A Public Sector Enterprise in India

3. A 10.07 Crore INR Advance Payment BG issued from Euro Exim Bank to Central
Electronics Limited, A Public Sector Enterprise in India

4. A 1 M USD (Approximately 7.36 Crore INR) SBLC Issued from Euro Exim Bank to
a Diamond merchant

5. A 10 Crore INR BG Issued from Euro Exim Bank to An Asset Restructuring

Company

6. A 9.95 Crore INR LC issued from Euro Exim Bank to a Covid 19 Protection
Equipment Supplier

7. A 2.25 Crore INR BG from Euro Exim Bank to Uttarakhand Agriculture Produce
Marketing Board

8. A 4.67 Crore INR Advance Mobilisation Bank Guarantee issued from Euro Exim
Bank to Chennai Metropolitan Water Supply and Sewerage Board

9. A 5 Crore INR Advance Mobilisation Bank Guarantee issued from Euro Exim Bank
to Municipal Commissioner, Gobichettipalayam, Tamil Nadu

10. A 6 Crore INR Advance Mobilisation Bank Guarantee issued from Euro Exim
Bank to Chennai Metropolitan Water Supply and Sewerage Board

11. A 3.22 Crore INR Performance Bank Guarantee issued from Euro Exim Bank to
Bruhat Bengaluru Mahanagara Palike (BBMP)

12. A 1 Crore INR BG issued from Euro Exim Bank to National Highways Authority
of India

13. A 1.19 Crore INR BG issued from Euro Exim Bank to Deputy Commissioner,
Mysure

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

14. A 92 Lakh INR BG issued from Euro Exim Bank to Deputy Commissioner,
Chikkamagalur

15. A 5 Crore INR LC issued from Euro Exim Bank to Jindal Saw Ltd

16. A 6 Crore INR LC issued from Euro Exim Bank to BEML (Bharat Earth Movers
Ltd), a Government of India organization

Question 3: No of BGs and LCs issued by Euro Exim Bank to different Clients/ Companies
of different nature – pl provide type of BG with name of Client along with the Client.

Ans: Answered above in detail. Unfortunately, we cannot provide Client names as we

come under Banking Secrecy Act

Question 4: Who is the End Client to whom the BG has been issued- are they all
Government Tenders

Ans: Most of our Bank Guarantees are issued to Government Departments. In few cases,
we have issued to Corporates as well

Question 5: Has Euro Exim Bank issued any BG for ADB/ World Bank/ German funded?
Or any other funded Project – pl provide few details

Ans: Until now, we have not issued

Question 6: What is the safeguard if the Bank discontinue / withdraw BG during the
tenure of BG/LC

Ans: Any instrument we issue is Irrevocable in nature. Hence, instruments stand legally
valid enforceable until the validity period of the Instrument

Question 7: Is all charges will have to be paid offhand before issuance of BG ( ABG/ PBG/
Bid Bond) - if so, what is the safeguard if any circumstances Bank is not agreed to issue
the BG after the receipt of all charges

Ans: Instrument issuance charges are to be paid prior to the issuance, after the
documentation and after obtaining confirmation from Compliance team for issuance.
Client will be paying directly to Bank, against an invoice from bank, which will clearly
state that our responsibility ends towards the issuance fee collected, once our instrument
reaches either the Beneficiary bank or Beneficiary. If we could not deliver the Instrument
to either the Beneficiary / Beneficiary’s Bank, the fee will be reimbursed after adjusting
our cost, which is 1/3 of the fee value and 2/3 will be returned back to client

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

Question 8: Do the Bank follow the same format of BG as provided in the Tender
document.

Ans: We do not issue exactly as per the required draft. Our legal team will vet the draft
and will make changes to it as necessary after analyzing the underlying transaction.

Question 9: Is the BG issued directly from Exim bank, or it is issued thru any Bank of that
country- that is say for example if BG has to be issued for any Project in India will it be
issued directly for Euro Asia Bank/ or it has tie up with any Nationalized Bank India like
SBI and others and issue BG on letter head of that Indian Bank.

Ans: BGs will always be issued from Euro Exim Bank only. However, our BGs will be
advised further by some Nationalized banks, for example, in India, Bank of Maharashtra
(BOM) will confirm the authenticity of the BG and will advise further to Department
via bank bonded courier. However, BOM advises without any risk or responsibility
and the entire liability will be on Euro Exim Bank itself.

Question 10: Contact for Euro Exim Bank in London and address and contact of India
Office

Ans: Please note that Euro Exim Bank is registered in Saint Lucia and our St. Lucia address
is as below.

Question 11: What are structured trade finance transactions?

Ans: Structured trade finance transactions are where a secured loan is extended to a
seller of goods to finance the production of those goods. Typically, the transaction is
structured so that the proceeds of sale are applied to repay the loan.

There are several different types of structured finance transactions. These include:

 Pre-export and prepayment finance – a loan that is repaid directly from the sale of
goods.
 Warehouse financing – a loan secured on the quantity of goods stored in a
warehouse.
 Borrowing base facilities – a working capital loan based on a borrowing base of
assets.
 Export credit agency finance – where trade agencies of individual countries lend
support to exports of goods from their country.
 Trade receivables securitization – where assets are sold to a financing vehicle that
issues debt on a capital market.
 Islamic finance transactions – transactions structured to be in line with Islamic
finance principles.
 Receivable’s financing – forfaiting, invoice discounting and factoring.

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

Question 12: What is the Uniform Customs and Practice for Documentary Credits?

Ans: The Uniform Customs and Practice for Documentary Credits (UCP) is a set of
international standards for international trade finance. The UCP brings together the
different domestics laws covering letters of credit into a single set of rules, standardised
by the International Chamber of Commerce (ICC). The UCP presents a single uniform set
of rules and practice and can significantly speed up the process of negotiating trade
finance documents.

The UCP is currently in its sixth edition (UCP 600) and is made applicable to a letter of
credit by an express term in the letter of credit.

Question 13: What are the legal considerations in a trade finance transaction?

Ans: The key legal considerations in a trade finance transaction include:

 The precise obligations of each finance party
 Legal jurisdiction
 Currency risks
 Insurance

The precise obligation of the issuing bank will depend on the financing arrangement
chosen. Letters of credit are the most frequent method of payment in international trade
and they impose an obligation on the issuing bank to pay the seller on presentation of the
relevant documents. In more complex deals, a number of banks may be required.
In many letter of credit transactions there are two banks involved, the issuing bank in the
buyer’s home country and the correspondent bank in the seller’s home country. These
banks will enter into bilateral agreements which determine the role of each party. Care
should be taken to ensure that these contracts are consistent with the governing law of
the letter of credit and other related credits. Determining the governing law of contracts
can be complex where the parties are in different jurisdictions and have different rules
on the conflicts of laws. In the event that no governing law is specified then the general
rule is that the governing law will be that in which the documents are presented by the
seller for payment.

Export transactions involve payment across country borders and can introduce material
currency risks, particularly where one party does not operate in the currency of the other
country. A buyer may seek to hedge its foreign exchange rate risk but the costs can be
prohibitive. Alternatively, a lender may offer hedging services in return for a fee.

Question 14: What is a typical type of security?

Ans: A typical type of security in trade finance will depend on the type of trade finance
transaction involved. In asset-based lending, a receivables financier will often take
security over a company’s debts as security for its loan.

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

In pre-export finance facilities, loans are normally secured by taking security over the
sale and purchase contract. A lender may also take security over banks accounts,
including collection accounts.
In borrowing base facilities, security is taken over the assets forming the borrowing base.
These are the goods in storage or transit, and security normally extends to the right to
payment for goods and sale proceeds.

Question 15: What role does insurance play in trade finance?

Ans: Insurance plays an important role in trade finance transactions. It provides an

additional layer of protection for a financier. Insurance can help protect against the risk
of damage or destruction of the goods.

Common types of insurance in trade finance include:

 Asset protection insurance – insurance covering the risk of damage or destruction
of goods
 Non-payment insurance – insurance covering the risk of non-payment under a
contract
 Political risk insurance – insurance against the risks of a change of law, civil war,
revolution or expropriation of assets

Question 16: What is pre-export finance?

Ans: Pre-export finance (PXF) is where a loan is extended to a borrower that is to be

repaid directly from the cashflow generated through the sale of goods or commodities.

Security is typically taken over the borrower’s rights under the export contract and the
collection account where amounts under the export contract must be paid.

PXF loans are typically used to meet a borrower’s working capital requirements.

Question 17: What are the advantages of pre-export finance?

Ans: Pre-export loans are a form of secured lending and as such can attract more
favourable terms than unsecured lending. The secured nature of the loan means that a
lender has to take less risk and may therefore offer more favourable terms. Secured loans
often have a greater access to lenders than higher-risk, unsecured, financing, and so a
borrower may be able to choose from a range of lenders.

Pre-export finance is heavily documented, and lenders may be able to anticipate a

borrower’s needs regarding grace periods, indebtedness or permitted disposals based on
prior transactions.

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

Question 18: What is export credit agency finance?

Ans: Export credit agency (ECA) finance is where the representatives of a country lend
money to support the export of capital goods and services from that country. ECAs have
the financial backing of its home state and the obligations it assumes are considered
sovereign obligations of its home state. Their purpose is to support the trade policy of
their domestic government.

Question 19: What are the benefits of export credit agencies?

Ans: Most ECAs have very strong credit ratings and they can help counter a gap in supply
from the commercial markets. If an ECA’s own capital and reserves are insufficient then
they may be able to call upon its home state to provide additional support. ECAs may also
be willing to provide credit directly by lending to buyers and at highly competitive rates.

Question 20: What is Avalization?

Ans: Avalization is defined as the endorsement of a bill of exchange. It is the involvement

of a third party whose role is to guarantee the obligations of the buyer as per the contract.
By ‘Avalizing’ the document, they are acting as a co-signer on the contract, and thus share
liability.

When companies are trading overseas, the provision of an AVAL may be often necessary
to make the instrument eligible for discount.

One example of a document that utilizes the Avalization process is Promissory notes.
Technically, a promissory note is a signed document that contains a promise of payment
on a specified date. Promissory notes are used to source methods of finance that do not
include a banking institution. Although this is generally true, Banks do also issue them.
This third party can be an individual or a company, the only requirement is they are
willing to bear the liability.

Since anyone can issue the Promissory Note, Avalization instils a lot of confidence in the
transaction.

Question 21: Factoring vs. Reverse Factoring

Ans: Standard invoice factoring allows a business to unlock cash that is tied up in future
income. It includes a company selling its accounts receivables to a third party – the factor
– at a discount. This allows the business access to money that would have not otherwise
been accessible in the short-term.

Reverse factoring, however, is the process of a third party putting itself between the
buyer and the seller. The third party commits to paying the company’s invoices to the
suppliers at an accelerated rate in exchange for a discount.

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia
 st
Office 2, 1 Fl,
Place Creole Building,
POB 838, Rodney Bay,
Gros-Islet, Saint Lucia WI

The buyer will pay the provider at the agreed invoice due date, and the supplier receives
a much-discounted payment from the Factor.

Question 21: What currency can the issuing bank pay within a Letter of Credit?

Ans: Officially, the currency that the issuing bank uses to pay the beneficiary should be
the currency specified in the Letter. This being said, there is no law or regulation that
prevents parties negotiating about a different currency.

Question 22: Marine Insurance: What does it cover?

Ans: Although each policy and coverage will be different, Marine insurance will cover the
loss or damage of the following:

 Ships
 Cargo
 Terminals
 The Marine Insurance Documents should reflect whether the contract specified
warehousing of goods also. However, if delivery is at the port, then the standard
insurance will terminate there.

Euro Exim Bank Ltd - Office 2, 1st Fl, Place Creole Building, POB 838, Rodney Bay, Gros-Islet, Saint Lucia