Project on Trade Finance

In A Project Report on

“TRADE FINANCE”

Submitted to PUNJAB TECHNICAL UNIVERSITY JALANDHAR

In partial fulfillment of the requirement for the Award of of degree of of Master of Business Applications Submitted by Name: Suman Verma Uni. Roll no. 1174053

(Session 2011 – 2013) GURU NANAK INSTITUTE OF MANAGEMENT AND TECNOLOGY Ludhiana

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ACKNOWLEDGEMENT

In presentation presentation of this report by me, I feel great pleasure because because it gives me extensive practical knowledge in my career. I get idea about Indian trade finance Industry by this project.

I express my deep sense of gratitude to My Company Guide Mr. Anuvrat Sharma for his valuable inspiration inspiration and guidance during my project work. They have patient and critically gone the subject matter.

I also like to thank all staff of Kotak Mahind ra bank who guid guides es me in proj proje ect work. I would uld like like to take take oppo opport rtun unit ity y to expr expre ess my grati ratitu tude de towards all of them who have contribut contr ibuted ed directly direc tly or indirectl indi rectly y in my proj projec ectt wor work. k.

Student Name: SUMAN VERMA

























CERTIFICATE

This is to certify that the Summer Internship project project titled “ TRADE FINANCE” FINANCE” a bona fide w o r k o f S U M A N V E R M A , i s o r i g i n a l a n d h a s b e e n d o n e under my supe supervi rvisio sion n in partia partiall fulfill fulfillmen mentt of the requi require remen mentt for the th e awa rd of M.B.A M. B.A for the th e period of 1.5 months from 25 th April2012 to 15 th June 2012. This report neither full nor in part has ever ever befo before re been been subm submitt itted ed for for awar awardi ding ng of any any degr degree ee of either either this this university university or any other other university. university. I am pleased to stay that his performance during the period was extremely satisfactory.

College: GNIMT City: LUDHIANA

























CONTENTS    

Introduction to study Objective to study Banking Industry Profile Introduction of kotak Mahindra bank Corporate identity of kotak Mahindra bank About company The journey Business of kotak Mahindra bank Senior management Awards Introduction of trade Key factors of trade Risk in international transaction INCOTERMS Mode of International trade o Clean payment o Bill of collection o Documentary credit Introduction of trade Importance of trade finance Pre-shipment and post-shipment Forfeiting, factoring, bank guarantees and co acceptance Domestic trade finance services Trade finance in kotak Mahindra Bank International- Export International- Import Bank guarantee Domestic Statistical Analysis Conclusion Findings Bibliography • • • • • •

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Project Project title “TRADE “TRADE FINANCE” FINANCE” is the study study of trade trade facilita facilitatio tion n aims at reducin reducing g transaction cost and time by streamlining trade procedures and processes. One of the most important challenges challenges for traders traders involved in a transaction is to secure financing so that that the transactio transaction n may actually actually take place. place. The faster faster and easier the proces process s of financing an international transaction, the more trade will be facilitated. Trader Traders s require require working working capital capital (i.e., (i.e., short-te short-term rm financin financing) g) to support support their their trading trading activities. Exporters will usually require financing to process or manufacture products for the export market before receiving payment. Such financing is known as pre-shipping finance. Conversely, importers will need a line of credit to buy goods overseas and sell them in the domestic market before paying for imports. In most cases, foreign buyers expect to pay only when goods arrive, or later still if possible, but certainly not in advance. They prefer an open account, or at least a delayed payment arrangement. Being Being able able to offe offerr attra attracti ctive ve payme payments nts term term to buyer buyers s is ofte often n crucia cruciall in getti getting ng a contract and requires access to financing for exporters. Therefore, Therefore, governments governments whose economic growth strategy involves trade development development should provide assistance assistance and support in terms of export financing financing and development development of an efficient financial infrastructure.



















































The mai n of t he prese nt stu dy of i s accom plish the fol lowing obje object ctiv ive. e.

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Proper understanding of Trade finance department.

To know about brand awareness of kotak Mahindra bank and client’s ranking about Kotak Mahindra bank. 

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Factor responsible for performance of kotak Mahindra bank.

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To know the organization.

















































Indian Banking Industry

Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospe prospered red.. The The first first fully fully India Indian n owne owned d bank bank was was the Allah Allahab abad ad Bank Bank,, which which was was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. ownership. The Reserve Bank of India formally took on the resp respon onsi sibi bili lity ty of regu regula lati ting ng the the Indi Indian an bank bankin ing g sect sector or from from 1935 1935.. Afte Afterr Indi India' a's s independence in 1947, the Reserve Bank was nationalized and given broader powers. Nationalisation

By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stra "Stray y thoug thoughts hts on Bank Bank Natio Nationa naliz lizat ation ion." ." The The pape paperr was was rece receive ived d with with posit positive ive enth enthusi usias asm. m. Therea Thereafte fter, r, her her move move was was swift swift and and sudde sudden, n, and and the the GO GOII issue issued d an ordin ordinan ance ce and and natio national nalize ized d the 14 large largest st comme commerc rcial ial bank banks s with with effe effect ct from from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquition and Transfer of Unde Underta rtakin king) g) Bill, Bill, d it ived ived the identi idential al val 9th Au t, 1969. 1969.

























Liberalization

In the early 1990s the then Narasimha Rao government embarked on a policy of liberalization and gave licenses to a small number of private banks, which came to be know known n as New New Gene Generat ration ion tech tech-sa -savvy vvy bank banks, s, which which inclu include ded d banks banks such such as UTI UTI Bank(now re-named as Axis Bank) (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks.

The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%, at present it has gone up to 49% with some restrictions.

The new policy shook the Banking sector in India completely. Bankers, till this time, were were used used to the the 4-64-6-4 4 meth method od (Bor (Borro row w at 4%; 4%; Lend Lend at 6%; 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.



























Current Situation

Currently banking in India is generally fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. In terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets relative to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility but without any fixed exchange rateand this has mostly been true.

With the growth in the Indian economy expected to be strong for quite some timeespecia especially lly in its service services s sectorsector-the the demand demand for banking banking service services, s, especi especially ally retail retail banking, mortgages and investment services are expected to be strong. One may also expect M&As, takeovers, and asset sales.

In March 2006, the Reserve Bank of India allowed Warburg Pincus to increase its stake in Kotak Mahindra Bank (a private sector bank) to 10%. This is the first time an investor investor has has been been allo allowe wed d to hold hold more more than than 5% in a priv privat ate e sect sector or bank bank sinc since e the the RBI RBI

















































Corporate Identity of kotak Mahindra Bank

























ABOUT COMPANY Kotak Mahindra Bank is a financial service firm established in 1985. It was previously know known n as Ko Kotak tak Ma Mahin hindra dra Fin Finan ance ce Lim Limite ited d , a nonnon-ban banking king fina financia nciall com company pany.. In February 2003, Kotak Mahindra Finance Ltd, the group's flagship company was given the license to carry on banking business by the Reserve Bank of India (RBI). Kotak Mahindra Finance Ltd. is the first company in the Indian banking history to convert to a bank. Today it has more than 20,000 employees and Rs. 10,000 crore in revenue.

Mr. Uday Kotak is Executive Vice Chairman & Managing Director of Kotak Mahindra Bank Ltd. In July 2011 Mr. C. Jayaram and Mr. Dipak Gupta, Gupta , whole time directors of the Bank Bank,, were were appo appoin inte ted d the the Join Jointt Mana Managi ging ng Dire Direct ctor ors s of Kota Kotak k Mahi Mahind ndra ra Bank Bank.. Dr. Shankar Acharya is the chairman of board of Directors in the company. The Bank has its registered office at Nariman Bhavan, Nariman Point, Point , Mumbai Mumbai.. It bought stressed assets from a number of banks, at full loan value of Rs 1,000 crore in 2005. In January 2011, the bank reported a 32% rise in net profit to Rs188 crore for the quarter ended December 2010 against Rs. 142 crore the corresponding quarter last year. Kotak Mahindra bank also reached the top 100 most trusted brands of India in The Brand Trust Report published by Trust Research Advisory in 2011.

























THE JOURNY

2011-2005

2011 

Kotak Kotak Mahindra Mahindra Bank Ltd entered entered into a Busines Business s Cooper Cooperatio ation n arrangement with CIMB Group Sdn Bhd, Malaysia.

2010 Ahemedabad  Ahemedabad

Derivatives Derivatives and Commodities Commodities Exchange, Exchange, a kotak anchore anchored d enterp enterprise rise,, became operat operationa ionall as a nationa nationall commodity exchange.

2009 

Kotak Mahindra Bank Ltd. opened a representative office in Dubai. Entered Ahmedabad commodity exchange as anchor investor.

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Launched a Pension Fund under the New Pension System.

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Bought the 25% stake held by Goldman Sachs in Kotak Mahindra

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2008

2006



























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Launched Insurance Services. 

Kotak Securities Ltd. was incorporated

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Kota Kotak k Mahi Mahind ndra ra tied tied up with with Old Old Mutu Mutual al plc. plc. for for the the Life Life Insurance business.

2000

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Kotak Securities launched its on-line broking site. 

1995-1999

1998

Commencement Commencement of private equity activity through setting up of Kotak Mahindra Venture Capital Fund.

























1992 

Entered the Funds Syndication sector

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The The Inve Investm stmen entt Bank Banking ing Divis Division ion was was start started ed.. Took Took over over FICO FICOM, M, one one of Indi India' a's s larg larges estt fina financ ncia iall reta retail il mark market etin ing g networks

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The Auto Finance division was started.

1991

1990

1989-1985

























Multiple businesses, one brand Kotak Mahindra is one of India’s banking and financial services group, offering a wide range of financial services.

Kotak Mahindra Bank Ltd.

Kotak Mahindra Bank Ltd is a one stop shop for all banking needs. The bank offers pers persona onall finan finance ce solut solution ions s of ever every y kind kind from from savin savings gs acco accoun unts ts to credit credit cards cards,, distribution of mutual funds to life insurance products. Kotak Mahindra Bank offers transaction banking, operates lending verticals, manages IPOs and provides working capital loans. Kotak has one of the largest and most respected Wealth Management teams in India, providing the widest range of solutions to high net worth individuals,

























Kotak Investment Banking (KMCC) is a full-service full-service investment bank in India offering a wide suite of capital market and advisory solutions to leading domestic and multinational corporations, banks, financial institutions and government companies. Our services encompass Equity & Debt Capital Markets, M&A Advisory, Private Equity Advisory, Advisory, Restructuring and Recapitalization Recapitalization services, Structured Finance services and Infrastructure Advisory & Fund Mobilization.

Kotak Mahindra Prime Ltd .

Kotak Kotak Mahindra Mahindra Prime Ltd is among among India's India's largest largest dedicat dedicated ed passen passenger ger vehicle vehicle finance companies. KMPL offers loans for the entire range of passenger cars, multiutil utilit ity y vehi vehicl cles es and and prepre-ow owne ned d cars cars.. Also Also on offe offerr are are inve invent ntor ory y fund fundin ing g and and infra infrastr struct ucture ure fundin funding g to car car deale dealers rs with with strate strategic gic arra arrange ngemen ments ts via vario various us car car

























Kotak Realty Fund deals with equity investments covering sectors such as hotels, IT parks, residential townships, townships, shopping centres, centres, industrial industrial real estate, health care, retail, education and property management. The investment focus here is on development projects and enterprise level investments, both in real estate intensive businesses Senior management

Mr. Uday S. kotak Executive Vice Chairman and managing director

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Mr. Uday S. kotak Executive Vice Chairman and managing director of the bank, and its principal founder and promoter. Mr. kotak is an alumnus of Jamnalal Bajaj institute of management studies. In 1985, where he was still in his early twenties, Mr. kotak thought of setting up a bank



























He heads heads commerci commercial al banking banking,, retail retail asset asset busines businesses ses and looks after after group group HR function. Early on, he headed the finance function and was instrumental in the joint venture between Kotak Mahindra and Ford Credit International. He was the first CEO of the resulting entity, Kotak Mahindra Primus Ltd. Awards

















































While a seller (the exporter ) can require the purchaser (an importer ) to prepay for goods shipped shipped,, the purchaser (importer) may wish to reduce risk by requiring the seller to document the goods that have been shipped. Banks may assist by providing providing various forms of support. For example, the importer's bank may provide a letter of credit to the

























Key Factors in Trade

























Exporter’s Bank

Importer’s Bank















































































































































































































































































































































































































































































































































































































































































































































BANK GUARANTEES Guara uarant nte ees are are give given n by bank bank on beha behalf lf of its its cust custo omer mer rega regard rdin ing g spec specif ific ic perform performance ance/ob /obliga ligation tion by the custome customerr to the other other party. party. The guarant guarantees ees ensure ensure payment to the party the bank’s customer is doing business. Under a bank guarantee/surety bond arrangement, the bank acts as guarantor of a claim or obligation in lieu of the debtor. The bank cannot be held liable in the event that the debtor fails to “perform”. The banks obligation is limited to its pledge to pay a maximum specified amount on fulfillment of the terms of the commitment. A bank guarantee/suret guarantee/surety y bond may only be issued if the customer has been granted a line of credit. In certain cases, the bank may require adequate collateral. One may note that even though in both Letter of Credit and Bank Guarantee ensure that the issuing bank guarantee payment, the difference lies in that while LC is a ‘positive action’ instrument, BG is a non-performance instrument. Hence, payment is released under LC as and when all the terms of the underlying trade transaction are met. On the other other hand hand,, payme payment nt is relea release sed d unde underr BG if and and when when the terms terms of the the underlying transactions are not complied with. TYPES OF BANK GUARANTEES DIRECT/INDIRECT GUARANTEE In principle, there are two types of guarantee: 1. Dire Direct ct gua guara rant ntee ee A direct guarantee guarantee occurs when the client instructs the bank to a guarantee guarantee directly in favor of the beneficiary. 2. Indi Indirec rectt guara guarant ntee ee With an indirect guarantee, guarantee, a second bank is involved the second bank usually a foreign bank with head office in the beneficiary’s country of domicile, is requested by the initiating bank to issue a guarantee in return for the latter’s counter – liability and counter- guarantee. In this case, the initiating bank will cover the guaranteeing (foreign) bank against the risk of any losses that it may incur in the event that a claim is made under the guarantee upon first demand by the guaranteeing bank.

Depending on the purpose of the Guarantees may be classified as under: 1. Tend Bo Bond This type of bank guarantee is also known as a bid bond. The purpose of a tende tenderr bond bond is to prev preven entt a compa company ny from from submi submitti tting ng a tende tender, r, winn winning ing the contrac contractt and them declinin declining g to accept it on the grounds grounds that that the deals is no long longer er lucr lucrat ativ ive. e. Tend Tender er bond bonds s offe offerr buye buyers rs secu securi rity ty agai agains nstt dubi dubiou ous s or unqualified bids. They are often mandatory for public invitations to tender. 2. Perf Perfor orma manc nce e Bond Bond This is also known as a performance guarantee. A performance bond/guarantee provides security for any costs that may be incurred by the bond beneficiary on

























3. Cred Credit it Gua Guara rant ntee ee Borrowers are often required to provide collateral for a credit line or a loan. A third party may also provide collateral. A bank guarantee is one of the options creditors have to ensure that a loan will be repaid. 4. Paym Paymen entt Guara Guarant ntee ee A payment guarantee, guarantee, or payment default guarantee, guarantee, provides provides security against default for the goods to be delivered, for example. If the debtor fails to make payme payment nt when when due, due, and and the bene benefic ficiar iary y has has fulfi fulfille lled d his or her her cont contra ractu ctual al obligations, obligations, e.g. goods have been delivered delivered and/or services have been provided provided in accordance with the contract, a written declaration to this effect is generally sufficient to redeem payment from the guaranteeing bank. This instrument can be used instead of a letter of credit if, for example, the buyer does not require or demand proof of delivery by means of the usual original delivery documents. 5. Confi Confirm rmed ed Paym Paymen entt Order Order This is an irrevocable obligation on the part of the bank to pay a specified sum at a specified time to the beneficiary (creditor) on behalf of the customer. 6. Adva Advance nce Pay Payme ment nt Guara Guarante ntee e The advance payment guarantee is intended to bind the supplier to use the advance payment for the purpose stated in the contract between the buyer and the supplier. An advance payment provides the supplier with funds to purchase equipment or components, for example, or to make other preparations In general, the advance payment guarantee should contain a reduction clause that automatically reduces the amount in proportion to the value of the (Partial) deliver delivery(ie y(ies). s). The advanc advance e payment payment guaran guarantee tee should should only become become effectiv effective e once the advance payment has been received. 7. B/L B/L Lette Letterr if Inde Indemn mnit ity y This is also called a Letter of Indemnity. Individual bills of landing or the full set can go missing or be held up in the mail. Carries may be liable for damages if they deliver the consignment before receiving the original bill of landing. A bank guarantee in the carrier’s carrier’s favor for 100-200% 100-200% of the value of the value of the the good goods s enab enable les s them them to deli delive verr the the good goods s to the the cons consig igne nee e with withou outt presentation of the original documents. 8. Rental Guarantee This is a guarantee of payment under a rental contract. The guarantee is either limited to rental payment only, or includes all payments due under the rental contract. 9. Credi Creditt Card Card Guara Guarante ntee e In certain certain circumst circumstance ances, s, credit credit card card compani companies es will not issued issued a high value credit cared without a bank guarantee. Such kind of guarantee extended by a Bank is known as a Credit Card Guarantee.

























CLAIM (GUARANTEE UTILIZATION) If the benefic beneficiary iary under the guaran guarantee tee conside considers rs that that the supplier supplier has violated violated the supplier’s supplier’s contractual obligations, obligations, the former may utilize the guarantee. guarantee. Claims must be made made durin during g the perio period d of valid validity ity and and stric strictly tly in acco accorda rdance nce with with the guar guaran antee tee conditions. STANDBY LETTER OF CREDIT The standby letter of credit comes from the banking legislation of the United States, which forbids US credit institutions from assuming guarantee obligations vis-à-vis third parties. To circumvent this rule, the US banks created the standby letter of credit, which is based on the uniform customs and practice for documentary credits. SIMILARITIES WITH THE GUARANTEE Like the guarantee, the standby letter of credit is of an abstract nature, i.e. legally separated from the underlying transaction. In case of a standby letter of credit, the documents documents stipulated in the claim must m ust be submitted within the specified period. These documents should show that the client (exporter) has not met or insufficiently fulfilled his or her performance obligations or the debtor has not met a payment on time. The standby basically fulfils the same purpose as a guarantee it is payable upon first demand and without objections or defenses on the basis of the underlying transaction. It is up to the beneficiary to decide whether a standby may be given. AREA OF APPLICATION Standby Standby LCs are used used in import-e import-expo xport rt busines business, s, primaril primarily y with the Americas Americas and frequently in the Far East as well, or whether the contracting parties decide to use this legal from as a security instrument. PURPOSE To secure any claim by the oblige on the obligor due to non-contractual delivery or performance by the agreed date or credit repayment on the due date SPECIAL FEATURES In contrast to the guarantee, a standby can be confirmed immediately provided the standby conditions permit. The standby letters of Credit (LCs) are issued subject to either Uniform customs and Practices for Documentary Credit (UCPDC) Publication No.500 or International Standby Practices issued by International Chamber of Commerce. CO-ACCEPTANCE OF BILLS Co-a Co-acc ccep epta tanc nce e is a mean means s of nonnon-fu fund nd base based d impo import rt fina financ nce e wher whereb eby y a Bill Bill of Exchange drawn by an exporter on the importer is co-accepted by a Bank. By coaccepting the Bill of Exchange, the Bank undertakes to make payment to the exporter even if the importer fails to make payment on due date. The co-acceptance by the importer’s banker acts as a guarantee for the exporter for timely receipt of proceeds from the importer. For the Bank, it is a non-fund based exposure on the importer. It is an increasingly used form of import

























DOMESTIC TRADE FINANCE Fundamentally, the trade finance business in the domestic arena is similar to the trade finance business on an International level. However, since no multi-currency or cross country transactions occur, hence the regulatory framework is much simpler. The goods do not require customs clearance and the remittances do not need to be reported to Forex regulatory bodies. Naturally, export/import licenses are not required and export quota restrictions do not limit growth. Also, since both the buyer and seller operate within the same legal and administrative framework, and are often well known to each other, the level of mutual confidence is higher. Modes of transaction in domestic trade within national boundaries are basically similar to the modes of transaction in International Trade. These include:  Clean Payment Open a/c transaction Advance payment payment  Documentary Collections Delivery against payment Delivery against acceptance  Documentary Credit It is natural that due to higher degree of confidence enjoyed by the buyer and sellers within the same regulatory and administrative boundaries, the easier to carry out and less less docum documen enta tatio tion n inten intensiv sive e trade trade optio options ns like like clea clean n payme payment nt and and docum documen enta tary ry collections are used more often. Most of the trade finance options available in International trade are also available in domestic trade. These have been touched in detail in the preceding chapters. Howeve However, r, here here we shall shall discuss discuss some financin financing g options options that are specifi specificall cally y more relevant in domestic trade. CHANNEL FINANCING Through Channel Financing, Dealer are able to leverage their relation with reputed companies in sourcing low cost funds with support from their counterparts. Channel Financing is a product that extends working capital finance to dealer having business relationships with large companies in India. This may be in the form of either cash credit facilities or as a bill discounting line of credit. Discounting of trade bills drawn by the reputed supplier and accepted by the dealer/ distributor. Limited overdraft facility to the dealer/distributor for his business dealing with large corporate. By providing short term lending to clients utilizing qualified receivables as collateral, value value is adde added d to the clien clientt by way way of worki working ng capit capital al suppo support, rt, reduc reduced ed acco account unts s receivables and improved control of the sale/ distribution channels. In addition, payables discount discounting ing serves serves to add value value by improvi improving ng supplier supplier relatio relationshi nships ps and enhancin enhancing g cash-flow management. • •

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VENDOR FINANCING Vendor can leverage their relationship with reputed companies by sourcing low cost bill discount discounting ing line of credit. credit. Vendor financing financing is a product product to extend extend working working capital capital finance to vendor having business relationships with large corporate in India. Herein the bank undertakes to discount bills drawn by the supplier/ vendor and accepted by the corporate.



























TRADE FINANCE IN KOTAK MAHINDRA BANK

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International – Export International – Import Bank Guarantee Domestic

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International – Exporter

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Kotak Mahindra Bank provides a wide range of exporter related services, assisting the growth of organization into overseas market. Key Features Tailor made solutions to suit all export needs. Experienced trade finance team that focuses on client requirements. Leverage our global network of correspondent banks. Pre-Shipment Credit Kotak offer pre-shipment credit to exporters by way of packing credit, enabling them to finance operations like purchase/import of raw materials or processing and packing of export goods. Exporters can avail of this pre-shipment credit either in rupee or foreign currency. Post-Shipment Credit Kotak Kotak offe offerr postpost-sh shipm ipmen entt credit credit to expo exporte rters rs,, helpi helping ng them them finan finance ce expo export rt sales sales receivable for the time lag between shipment of goods and date of realization of export proceeds. Exporters can avail of the following services: Negotiation/payment/acceptance of export documents under letter of credit. Purchase/discount of export documents under confirmed order/export contracts etc. Advances Advances against export export bill sent on collection collection basis. Advances Advances against exports exports on on consignment consignment basis. basis. Advances Advances against undrawn undrawn balance on on exports. exports. Advances Advances against approve approved d deemed exports exports • • •

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Bills & Collection Kotak have a strong, experienced trade finance team that focuses on client traderelated requirements, whether domestic or international. This team advises and guides clients on documentation and transactions ensuring: Quick turnaround times through smooth document processing. Faster payment through constant follow-ups with correspondent banks for timely recovery of funds. Cost effectiveness Better reach Excellent trade support Arrangement Arrangement of credit credit reports reports of overseas overseas parties. parties. Special Specialize ized d advice advice on interna internation tional al trade trade related related issues issues as well well as technic technical al issues such as ECM requirements, RBI reporting, new circulars and international developments Kotak have developed global network of correspondent banks that enables us to handle large volume collection portfolios. We offer world-class facilities for handling collection related to international trade. It also handles documents where proceeds have been received by the exporter on an advanc advance e payment payment basis and actual shipment shipment takes takes place place later. later. In such such cases, cases, the documen documents ts need need to be accompa accompanied nied with a Foreign Foreign Inward Remitta Remittance nce Certifi Certificate cate (FIRC) as proof of receipt of the advance payment. • •

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Inward Remittances We facilitate Foreign Inward Remittance (foreign exchange received by a person in India through banking channels) and offer convenient modes of operations for quick and easy easy disbu disburse rsemen ment. t. The The facil facility ity is exte extende nded d throu through gh arran arrange gemen mentt with with reput reputed ed,, correspondent banks located in most countries around the world.

























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International-Import

Kotak Kotak Mahindra Mahindra Bank provides provides a comprehe comprehensiv nsive e range range of import import related related service services, s, helping to cover trading risks. Key Features Tailor made solution suit all import needs Experienced trade finance team that focuses on client requirements. Leverage our global network of correspondent banks Letter of Credit We offer our customers import financing services through Letter of Credit (L/C) which are well accepted globally and supported by strong trade finance setup. We have correspondent banking arrangements with a large number of banks worldwide for for this this servi service ce.. Our Our trad trade e team team is equip equippe ped d to struc structu ture re solut solution ions s for for a varie variety ty of purchase purchase requirements, ranging from simple L/C is to revolving revolving L/C, bid bonds, standby L/C and other performance guarantees. Bill & Collection We have a strong, experienced trade focuses on client trade-related requirements, whet whethe herr dome domest stic ic or inte intern rnat atio iona nal. l. This This team team advi advise ses s and and guid guide e clie client nts s on documentation and transactions ensuring: Quick turnaround times through smooth document processing. Faster payments through constant follow-ups with correspondent banks for timely recovery of funds. Cost effectiveness Better reach Excellent trade support Arrangement Arrangement of credit credit reports reports of overseas overseas parties parties Specialized Specialized advice on international international trade issues as well as technical issues such as ECM requ requir irem emen ents ts,, RBI RBI repo report rtin ing, g, new new circ circul ula ars and and inte intern rnat atio iona nall developments. We have developed a global network of correspondent bank that enables us to handle large volume collection portfolios. We offer world-class facilities for handling collection • • •

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Outward Remittances Services in this area include: Payment of direct Import Bills: Processing Processing and remittances for import Bill directly received by importers in India. Advance payment toward import: Processing Processing and remittances remittances toward advance advance payment for imports. Other outward remittances like divided payout, ECB payment, royalty, shipping etc. •

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Bank Guarantee

Kotak offer a wide spectrum of guarantee that address varying client requirements and risk profiles. These include performance performance and financial guarantees, guarantees, bid bond, tender and customs guarantees, etc. Key Features Experienced trade finance team that focuses on client requirements. Reduce risks. • •

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Domestic Key Features Extensive range of trade –related services. Experienced trade finance team that focuses on client requirements. Tailor made solution to suit all trading needs. Bill Discounting Kotak Kotak experie experience nced d and dedicat dedicated ed trade trade finance finance team team is focuse focused d on structur structuring ing bill discounting products to meet customer needs- be it short term or medium term finance. In fact, our services go beyond plan bill discounting to encompass a complete range of supply chain management solutions. We aim at increasing the efficiency of the entire cycle, ensuring that transactions are executed speedily and effectively. We will soon offer integrated supply chain services on an electronic platform. Invoice Discounting • • •

























Corporate pays the bank directly for all supplies by the vendor Maximum tenure is currently 45 days. Statistical Analysis •

In this segment I will show my findings in the form of graphs and charts. Al All the data which I got form the market m arket will not be disclosed over here but extract of that in the form of information will definitely be here Detail: Ar Area: Ludhiana Type of Data: 1. Primary 2. Secondary Respondent: Respondent: Customers Customers Industry: Banking

Methodology: M et e t h od od ol o l o gy gy i s t he h e s y st st em e m a ti ti c m e th th od o d o r a n a ct c t i vi vi t y, y, w hi h i c h i s u se se d t o collect the information information required to complete this project work. The data is collected collected by 2 methods: 1. Primary data 2. Secondary data

Primary data Is collected through personal interaction with customers of kotak Mahindra bank and office staff. Secondary data This is secondary in nature i.e. already, collected information. This secondary data is collected through:



















































ANALYSIS AND INTERPRETATION 1). People know about kotak Mahindra Bank

Sr no. 1 2

80% 70% 60% 50% 40% 30%

Attributes Yes No

No of respondent 80 20 100

percentage 80% 20% 100

























2). Rank the kotak Mahindra bank on following Features:Rank 1 for best and 5 for worse

Sr no. 1 2 3 4 5

Attributes Rank 1 Rank 2 Rank 3 Rank 4 Rank 5 Total

40% 35% 30% 25% 20% 15%

No of respondent 15 38 28 16 3 100

percentage 15% 38% 28% 16% 3% 100

























3). People would like to be a customer of kotak Mahindra bank because:

Sr no. 1 2 3 4 5

Attributes Customer Services Efficient Services securities Brand Name Advertisement Total

40% 35% 30% 25% 20% 15%


percentage 29% 39% 8% 21% 3% 100

























4). 4). kota kotak k Mahin ahind dra Bank Bank is a safe safe plac place e for for mone money y proc proces ess sing ing or tra trade transaction:-

Sr no. 1 2

Attributes Yes No Total

90% 80% 70% 60% 50% 40% 30% 20%

No of respondent 85 15 100

percentage 85% 15% 100



























5). Investment Preference:-

Sr no. 1 2 3 4 5

Attributes Fixed Deposits Real estate Insurance Mutual Funds Gold Total


percentage 33% 21% 27% 9% 10% 100

























6).Time Duration with Bank:-

Sr no. 1 2 3 4

Attributes No of respondent -6 months 3 6 months to 1 year 30 30 1 year to 2 year 50 Above 2 year 17 Total 100

percentage 3% 30% 50% 17% 100

























7). Most frequent way to interaction with bank:-

Sr no. 1 2 3

Attributes Visit Branch Internet Phone Total

No of respondent 42 22 36 100

percentage 42% 22% 36% 100

























8). Satisfaction level with bank:-

Sr no. 1 2

Attributes Very satisfy Some what satisfy

No of respondent 14 36

percentage 14% 36%

























9). Satisfaction level with staff:-



































































































response 42% people not like to be a customer of Bank because of Bad customer serv servic ices es,, 16% 16% peo people ple not not like like to be a cust custom omer er of Bank Bank beca becaus use e of lack lack of tran transp spar aren ency cy,, 7% peop people le not not like like to be a cust custom omer er of Bank Bank beca becaus use e of lack lack of securities.

























(B) Efficient Efficient Services Services (C) Security

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Project on Trade Finance

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