Post shipment finance is provided to meet working capital requirements after the actual shipment of goods. It bridges the financial gap between the date of shipment and actual receipt of payment from overseas buyer thereof. Whereas the finance provided after shipment of goods is called post-shipment finance. DEFINITION: Credit facility extended to an exporter from the date of shipment of goods till the realization of the export proceeds is called Post-shipment Credit. IMPORTANCE OF FINANCE AT POST-SHIPMENT STAGE: To pay to agents/distributors and others for their services. To pay for publicity and advertising in the over seas markets. To pay for port authorities, customs and shipping agents charges. To pay towards export duty or tax, if any. To pay towards ECGC premium. To pay for freight and other shipping expenses. To pay towards marine insurance premium, under CIF contracts. To meet expenses in respect of after sale service. To pay Continue reading
International Financial Institutions
The Asian Development Bank (ADB)
Origin During the 1950s, it was strongly felt that there should be a bank for Asia like the World Bank to meet the development needs of this region. This view was suggested for the first time at the ministerial Conference on Asian Cooperation held at Manila in December 1963. The Conference constituted a working group of experts which submitted its report to the UN Economic commission for Asia and Far East (ECAFE) at its session held at Wellington in March 1965. It was on the basis of this report that an Agreement Establishing the Asian Development Bank was drafted and adopted at the Second Ministerial Conference on Asian Economic Cooperation at Manila in November-December 1965. By January 1966, 33 countries had signed its Charter and the Asian Development Bank was set up on December 19, 1966 with its headquarters at Manila in the Philippines. Objectives The main aim for the Continue reading
The World Bank or The International Bank for Reconstruction and Development (IBRD)
The International Bank for Reconstruction and Development (IBRD) or the World Bank was established on December 27, 1945 following international ratification of the Bretton Woods Agreement of 1944 , which emerged from the United Nations Monetary and Financial Conference (July 1-22,1944).to assist in bringing about a smooth transition from a war time to peace time economy. It is the sister institution of IMF. Since its inception in 1944, the World Bank has expanded from a single institution to an associated group of coordinated development institutions. The Bank’s mission evolved from a facilitator of post-war reconstruction and development to its present day mandate of worldwide poverty alleviation, social sector funding and comprehensive development framework. The term ‘World Bank’ now refers to World Bank Group which includes International Bank for Reconstruction and Development (IBRD) established in 1945 for providing debt financing on the basis of sovereign guarantees. International Financial Corporation (IFC) established Continue reading
Understanding the Role and Impact of Green Bonds on the Financial Sector
Socially responsible investment has become an important role of financial services in the world. One of the latest investments that are available in the market is called “green bonds”, its popularity has taken off the recent years. A green bond is a bond specifically earmarked to be used for environmental and climate activities, meaning green bonds are used to fund projects with clear environmental benefits. To elaborate, green bonds are intended to encourage climate-friendly projects that aimed at pollution control, sustainable agriculture and wastewater management system, clean transportation, climate change adaptation, etc. Green bond market is open to different types of issuers such as government bodies, corporates, and financial institutions. The market for green bonds has expanded significantly over the past decade. In 2020, the cumulative green bond issuance crossed over $1 trillion and stood at $1.05 trillion, an average annual growth of 60% since 2015. Last year, the United States led Continue reading
Gold Backed Currency System
If the monetary authority holds sufficient gold to convert all circulating money, then this is known as a 100% reserve gold standard, or a full gold standard. Some believe there is no other form of gold standard, since on any “partial” gold standard the value of circulating representative paper in a free economy will always reflect the faith that the market has in that note being redeemable for gold. Others, such as some modern advocates of supply-side economics contest that so long as gold is the accepted unit of account then it is a true gold standard. In an internal gold-standard system, gold coins circulate as legal tender or paper money is freely convertible into gold at a fixed price. In an international gold-standard system, which may exist in the absence of any internal gold standard, gold or a currency that is convertible into gold at a fixed price is Continue reading
Case Study: Reasons behind the Bankruptcy of Lehman Brothers
The bankruptcy of Lehman Brothers was a result of the investment bank’s exposure to the 2007-2010 financial crisis. In fact, the demise of the investment bank would come to symbolize the crisis. Therefore, in order to understand the bankruptcy of Lehman Brothers, a consummate understanding of the 2007-2010 financial crisis is requisite. As such, an examination of crisis will serve as introductory. Several factors contributed to the fall of Lehman Brothers. Perhaps most important, however, was the period of deregulation that preceded the crisis. Arguably, the period of deregulation started during the Reagan Era. Reaganomics, the lassiez faire economic policies advocated by the former president, may have served as the starting point for the deregulatory climate that ensued for the following two decades. Either way, the following two decades witnessed an overriding belief in the virtues of deregulation. In 1999, President Clinton signed the Gramm-Leach-Bliley Financial Services Modernization Act into Continue reading