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I. Description
If your company is an import and domestic market-saling enterprise, and takes RMB to pay outside, then ICBC's "Remittance and Financing Express" service can well save purchasing and remittance cost and reduces financial cost for your company.
Brief flow chart is as follows:
① Your company deposit the RMB amount used to pay outside purchasing and remittance into ICBC and the time deposit is used for pledge.
② Simultaneously, ICBC will offer an amount of financing capital, with the period of corresponding forward purchasing and remittance transaction.
③ after the extending of financing, ICBC extends your company to pay for external institutions.
④ When the financing is due, ICBC will return financing after the delivery of forward purchasing and remittance, with the principal and interest of RMB time deposit.
II. Transaction occasion
Your company needs instant forward purchasing and remittance to pay outside with import L/C, import agent collection and remittance.
III. Functions and characteristics
Reduce remittance cost and financial cost
If your company pays outside with instant forward exchange rate, the funds cost of instant forward purchasing and remittance is: the amount of foreign currency paid outside multiplies instant buying rate.
If your company chooses ICBC's Remittance and Financing Express, then the funds cost comes: ICBC financing principal and interest × forward buying rate - RMB deposit interest.
If forward buying price and financing rate is good, then the funds cost of instant buying － "Remittance Financing Express" >0
IV. Warm tips
1. Your company must have a forward buying transaction simultaneously. The transaction volume and limit must correspond to the principal and interest, limit of the financing.
2. Your company needs to take former RMB, used for instant buying, as a pledge to ICBC, in the form of time deposit. Financing principal and interest should be equal to the amount of the principal and interest of RMB time deposit divides forward buying rate, and the time deposit limit should match the financing limit.
3. If forward buying price and financing rate is high and this leads the increase of the cost of funds, then, this package of service cannot bring about any proceeds.
V. Cases
Company A is an import and domestic market-saling enterprise. It pays 10 million USD outside in the form of RMB, with a low profit rate.
If Company A chooses instant buying, the cost of funds is 80,400,000 RMB.
If Company A chooses ICBC's "Remittance and Financing Express" package service, takes the RMB formerly used for buying as a pledge to ICBC. Then ICBC will substitutingly pay 10 million USD for Company A, with a year's financing limit and 5.7%'s annual financing rate. Then the cost of funds is ICBC's financing principal and interest × forward buying rate- RMB deposit interest. The ICBC financing principal and interest totals 10,562,200 USD(1000+1000×5.7%×365/360), the forward buying rate is 7.7 and RMB deposit interest is 1,789,600 Yuan.
COMPANY A's cost of funds is ×:1056.22×7.7-178.96= 79, 539,400 Yuan
COMPANY A's saved expenditure is 860, 600元(8040－7953.94)
Note: ICBC's one-year time RMB deposit interest is 2.25%. The principal and interest of RMB used for pledge × (1+2.25%) =1056.22×7.7. therefore, we can figure out the RMB deposit principal and interest used for pledge.
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