Calculators / Buyer's Credit Cost
Evaluate the true cost of foreign currency buyer's credit against domestic INR borrowing: including commission, CILE, SWIFT and forward cover.
Buyer's Credit Parameters
Results
Buyer's credit is a short-term import financing arrangement where an overseas bank lends directly to an Indian importer to pay the foreign supplier: at international interest rates (LIBOR/SOFR-linked), which are often lower than domestic rates.
You import goods worth USD 20,00,000. Instead of paying from your INR working capital, you arrange buyer's credit from an overseas lender against your bank's guarantee / SBLC.
The overseas bank charges Term SOFR (e.g. 3.48%) plus a lender spread (e.g. 70 bps). That's the dollar funding rate, around 4.18%, but it is not the all-in cost.
Your bank charges a guarantee / BG commission, charges in lieu of exchange (CILE), and flat SWIFT / processing fees. These are real rupee costs and must be loaded into the all-in.
You buy the USD forward to repay at maturity. The premium (forward minus spot) is the hedge cost on the principal, the line that pulls the dollar rate back toward the rupee rate.
Interest + commission + CILE + SWIFT + forex on principal = the fully-loaded all-in cost in INR. On the $2M example here it lands around 6.11%, against a ~9% rupee working-capital line.
Note: dollar interest is computed on a 360-day money-market basis and converted at the forward / booking rate. The all-in cost is the figure to compare against domestic borrowing, never the headline "SOFR + spread".