Current Market Sanpshot

At IBC we believe that the current marketplace for Buyers Credit is less than ideal, and most seekers and providers continue to transact in the current fashion solely due to a lack of a credible, organised alternative.

Currently seekers across all sectors access Buyers Credit for commodities ranging from gold and diamond jewellery to ship breaking and capital goods

Buyers Credit is normally provided by overseas branches of nationalised banks and occasionally by foreign banks

The price of Buyers Credit is largely influenced by the LIBOR rates that are currently prevailing.

The market is highly dispersed, with a lot of small arrangers including individuals with unknown antecedents and levels of reliability

The access to Buyers Credit is currently controlled by these "arrangers"

There is no institutionalised mechanism for monitoring or governance of the market

These facts result in imperfect price discovery, and lack of common knowledge of the current market size

The amounts of imports to India is increasing and currently stands at US$ 451 billion in 2013-14

Given the opaque nature of the market, there is a pressing need to popularise the product and increase awareness amongst importers

The most popular currencies for Buyers Credit transactions is USD with a few deals done in JPY, EUR and CHF

The pricing in the market is largely dependent on the USD-INR exchange and during the FY 2013-14 many importers were troubled with the continued volatility of the INR USD exchange rate

Currently the Buyers Credit tenure is restricted to the Trade Business Cycle of the commodity being imported as per RBI regulations.

The pricing and flow of finance in the Buyers Credit market is largely influenced by the demand/supply conditions of the US$ since major payments occur in dollar terms across the world.

There is currently a demand gap as the market has ample liquidity of dollar funds and there is subdued growth due to the global slowdown. Current prices have gone down to as low as LIBOR +30 bps pa for USD 5 to 10 million size transactions

Today the Buyers Credit as a product is a source to raise the cheapest funds with least hassles