◆Product 1: Domestic-import back-to-back letter of credit

Domestic-import back-to-back letter of credit refers to the combination of domestic letter of credit and import letter of credit according to the operation of goods and capital flow of the enterprise, opening up the domestic and foreign trade process, and meeting the settlement and financing needs of the whole process from import to domestic sales. In this model, the importer occupies a core position and is the ultimate beneficiary, and the domestic downstream manufacturer first issues the domestic letter of credit through the bank, and then the bank or other banks issue the import letter of credit according to the domestic letter of credit for overseas procurement.

This model is often adopted by importers who have a clear sales channel in the country before purchasing goods. For example, some foreign trade wholesale enterprises or agency companies have fixed sales channels in China; Or the external procurement platform of some large enterprises, which sells the goods purchased in the overseas market to internal affiliated enterprises, can also be regarded as having a fixed sales channel.

There are two necessary conditions for the success of the domestic-import back-to-back L/C model: first, the documents and funds of the domestic L/C and the import L/C must circulate within the bank to form a closed loop; Second, after receiving the documents under the import L/C, the issuing bank of the L/C should quickly open the bills and convert the documents in accordance with the requirements of the domestic L/C, so as to ensure that the L/C issuing bank can confirm in advance and make payment when due. If the L/C at sight is handled in the early stage, the importer can apply for the discounting of domestic L/C claims to pay for the L/C; If the usance import letter of credit is handled in the early stage, the issuing bank can accept it.

The issuing bank of the import letter of credit must reply within 5 working days after receiving the documents, because the domestic letter of credit issuing bank should confirm the payment due during this period, so before issuing the domestic letter of credit and foreign letter of credit, it is necessary to clarify the entire issuance process, understand the relevant document requirements, and try to choose the same bank to issue two kinds of letters of credit to save time.

If the above two points can be achieved, with the help of this model, the bank can fully control the domestic and foreign trade process of the enterprise and effectively prevent related risks. With the credit enhancement of the domestic L/C issuing bank, the bank can adopt a low-risk credit method when issuing import L/C, so as to effectively control the risk on the one hand, and solve the bottleneck problem of enterprise credit on the other hand.

◆ Product 2: Refinancing of domestic L/C pledge

Domestic-import back-to-back L/C takes domestic L/C and import L/C as the settlement method, which is only suitable for downstream fixation, and both use L/C as the settlement method, which has higher requirements for the time of the connection of documents and key nodes of these two types of L/C, and will be subject to many restrictions in the actual application process. In order to further expand the application scope of domestic L/C, we will explore in detail the refinancing model of domestic L/C pledge.

The domestic L/C pledge refinancing model refers to a mode in which the beneficiary of the domestic L/C pledges the accounts receivable that have been confirmed to be due under the L/C to the bank for financing. Financing products include the issuance of domestic letters of credit or import letters of credit, the issuance of letters of guarantee with a definite maturity date, packaging loans, import and export bills, and payment and substitution.

Some similarities can be found by comparing the domestic L/C pledge refinancing with the banker's acceptance bill pledge, both of which are based on the interbank credit of the issuing bank to handle financing for the domestic L/C beneficiary, the difference is that the domestic L/C pledge refinancing model is not only for financing the basic trade and related documents under a single L/C, but the accounts receivable under the domestic L/C that the issuing bank has confirmed payment for as a way to prevent and control risks, if the financing applicant defaults when due, The domestic L/C issuing bank shall repay the loan on behalf of the applicant. Under this low-risk model, banks can occupy a low-risk credit line or a special credit line for the enterprise to finance it.

In practice, the domestic L/C pledge refinancing model should focus on whether the accounts receivable meet the pledge conditions, including that the domestic L/C has clearly stated that the payment is due, and the payment due date is specified; The accounts receivable have been registered in the credit information system of the People's Bank of China, and there will be no duplicate pledge problem; The applicant for financing must be a beneficiary of a domestic letter of credit.