Assignment, Trade Finance, BBA-BI 7th semester, Ace Institute of Management

1. International Trade
Practices & Trade
Financing
Provisions in Nepal
By:
• Chhitiz Shrestha
• Mintira Lama
• Samyak Shakya
• Sushan Byanjankar
Trade Finance
Group Project
Work

2. Introduction to Int’l Trade
 Buying and selling of large number of goods
and services between countries
 Any buying and selling of goods that takes,
with the return of financial compensation
such as money or money’s worth is referred to
as trade.
 Trade is taken as an effective tool to reduce
poverty in the country and to enhance the
wellbeing of the marginalized people.

3. Introduction to Int’l Trade
 International trade is the exchange of
capital, goods, and services across
international borders or territories.
 It has high economic, social, and political
importance.

4. Objectives
 To learn about the
International Trade
practices in Nepal.
 To learn about the
Trade financing
provisions.
 To learn about the
practices in trade
prevalent in the
country.

5. Limitations
 Making generalization on the basis of the
findings of the project may not be
correct.
 Limitations in the time for preparation
have brought major constraints, a more
time allotment could have brought
greater results.
 Limitation in the information availability.

6. Methods of Payment
 Cash in Advance
 Documentary Credit (Letter of Credit)
 Documentary Collection
 Open Account

7. Incoterms
 Incoterms are the Trade terms published
by the International Chamber of
Commerce (ICC) that are commonly
used in both international and domestic
trade contracts.
 Incoterms, short for "International
Commercial Terms," are used to make
international trade easier by helping
traders in different countries understand
one another.

8. Incoterms

9. Incoterms

10. Advantages of Trade
 • Promotes efficiency in production as
countries will try to adopt better methods
of production
 • More employment could be generated
as the market for the countries’ goods
widens through trade.

11. Disadvantages of Trade
 Import of harmful
goods
 It may exhaust
resources
 Over Specialization
 Danger of Starvation
 One country may
gain at the expensive
of another
 It may lead to war

12. Nepal and its international
trade history
 The Federal Democratic Republic of Nepal has
traditionally maintained a non-aligned policy and
enjoys friendly relations with neighbouring countries
 Nepal’s most substantive international relations are
perhaps with international economic institutions, such
as the Asian Development Bank, the International
Monetary Fund, the World Bank, and the South Asian
Association for Regional Cooperation, a multilateral
economic development association
 In the 1950s, over 90 precent of its foreign trade was
conducted with India
 Most of Nepal's basic consumer goods were
imported from India, and most of its agricultural
exports went to India.

13. Nepal and its international
trade history
 The March 1989 impasse in negotiations for trade and
transit treaties with India seriously damaged Nepal's
economy.
 The transit treaty had allowed goods from third countries
entering at Calcutta to pass through to Nepal and
exempted them from customs and transit duties.
 The treaty allowed trade to transit at twenty-one border
points, and primary commodities were essentially duty-free
in both directions
 The dispute was not solved until June 1990 when
Kathmandu and New Delhi agreed to restore economic
relations to the status quo ante of April 1, 1987.
 Trade with India decreased from more than 70 percent in
1975 to about 27 percent of total trade in 1989.

14. Documents to be submitted in the customs
while goods are to be imported from India
against the payment of convertible foreign
exchange:
 Declaration Form
 LC/ T.T/ Draft
 Document of Insurance
 Packing List
 Bill of Export
 Certificate of VAT Registration
 Certificate of Registration of firm or company
 Certificate of Industry Registration is case of Industry
 In case of requirement of permission of certain institution for
importation of particular goods, such permission of the concerned
institution
 TA and COP documents for the importation of vehicle
 Bi. Bi. Ni. Form 4
 Appointment letter of customs agent in case of appointed agent

15. Provisions Regarding the
Imports from India
 Procedures to import goods from India
 L/C
 T.T
 Draft
 Local Purchase (Local Import)

16. The documents to be submitted in
the customs while imports are
under barter system are
 Declaration Form for Import
 Declaration Form of already Exported Goods
 Invoice
 Document of Insurance
 Packing List
 Certificate of Registration of Firm or Company
 Certificate of Registration of Industry in case of
Industry
 Certificate of VAT Registration
 Appointment Letter of Agent in case of appointed
Agent

17. Provisions Regarding the Imports
from Tibet the Autonomous Region
of China
 L/C
 Draft or convertible foreign currency payment
as specified by Nepal Rastra Bank
 Traditional Barter System
 Nepalese resident within 30 km distance of
the border are allowed to import the goods
up to the amount of NRs.16000 without
payments through banking system

18. Trade finance done by
Nepalese commercial banks
 Import Business
 Letter of Credit
 Documentary Collection (DAP or DAA)
 Advance Payment
 Import Loan
 Trust Receipt Loan

19. Trade finance done by
Nepalese commercial banks
 Export Business
 Cash against Document (CAD)
 Documents Collection Service
 Export Loan
 Pre Shipment Loan / Packing Credit
 Post Shipment Loan / Bills Purchase / Bills
Discounting
 Bank Guarantee

20. Thank you!!!!