BSI provides short-term FX facilities in form of refinance credit lines utilizing resources of its foreign branches and foreign banks. Since profit rate of this facility is lower than that of IRR facilities, it will be a great help to reduce the cost price of the goods for production units (to import raw materials, spare parts and machinery), commercial importers (to purchase and import consuming goods) and government-affiliated organizations the minimum amount for documentary credits to make use of refinance credit lines is one hundred dollars or the equivalent in other currencies. The period for utilization of short-term facility will be at most one year from the date of negotiation of documents.
The ceilings for utilization of refinance credit lines facilities by individual and legal entity are determined by the Central Bank of Islamic Republic of Iran.
Maximum period of utilization of the short term facilities is one year after negotiation of the documents.
At present , minimum amount of the LCs for making use of refinance credit lines is USD 100,000 or its equivalent to other currencies.
Refinance facilities profit rate is one year LIBOR rate plus two percent per annum which is to be paid by the applicant at the time of repayment of the amount of the negotiated documents.
- Other fees such as opening , negotiation, undertaking and management fees are obtained from the applicant in conformity with the contract between this bank and the financer, based on the current regulations, taking into consideration credit risk and presented services.
Users of the facilities
Manufacturing companies for import of raw materials , spare parts and machinery of production lines.
Importers for import and purchase of consuming goods.
Companies and organizations affiliated to the government , subject of article 4 of Public Accounts Law, approved by Organization of Management and Planning , regardless of having budget line or not, in case they are not using public budget resources of the country , in general , and /or for a special order registration.
Such companies and organizations will be involved in the related regulations and full payment of IRR equivalent of the LC amount to the opening bank , in case they are using public budget resources.
Process of Providing IRR Equivalent of the Refinance Credit
At least 10 percent of IRR equivalent of the principal and interest of the refinance LC is obtained from the applicant at the time of opening the LC.
At least 10 percent of IRR equivalent of the principal and interest of the LC is obtained from the applicant at the time of negotiation of the documents.
The balance of IRR equivalent of the principal and interest of the refinance LC is obtained from the applicant at the time of repayment of the principal and interest to the correspondent at the maturity date.
Collaterals for the facilities:
1- Easily marketable ownership collateral
2-FX and IRR term deposit
3- Partnership bonds
4- Bank guarantee and collectable documents at the discretion of the bank.
5-Promisory notes of the managers of the company
6-Any other valid securities at the discretion of the bank.
Method of Utilization
Cash withdrawal against commitment to present documents with respect to technical and engineering services is possible through opening of LC in favor of the beneficiary or producer of the machinery, raw materials or provider of the services relevant to the technical and engineering services.
Processes of Refinance Credit
Presenting the client's request to the branch for utilization of refinance credit line.
Coordination of the branch with FX Operations Department on possibility of any credit line in the country of origin or seller's country.
Receipt of an approval for facility granting and notifying the client of the kind and amount of the required collateral.
Issuance of LC opening instruction by Foreign Exchange operations Dept. Specifying the relevant credit line which will be sent to the relevant branch together with the issued certificates of registration of statistical data.
Receipt of adequate collateral and collection of commissions from applicant.
Obtaining a Letter of Undertaking from the applicant evidencing acceptance of any changes and fluctuations in the exchange rate and the relevant costs at the maturity date.
Issuance L/C in the relevant branch based on the instructions of Foreign Exchange Operations Dept.