Avoiding Payment Risks in Trade Finance

FEMA, 1999, requires authorized dealers to facilitate secure forex transactions, reducing payment risks.

Payment risks disrupt global trade, but Indian traders can stay secure with FEMA-compliant strategies.

• Use UCP 600 LCs to ensure banks honor compliant documents, reducing default risks.

• INR vostro accounts, facilitated by authorized dealers under FEMA, cut forex volatility losses by 5% for trade with 18 countries.

• Verify buyer creditworthiness with tools like Experian to avoid fraud.

• Insist on advance payments for high-risk markets like Africa.

• Align documents with ISBP and other International standard Banking practices to prevent LC rejections, which delay payments by 10–15 days.