GROUP MEMBERS

PRIYA SHARMA 55

NIKITA CHURIWALA 9

SANGITA GUJAR 19
PRIYA MAHADIK 30

KAJAL OZA 40

KOMAL PAREEK 42
What is forfaiting ?
 Definition

 The terms forfeiting is originated from a old

French word ‘forfait’, which means to
surrender ones right on something to
someone else. In international trade,
forfeiting may be defined as the purchasing
of an exporter’s receivables at a discount
price by paying cash. By buying these
receivables, the forfeiter frees the exporter
from credit and the risk of not receiving the
payment from the importer.
Mechanism
MECHANICS OF FORFAITING

EXPOTER IMPORTER

FORFAITER AVAILING BANK

HELD TILL MATURITY

SELL TO GROUPS OF INVESTORS

TRADE IN SECONDARY MARKET

 Documentation

Cost involved
Benefits of forfaiting

Eliminates Risk
Enhances Competitive Advantage
Improves Cash Flow
Increases Speed and Simplicity of
Transactions
 ADVANTAGES TO:

EXPORTERS

IMPORTERS GUARANTOR
 DIS-ADVANTAGES

TO EXPORTERS TO IMPORTERS
Forfaiting

In

India
Reasons for low pace of growth of
forfaiting in India:

1. Minimum amount is high:

2. Low Credit Period:
3. Cost related issues:
4. Exports to limited number of
countries