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Which statements are correct for Forfeiting business?
(i) It is a method of discounting international trade receivables on a 'without recourse' basis only.
(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.
(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.
(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.
(i) It is a method of discounting international trade receivables on a 'without recourse' basis only.
(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.
(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.
(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.
- a)(i), (ii) & (iii)
- b)(i), (iii) & (iv)
- c)(ii), (iii) & (iv)
- d)All/None of the above
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Which statements are correct for Forfeiting business?(i) It is a metho...
- When an exporter transfers his right to receive payment in favor of the forfaiter, the transaction is called forfaiting.
- It is a method of discounting international trade receivables on a 'without recourse' basis. In terms of RBI guidelines, Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions. All forfaiting transactions have a minimum transaction size, normally in the range of US$ 250,000.
- Its main advantage is Forfaiting provides 100% financing and therefore improves the cash flow of the exporter.
Most Upvoted Answer
Which statements are correct for Forfeiting business?(i) It is a metho...
Understanding Forfeiting in Business
Forfeiting is a financial mechanism used in international trade to manage the risks associated with receivables. Here's a breakdown of the statements regarding forfeiting and the reason why option 'A' is correct.
Statement Analysis
- (i) It is a method of discounting international trade receivables on a without recourse basis only.
This statement is correct. Forfeiting specifically involves selling receivables without recourse, meaning the exporter does not bear the risk of non-payment after the transaction.
- (ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.
This statement is correct. Both Exim Bank and Authorized Dealer (AD) Category - I Banks can engage in forfaiting transactions on a non-recourse basis, ensuring exporters can mitigate risks effectively.
- (iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.
This statement is also correct. It is essential for exporters to disclose forfaiting charges in invoices and related documentation for transparency and compliance with regulations.
- (iv) In case of failure of recovery, the exporter cannot claim the whole of the amount from forfeiter.
This statement is incorrect. In a forfeiting arrangement, the exporter sells the receivable and assumes that the risk of non-payment is transferred to the forfeiter. Hence, the exporter cannot claim the amount back.
Conclusion
Given the analysis, the correct statements are (i), (ii), and (iii). Therefore, option 'A' is the correct answer, as it accurately reflects the nature of forfeiting transactions and the roles of banks involved.
Forfeiting is a financial mechanism used in international trade to manage the risks associated with receivables. Here's a breakdown of the statements regarding forfeiting and the reason why option 'A' is correct.
Statement Analysis
- (i) It is a method of discounting international trade receivables on a without recourse basis only.
This statement is correct. Forfeiting specifically involves selling receivables without recourse, meaning the exporter does not bear the risk of non-payment after the transaction.
- (ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.
This statement is correct. Both Exim Bank and Authorized Dealer (AD) Category - I Banks can engage in forfaiting transactions on a non-recourse basis, ensuring exporters can mitigate risks effectively.
- (iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.
This statement is also correct. It is essential for exporters to disclose forfaiting charges in invoices and related documentation for transparency and compliance with regulations.
- (iv) In case of failure of recovery, the exporter cannot claim the whole of the amount from forfeiter.
This statement is incorrect. In a forfeiting arrangement, the exporter sells the receivable and assumes that the risk of non-payment is transferred to the forfeiter. Hence, the exporter cannot claim the amount back.
Conclusion
Given the analysis, the correct statements are (i), (ii), and (iii). Therefore, option 'A' is the correct answer, as it accurately reflects the nature of forfeiting transactions and the roles of banks involved.
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Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer?
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Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? for Bank Exams 2025 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Bank Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? for Bank Exams 2025 is part of Bank Exams preparation. The Question and answers have been prepared according to the Bank Exams exam syllabus. Information about Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Bank Exams 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer?.
Solutions for Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Bank Exams.
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ample number of questions to practice Which statements are correct for Forfeiting business?(i) It is a method of discounting international trade receivables on a without recourse basis only.(ii) Exim Bank and AD Category - I Banks (on a Non-recourse basis only) are permitted to handle forfaiting transactions.(iii) Forfaiting charges should be indicated in the invoice, (EDF form) and shipping bill to the exporter.(iv) In case of failure of recovery Exporter cannot claim the whole of the amount from forfeiter.a)(i), (ii) & (iii)b)(i), (iii) & (iv)c)(ii), (iii) & (iv)d)All/None of the aboveCorrect answer is option 'A'. Can you explain this answer? tests, examples and also practice Bank Exams tests.
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