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—— Kafalah /Letter of Guarantee Facility/ ——

Cultivate Trust and Security with the Letter of Guarantee Facility

— Kafalah /Letter of Guarantee Facility/

Cultivate Trust and Security with the Letter of Guarantee Facility

Definition

A facility provided by a bank in the form of a written promise or irrevocable obligation.

  • Financial Security: Provides a reliable and secure mechanism for financial transactions and agreements.
  • Written Promise: Offers a written promise or irrevocable obligation issued by the bank.
  • Compensation Assurance: Ensures that the beneficiary receives compensation (a sum of money) if the obligator fails to fulfill their obligations.
  • Versatile Usage: Available for various purposes, catering to the specific needs and requirements of customers.
  • Local and Foreign Coverage: Extends its benefits to both local and foreign beneficiaries.
  • Risk Mitigation: Acts as a safeguard against potential risks and uncertainties in business transactions.
  • Customized Solutions: Different types of Kafalah guarantees are available upon customer request, providing tailored solutions.
  • Enhances Trust: Instills confidence and trust among the parties involved in the agreement or contract.
  • Regulatory Compliance: Adheres to the terms and conditions specified in the guarantee/agreement/contract.
  • Reliable Bank Support: Issued by the bank, a trusted and reputable financial institution.
  • Business Entities: The Kafalah/Letter of Guarantee Facility is typically available for business entities such as corporations, partnerships, sole proprietorships, and other legal entities.
  • Customer Relationship: The facility is generally offered to customers who have an established relationship with the bank, which may include maintaining accounts or having a history of transactions.
  • Creditworthiness: The bank may assess the creditworthiness of the customer to determine their eligibility for the facility.
  • Compliance with Requirements: The customer must comply with the bank’s requirements, including providing necessary documentation, information, and collateral if required.
  • Applicable Laws and Regulations: The eligibility is subject to compliance with applicable laws, regulations, and guidelines set by the bank and regulatory authorities.

—— Hawalah /Debt Transferring/ ——

Simplify Debt Transfers with Hawalah: Relieving Obligations, Empowering Finances

Hawalah /Debt Transferring/

Simplify Debt Transfers with Hawalah: Relieving Obligations, Empowering Finances

Definition

Hawalah is an esteemed service within Islamic finance, facilitating the transfer of debt from a transferor to a transferee, harmonizing financial obligations with elegance and adherence to principles.

  • Debt Transfer: Hawalah allows for the transfer of debt from one person (the transferor) to another person (the transferee).
  • Obligation Relief: Once the debt transfer is accepted by the transferee, the transferor is released from their obligation to repay the debt.
  • Flexibility: Hawalah provides flexibility in managing financial obligations by enabling the movement of debts.
  • Islamic Finance Compliance: The service adheres to the principles of Islamic finance, such as the prohibition of interest (riba) and the promotion of ethical and socially responsible practices.
  • Asset-Backed: Hawalah transactions are typically asset-backed, ensuring a genuine economic basis for the financial arrangement.
  • Risk-Sharing: The service promotes risk-sharing between the parties involved, ensuring a fair distribution of profits and losses.
  • Consent of Transferor: The transferor must willingly agree to transfer their debt to the transferee.
  • Consent of Transferee: The transferee must willingly accept the transferred debt and assume the responsibility for its repayment.
  • Compliance with Islamic Finance Principles: Eligibility for Hawalah requires adherence to the principles of Islamic finance, including the prohibition of interest and compliance with ethical guidelines.
  • Legally Permissible Debt: The debt being transferred must be legally permissible and not associated with prohibited activities according to Islamic principles.
  • Agreement between Parties: Both the transferor and transferee must enter into a mutual agreement for the debt transfer, outlining the terms and conditions of the arrangement.

—— International Banking Trade & Services ——

Comprehensive solutions to enhance your interest free import and export transactions.

International Banking Trade & Services

Comprehensive solutions to enhance your interest free import and export transactions.

A service that allows individuals or businesses to pay a percentage of the document value while opening a Letter of Credit, facilitating convenient and cost-effective international trade transactions.

  • Goods shipped at seller conveniences.
  • Payment is received prior to the transfer of ownership of the goods.
  • Buyer shall not make any payment until they receive the goods.
  • Allows the buyer to import goods at relatively lower finance cost.
  • Establishing of a new relationship with a minimum cost.
  • Duly filled, Signed and stamped Import application form.
  • Performa invoice including full description of goods, unit price, quantity, mode of shipment, terms of payment, place of delivery.
  • Valid and renewed Foreign Trade, Investment, Industry, Agriculture or Mining License
  • Tin Certificate.
  • Title certificate for used vehicles.
  • Third party original price confirmation for used commodities/vehicles.
  • Insurance certificate with sum insured not less than 110% value of the consignment
  • Application letter for the transfer.
  • Customer’s name should not appear in delinquent list of NBE
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A documentary credit or banker’s commercial credit, is a payment mechanism used in international trade.

  • The issuing bank makes payment to the beneficiary or exporter against the receipt of complying stipulated documents.
  • The bank’s obligation to pay is solely conditioned upon the seller’s compliance with the terms and conditions of the LC.
  • The exporter usually expects the buyer to pay the charges for the letter of credit.
  • Payment is made on the basis of documents.
  • Protect the interests of both buyer and seller.
  • Payment is effected immediately or at a later date.
  • Both Banks deal in documents only, not goods.
  • Duly filled, signed, and stamped application form.
  • Signed contract by buyer and seller.
  • Valid and renewed Export/Manufacturing/Industry License.
  • TIN Certificate.
  • Undertaking letter that the sight CAD will be settled within 90 days.
  • Foreign inward remittance received and credit advice generated by Siinqee Bank.
  • Foreign cash note deposited to the exporter’s account, accompanied by customs declaration.
  • Customer’s name should not appear in the delinquent list of the National Bank of Ethiopia.
  • Purpose of payment and beneficiary name should clearly be stated on the credit advice.

A financial service that supports exporters by providing them with funds for small export transactions or advance payment Letter of Credit (L/C).

  • Advance Payment L/C: Allows exporters to collect payment before presenting shipping documents.
  • Pre-shipment Export Financing Facility: Provides short-term, one-time, or revolving financing for various export-related activities.
  • Favorable Terms: Offers favorable financing terms to exporters for manufacturing or shipping goods.
  • Working Capital Support: Helps exporters gain working capital for the sale of goods.
  • Credit Risk Mitigation: Eliminates credit risk or the risk of non-payment for exporters.
  • Requirements: Various documentation, including a filled, signed, and stamped export application form, signed contracts, valid and renewed export/manufacturing/industry license, TIN certificate, undertaking letter, foreign inward remittance details, customs declarations, and compliance with NBE regulations.
  • Exporters: Individuals or businesses engaged in export activities.
  • Compliance: Must comply with NBE regulations and should not appear on the delinquent list of NBE.
  • Valid Licenses: Should hold valid and renewed export/manufacturing/industry licenses.
  • Documentation: Applicants must submit the required documentation, including contracts, certificates, and compliance documents.

An electronic transfer of funds made by the instruction of a customer to beneficiaries in foreign countries.

  • Electronic Transfer: Swift and Telegraphic Transfer (TT) enable the electronic transfer of funds.

  • Customer Instruction: Initiated by the customer’s instruction to transfer funds to beneficiaries in foreign countries.

  • Duly Filled Form: A form, duly filled, signed, and stamped by the customer, is typically required.
  • Details of Beneficiary: Information about the beneficiary, including their name, account details, and other relevant details.
  • Purpose of Transfer: Clear indication of the purpose of the fund transfer, such as service payments, correspondence education, or medical treatment abroad.
  • Foreign Inward Remittance Documentation: Necessary documentation related to foreign inward remittance received and credit advice generated by Siinqee Bank.
  • Compliance with NBE: Ensuring that the customer’s name does not appear in the delinquent list of the National Bank of Ethiopia (NBE).

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