FDBP stands for 'Foreign Documentary Bills Purchase'. This facility is provided to negotiate (purchase) Foreign Documentary bills/documents submitted by the exporter on export made against export L/C denominated in Foreign Currency.
- This is a demand loan
- This is a mode of export finance
- All specific FDBP and each FDBP created under a revolving limit are demand loan by nature
- The documents/bills have to be in order as per export L/C terms
- Cash drawing allowed under FDBP after adjustment of BTB L/C, PC, and other liabilities associated to the particular export
- Usually has no fixed tenure but maximum tenure may be allowed is 21 days for sight L/C and as per stipulated usance period for usance (DP) L/C
- Rate of interest: In case of Sight L/C, interest not applicable for 21 days and in case of usance (DP) L/C, interest not applicable for the usance/deferral period. Usually bank earns from exchange rate difference. But in case of overdue, interest will be charged in commercial rate