BSTDB may provide forfaiting opportunities for its clients normally through its trade finance facilities between the member countries. Due to its characteristics as trade finance instrument and investment product, forfaiting is an instrument that BSTDB should employ, when warranted. It is the appropriate instrument to use for promotion of intra-regional trade in capital goods, and thus help achieve BSTDB’s mandate. BSTDB may act either as the forfaiter of the exporter or as the avalizer/guarantor of the importer, as appropriate.

Forfaiting is a form of medium term financing and can be used for both domestic and international transactions. Forfaiting provides to the exporter the same level of comfort as the confirmed documentary credit, with the additional benefit that it may stretch over extended periods of time, while documentary credit is used usually for short-term transactions of up to 360 days. Forfaiting is a proven method of providing fixed rate medium term export finance for international trade transactions in capital goods.

The following types of charges may apply:

• Option fee
• Committeemen fee
• Termination fee
• Discount rate