Post Box No 3233

Manama - Kingdom of Bahrain

Phone : +973 17295154

Fax : +973 17295156

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Applications and Tenors


What is Discountable


Export credit agencies and forfaiting







Frequently Asked Questions



How does forfaiting work?

The exporter approaches a forfaiter before finalizing a transaction’s structure for the mutually agreed discount rate. Once the deal is finalized the discount rate can be incorporated into the selling price. The exporter then accepts a commitment issued by the forfaiter, signs the contract with the importer, and obtains, if required, a guarantee from the importer’s bank that provides the documents required to complete the forfaiting.
The goods are then delivered to the importer and the documents are sent to forfaiter who verifies them and pays for them as per agreed Terms and Condition . Since this payment is without recourse, the exporter has no further interest in the transaction and it is the forfaiter who must collect the future payments due from the importer. The forfaiter bears the risk of the credit instrument thereafter.

What information does a Forfaiter need?

The Forfaiter needs to know who the buyer is and his nationality; what goods are being sold; detail of the value and currency of the contract; and the date and duration of the contract, including the credit period and number and timing of payments (including any interest rate already agreed with the buyer). He also needs to know what evidence of debt will be used (either promissory notes, bills of exchange, letters of credit), and the identity of the guarantor of payment (or avalor).

When forfaiting be used?

Forfaiting is used for international trade transactions. Normally, a Forfaiting house would not expect to handle transactions worth less than $100,000. However emerging trends in the Forfaiting transactions has made it flexible enough to accept trade finance instruments of lesser value.

What is Discountable?

The exporter is generally assured by the Credit instruments, given by the creditors on the revocable basis. These instruments could be discounted further for the various benefits for the protection against credit risk.
Documents evidence is provided for the debt owned by the buyer in the wide range such as

  • Bills of Exchange
  • Letters of Credit/Standby Letters of Credit
  • Payment guarantees
  • Promissory Notes
  • Open Book Receivables, subject to certain conditions

In most instances, the debt will need to bear the unconditional, irrevocable and freely transferable guarantee or the aval of an acceptable bank in the Buyer's country. In some cases however, with top tier corporate or government debt, BFC can carry out transaction without additional bank security.




For more specific enquiries apply for Online Inquiry Form.

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