Trade finance for Indian importers, exporters and traders
Trade finance is funding and payment security that banks and other lenders provide around the purchase and sale of goods, such as letters of credit, bank guarantees, packing credit and invoice discounting. It bridges the gap between paying a supplier, shipping or delivering, and getting paid by the buyer. It suits importers, exporters and traders whose payment cycle is long.
Capnix is not a lender and does not issue letters of credit, guarantees or any other banking instrument. Lenders decide every facility. We read your trade cycle, share your file with lenders on our panel only after you give consent, and run the lender application. Getting your loan through us costs you nothing.
- Loan
- Trade Finance
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- The lender
- Cost to you
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- Last checked
The facts that matter
| Fact | What it means | Source |
|---|---|---|
| Who can get a guarantee or letter of credit | In general only a customer that already has a funded credit facility from that lender, with exceptions such as full financial collateral. | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
| Exports and MSME limits | Export turnover is excluded when classifying an enterprise as micro, small or medium. | Udyam gazette notifications, 2020 and 2025 Checked 02-Oct-2026 |
| Payment protection | A buyer must pay a micro or small supplier within the agreed period, at most 45 days from acceptance, or owe compound interest. | MSME Samadhaan portal Checked 02-Oct-2026 |
| Exporter window | Under MCGS-MSME, loans up to ₹20,00,00,000 for exporters, with 75% cover and no fee in year one. |
PIB release on MCGS-MSME, 21-Mar-2026 Checked 02-Oct-2026 |
| Small businesses in exports | Micro, small and medium enterprises contributed 45.73% of exports in 2023-24. |
PIB release on MSME exports, 23-Dec-2024 Checked 02-Oct-2026 |
Trade finance instruments at a glance
Each instrument does a different job. Pick by who you need to protect and when the money moves.
| Instrument | What it does | Who it helps | Source |
|---|---|---|---|
| Letter of credit | A written undertaking by a bank, on the buyer's instruction, to pay the seller up to a stated amount against complying documents. | The seller, which gets a bank's payment promise | ICC Academy guide to documentary credits Checked 02-Oct-2026 |
| Bank guarantee | A bank's undertaking to perform a promise or discharge a liability if the party it guarantees defaults. | The party that holds the guarantee | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
| Packing credit (pre-shipment) | Credit to an exporter to buy, process, make or pack goods before shipment, against a letter of credit or a confirmed order. | The exporter, before shipping |
RBI master circular on rupee export credit, 01-Jul-2015 Checked 02-Oct-2026 |
| Post-shipment finance | Credit from shipment until export proceeds arrive: export bills purchased or discounted, advances against bills sent for collection, advances against duty drawback. | The exporter, after shipping |
RBI master circular on rupee export credit, 01-Jul-2015 Checked 02-Oct-2026 |
| Invoice discounting and TReDS | Cash against invoices a buyer has accepted. TReDS is an RBI-authorised platform for micro, small and medium enterprises. | The seller waiting for payment | RBI FAQ on TReDS Checked 02-Oct-2026 |
| Factoring | A factor takes over a seller's receivables. The Factoring Regulation Act, 2011 governs it, and non-bank factors register with RBI as NBFC-Factors. | The seller, which hands over collection | RBI NBFC-Factor Directions, 2012 Checked 02-Oct-2026 |
Trade credit, explained
Trade credit is the time a supplier gives a buyer to pay. It is the oldest form of trade finance. For micro and small suppliers, the law sets a limit: the buyer must pay within the agreed period, and at most 45 days from acceptance.
If it does not, it owes compound interest at three times the RBI bank rate, with monthly rests. A supplier with a valid Udyam registration can file a dispute on the MSME Samadhaan portal.
Source: MSME Samadhaan portal, checked 02-Oct-2026.
Support for exporters
Schemes and announcements help exporters and the lenders that serve them.
| Support | What it offers | Source |
|---|---|---|
| MCGS-MSME exporter window | Loans up to ₹20,00,00,000, with 75% cover for the lender, no fee in year one and 0.50% after. |
PIB release on MCGS-MSME, 21-Mar-2026 Checked 02-Oct-2026 |
| Budget 2025-26 announcement | Term loans up to ₹20,00,00,000 for exporting small businesses. This is an announcement, so ask the lender whether it is live. | Union Budget speech 2025-26 Checked 02-Oct-2026 |
| CGTMSE circular, 06-Feb-2026 | A special credit guarantee provision for collateral support on export credit. Ask a lender how it applies to you. | CGTMSE circulars Checked 02-Oct-2026 |
How export credit is limited
These rules come from an RBI master circular of 01-Jul-2015. RBI folded its circulars into consolidated directions on 28-Nov-2025, so confirm the current paragraph with your lender.
| Rule | What applies | Source |
|---|---|---|
| Pre-shipment limit | If a pre-shipment advance is not adjusted by export documents within 360 days, it stops qualifying for the export credit rate from the start. |
RBI master circular on rupee export credit, 01-Jul-2015 Checked 02-Oct-2026 |
| Usance bills | Credit on usance bills can run up to 365 days from shipment, including transit and grace. |
RBI master circular on rupee export credit, 01-Jul-2015 Checked 02-Oct-2026 |
| Foreign currency pre-shipment credit | An additional window for cash exports at internationally competitive rates. |
RBI master circular on rupee export credit, 01-Jul-2015 Checked 02-Oct-2026 |
Who can get a trade instrument from a lender
Lenders follow RBI's Non-Fund Based Credit Facilities Directions, 2025, which came into force on 01-Apr-2026 or earlier by lender policy.
| Point | What applies | Source |
|---|---|---|
| Who qualifies | In general a customer with a funded credit facility from that lender. Exceptions include facilities fully secured by financial collateral and obligors with no funded facility from any lender in India. | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
| The guarantee itself | Must be irrevocable and unconditional, with a clear way to honour it without demur. | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
| When it is called | The bank must pay an invoked guarantee on the deed's terms unless a court order stops it. | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
| If the bank pays out | A devolved facility becomes a fund-based facility, so loan rules apply. | RBI Non-Fund Based Credit Facilities Directions, 2025 Checked 02-Oct-2026 |
What lenders typically publish
Rate cards the lenders publish themselves, read on the date shown.
Rupee export credit pricing, as of 02-Oct-2026
| Lender and product | Published pricing | What else the page says | Source |
|---|---|---|---|
| Bank of Baroda, rupee export credit for MSME exporters, up to 3 months | Treasury Bill rate plus 1.35% (AAA) to 3.95% (BB and below). Unrated: 3.65%. | Priced as a spread over the 3-month Treasury Bill rate. | Bank of Baroda MSME loan rates Checked 02-Oct-2026 |
| Bank of Baroda, rupee export credit, over 3 months and up to 6 months | Treasury Bill rate plus 1.30% (AAA) to 3.90% (BB and below). Unrated: 3.60%. | Priced as a spread over the 6-month Treasury Bill rate. | Bank of Baroda MSME loan rates Checked 02-Oct-2026 |
This is one bank's published pricing, not a market rate and not an offer. Your lender sets the rate.
What trade finance costs, at one bank's published rates
| Charge | What the schedule says | Source |
|---|---|---|
| Inland letter of credit, sight | 0.70% for the validity period. | Bank of Baroda schedule of service charges Checked 02-Oct-2026 |
| Inland letter of credit, usance | 0.75% a year (AAA) to 2.40% (BB and below or unrated). An unrated MSME account is priced as BBB: 1.50% a year. | Bank of Baroda schedule of service charges Checked 02-Oct-2026 |
| Guarantee commission, a year | Performance guarantee: 1.00% (AAA) to 2.40% (unrated). Financial guarantee: 1.25% (AAA) to 3.00% (unrated). Unrated MSME accounts are priced as BBB: 2.00% and 2.65%. Minimum commission ₹1,500, plus ₹150 for SFMS, SWIFT or courier. | Bank of Baroda schedule of service charges Checked 02-Oct-2026 |
| Letter of credit advising, confirmation, transfer | Advising a letter of credit opened by another bank: ₹1,000. Confirmation: 0.20% a month. Transfer: ₹500 each. Discrepancy charge: 0.15%, minimum ₹500 and maximum ₹2,000. | Bank of Baroda schedule of service charges Checked 02-Oct-2026 |
| Export performance guarantees with ECGC cover | 1.25% a year with 75% ECGC cover and 1.30% a year with 90% cover, including ECGC premia. | Bank of Baroda schedule of service charges Checked 02-Oct-2026 |
| A private bank's range | ICICI Bank charges commission of up to 2% a year, pro rata, on letters of credit and bank guarantees, and nil foreclosure charges for micro and small enterprises. | ICICI Bank schedule of charges Checked 02-Oct-2026 |
| Key Facts Statement | Required for new MSME term loans sanctioned from 01-Oct-2024. |
RBI Key Facts Statement circular, 15-Apr-2024 Checked 02-Oct-2026 |
Worked example: what a ₹10,00,000 guarantee or letter of credit costs
At one bank's published schedule, an unrated micro or small enterprise is priced as a BBB account. The example shows the commission on ₹10,00,000 for common cases. It is the bank's published schedule, not a quote.
| Case | Rate | Commission |
|---|---|---|
| Performance guarantee for 1 year | 2% a year | ₹20,000 |
| The same guarantee with 100% cash margin | 0.5% a year, which is 25% of the card rate | ₹5,000 |
| Financial guarantee for 1 year | 2.65% a year | ₹26,500 |
| Sight letter of credit | 0.7% for the validity period | ₹7,000 |
| Usance letter of credit for 120 days | 1.5% a year | ₹4,932 |
A ₹150 charge for SFMS, SWIFT or courier applies to each guarantee. The commission is charged for the period including any claim period, at issue. Taxes are extra.
Source: Bank of Baroda schedule of service charges, checked 02-Oct-2026.
Who it suits and who it does not
A strong fit if
- Your business trades across supplier and buyer payment cycles
- You have clear purchase, sale, shipping or invoice papers
- You need funding or security tied to a trade transaction
Not a fit if
- You need general cash with no transaction behind it (see a business loan)
- You expect Capnix to issue a letter of credit or guarantee itself
Documents lenders usually ask for
The list depends on the instrument. Most lenders start from the records below.
- The purchase or sale contract, and invoices
- Shipping documents, for import or export finance
- Bank statements and GST returns for the last 6 to 12 months
- Financial statements for 1 to 3 years
- KYC papers for the business and its promoters
Source: Bank of Baroda guide to business loan documents, 29-Apr-2026, checked 02-Oct-2026.
Business loan documents checklistHow Capnix fits
- Capnix does not issue letters of credit or guarantees. We prepare your file and run the lender application.
- Trade documents reach a lender or a Lender Partner only after you give consent. You can withdraw that consent in your Capnix account.
- The lender pays Capnix a fee after disbursal. It is never added to your cost.
More than a loan. A team that gets you there
Funding matched to the transaction
We explain the buyer, supplier, shipment, invoice and payment path to a lender in the terms it expects.
Lenders suited to trade cycles
We approach lenders comfortable with import, export, domestic trade or document-led funding.
Where this helps
- Fund import or export orders
- Bridge supplier payment and buyer collection gaps
- Support packing credit or pre-shipment needs
- Finance trade transactions with clear documents
What happens after you start
We work out your Capnix score first, then work the lender applications with you until the money is disbursed.
See how it worksLoan products, rates, and eligibility are determined by the lenders on our panel. Capnix is not a lender and does not lend its own capital. We run your loan journey end to end.
Have a question?
Find answers here
Whether you are scaling up, smoothing cash flow, or buying new equipment, we take your file to the right lender and stay with it through to disbursal.
Read the transaction. Matched to the right lender
Trade finance is built around movement of goods, documents, and payments. We read the transaction path and package the funding need around real trade risk.
From there we approach lenders who understand domestic and international trade cycles, so the facility fits the transaction rather than a generic loan.
Real people,
start to disbursal.
No hand-offs and no generic replies. A dedicated team
works the lenders while you keep running your business.