Define crystallization of export bills. What is the purpose of crystallization or also called de-linking and how does it work in import export business?

 

Once the goods or services are shipped, most exporters or sellers discount or negotiate their export bills in import export business with their authorized banks. This process is done by submitting all the important

export documents like the BL (Bill of Lading)/AWB (Airway Bill), goods invoice, packing list along with other important export documents. Most world governments support exporters by providing financial aid such as loans against export documents with very low rate of interest especially for exporters. The bank then receives the amount of the said sale from importer or the overseas buyer on or before the due date agreed mutually between the indian exporter and the importer. In a situation where the export invoices are not realized due to various reasons even after 30 days of its maturity, the bank then has no other choice but to draw the advantage of low interest rate by crystallization or by delinking the invoices and charging them the commercial rate of interest. The above process is called crystallization of export bills. Crystallization of bills in other words is also known as delinking of export bills.