Trade Finance is an activity between an exporter and a bank where bank finance the importer for his or her export transaction and LC (Letter of credit) is used for document purpose.
Need of Trade Finance
Trade finance needed when an exporter wants to export goods
from one country to another country and he or she is facing financial crises so
bank takes guarantee (Cash in advance) from the importer then shipping is
processed.
It includes letter of credit,Bank,Insurance company,export credit agency,Shipping agency.
Trade finance also mitigates the risk involved in international trade.
