refinance credit

Definition:

a method of financing an export sale in which the exporter is paid under a payment credit, but the advising bank of the credit, instead of calling for reimbursement from the issuing bank, accepts an accommodation bill drawn on it by the importer and payable to the issuing bank. The advising bank then sells (i.e. discounts) the accommodation bill on behalf of the issuing bank and uses the proceeds to offset the issuing bank’s liability under the payment credit. When the accommodation bill matures, it is paid by the advising bank, which calls for reimbursement from the issuing bank which in turn obtains reimbursement from its customer, the importer, who has thus received a period of credit. Also called ‘reimbursement credit’.



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