Shanghai Pudong Development Bank- Draft discount

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Draft discount

Draft discount means your company transfers your title under the draft to the bank and receive the draft fund before its maturity after paying for certain rate of discount interest. It is kind of finance the bank offers to draft holder.
The draft discount should be based on real trade background. The discount tenor starts from the date of discount and expires at the maturity of the draft. The maximum tenor for discount is six months. The discount rate is agreed between your company and our bank within the range stipulated by the People's Bank of China.
The draft discount businesses our bank provides include Banker's Acceptance Bill discount, Trader's Acceptance draft discount and draft discount under special interest agreement. Your company could apply for draft discount at our business offices of different levels and provide them with related materials.

Banker's Acceptance Bill discount

Banker's Acceptance Bill discount means that your company asks our bank to cash the Banker's Acceptance Bill at a certain discount rate before maturity for funding purpose. Upon maturity our bank will present the draft to the acceptor for payment. In case the acceptor does not encash the draft, we will retain our right to recourse the discount applicant.
Advantages:

Discount of Banker's Acceptance bill is a kind of finance based on the credit of the bank. This kind of finance could be easily acquired by the client and is more flexible and convenient than other method of finance.
Discount rate of Banker's Acceptance bill is determined by the market. Therefore Banker's Acceptance bill discount has the advantage of low funding costs and helps your company to reduce your financial cost.

Trader's Acceptance Bill discount

Trader's Acceptance Bill discount means that your company asks our bank to cash a Trader's Acceptance Bill at a certain discount rate before maturity in order to seek finance. Upon maturity our bank will present the draft to the acceptor for payment. In case the acceptor refuse the payment, we will retain our right to recourse the discount applicant.
Advantages:

Trader's Acceptance Bill discount is based on corporate creditworthiness. If the acceptor has excellent creditability, it is relatively easy to acquire finance with its draft.
For the clients this kind of finance is characterized by low cost and simple procedure.

Draft discount under special interest agreement

Draft discount under special interest agreement means the draft finance our bank provides the supplier when it asks to discount the commercial paper (Banker's Acceptance Bill or Trader's Acceptance Bill) paid by the buyer after selling of the products. The discount interest will be paid by the buyer and the supplier jointly according to their respective proportion stipulated in their special interest agreement.
The discount procedure is completely the same as normal discount business except that the interest will be paid by the two parties of the contract in accordance with their interest agreement.
Advantages:

Usually the discount rate will be born by the discount applicant, namely the supplier completely. Draft discount under special interest agreement is more flexible in interest payment. The interest could be born by the buyer, the seller or shared by both parties.
In comparison to normal draft discount, the two parties of the sales contract could decide which party should bear the discount interest rate and the proportion of interest each party should share according to the negotiation power and respective financial situation in order to reach sales condition in satisfactory of both parties.

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