Trust Receipt (TR)

TR is a deferred payment facility from the Bank under your LC obligation by submitting TR Letter. This facility enables you to defer payment to the Supplier without reducing your credibility. With this facility, you can defer payment of your obligation to the Bank, but can still be able to get the goods that you already ordered with the LC. You simply have to submit the TR Letter which basically contains a statement of receiving the goods on Bank's behalf and promising to pay the Bank.

This is a credit facility granted to the customer to enable him to takedelivery of the goods prior to payment. As security, the goods title iswith the Bank, and the customer will undertake to hold the documents,the goods and the sale proceeds in trust for the bank.

Notice of the release merchandise to a buyer from a bank, with the bank retaining the ownership title to the released assets. In an arrangement involving a trust receipt, the bank remains the owner of the merchandise, but the buyer is allowed to hold the merchandise in trust for the bank, for manufacturing or sales purposes.

Benefits of using TR:

• Is a short term facility with a competitive interest rate when you experiencing a mismatch in your Cash Flow.
• Improve your credibility in your Supplier

The Trust Receipts Law

A law embodying an agreement entitling the beneficiary to the proceeds from the sale of the goods, documents or instruments released under a trust receipt to the trustee to the extent of the amount owing to the beneficiary or as appears in the trust receipt, or to the return of the goods, documents or instruments in case of non-sale, and to the enforcement of all other rights conferred on him in the trust receipt provided such are not contrary to the provisions of The Trust Receipts Law.

The beneficiary may cancel the trust and take possession of the goods, documents or instruments subject of the trust or of the proceeds realized there from at any time upon default or failure of the trustee to comply with any of the terms and conditions of the trust receipt or any other agreement between the beneficiary and the trustee, and the beneficiary in possession of the goods, documents or instruments may, on or after default, give notice to the trustee of the intention to sell, and may, not less than five days after serving or sending of such notice, sell the goods, documents or instruments at public or private sale, and the beneficiary may, at a public sale, become a purchaser. The proceeds of any such sale, whether public or private, shall be applied (a) to the payment of the expenses thereof; (b) to the payment of the expenses of retaking, keeping and storing the goods, documents or instruments; (c) to the satisfaction of the trustee's indebtedness to the beneficiary. The trustee shall receive any surplus but shall be liable to the beneficiary for any deficiency. Notice of sale shall be deemed sufficiently given if in writing, and either personally served on the trustee or sent by post-paid ordinary mail to the trustee's last known business address.

Updated On: 09.10.04