Availisation and Discounting of Bills of Exchange
Availisation is a payment undertaking given by a bank in respect of a bill of exchange drawn on and accepted by a buyer. Discounting of bills of exchange is a method of financing trade wherein a seller sells an accepted obligation on a trade transaction to a bank/financier at a discount.
The seller receives a discounted value of the transaction while the face value of the obligation is paid to the bank on maturity. It provides ready cash for the exporter and it is less expensive than Irrevocable Term Letters of Credit (ITLC) e.g. non existence of advisory, payment and amendment fee, etc.