A trust receipt is an import-finance arrangement under which a bank releases financed goods or documents to the importer while retaining agreed rights over the goods or sale proceeds. The importer may take possession, process or sell the goods and must repay the bank under the facility terms.
How is Trust Receipt used?
The bank finances or controls specified import documents, then releases the goods or documents to the importer under the trust receipt. The importer can take possession and may sell or process the goods, but must handle the goods and sale proceeds according to the facility. Repayment is due on the agreed date even if the importer has not collected from its customer.
What should a business document for Trust Receipt?
Retain the import documents, trust receipt, goods description, release date, insurance, sales proceeds and repayment record.
What should a business verify before relying on Trust Receipt?
The importer carries strict duties over financed goods and proceeds. Local law and the facility agreement determine the bank’s rights.
