What is availisation in trade terms?
Avalization is the co acceptance of usance export non DC bills
by the Drawee bank ( importers bank ). Just in the case of export
DC's where exporter's bank discount bills after acceptance from the
issuing bank, in Avalization exporter's bank can discount non DC
bills after the drawee bank ( importer bank ) has given their co
acceptance. The difference here is that the drawee bank is just not
giving an acceptance on behalf of the customer , but is co
accepting the bills ( which means even in the event of the importer
not paying, the drawee bank will pay to the exporter's bank ) For
avalization to work, the exporter has to get in touch with the
importer and get his buy in for the transaction. Only after the
importer buy in is got will the drawee bank co accept the bill. The
drawee bank actually earmarks the import limit of the buyer while
avalizing the bills and this essentially will only work for
importers who have existing import facilities with their banks.