Blocked Funds

Trading blocked funds is a specialty of some institutions and brokers. They exchange these funds for profits, frequently ask for discounts, or profit from currency exchange rates. On request, funds may be frozen to ensure that no fraudulent transactions have occurred. However, during this time, the money is placed in interest-bearing accounts so that it might earn income, which is then paid back to the account's owner after the money is unfrozen or unblocked.


Blocked funds, as a financial instrument in international trade, offer a layer of security and efficiency for traders involved in importing and exporting. When funds are "blocked," they are set aside in a dedicated account, typically held by a financial institution, to assure the seller that payment is secure and will be released according to the agreed terms. Here are some of the key benefits:


1. Increased Trust and Confidence

For both importers and exporters, blocked funds demonstrate a serious commitment to the transaction. With funds held securely in reserve, exporters gain confidence that payment is assured once the contractual obligations are fulfilled, reducing the risk of default by the buyer.


2. Enhanced Negotiation Power

Having blocked funds often enables traders to negotiate more favorable terms. For example, sellers may agree to provide discounts or extended payment terms, knowing that the payment is already set aside. This confidence can streamline negotiations and result in better pricing or terms.


3. Reduced Financial Risk

Blocked funds mitigate credit risk by guaranteeing that the required amount is available to settle the transaction, safeguarding both parties against unexpected financial instability. This security can be crucial when working with new partners or in high-value transactions where non-payment could result in significant financial loss.


4. Liquidity Management

Importers benefit by maintaining liquidity, as blocked funds are designated for a specific transaction but are only released upon meeting the agreed conditions. This structure can be particularly beneficial for importers who want to manage cash flow without committing to upfront payment.


5. Regulatory and Compliance Assurance

In some cases, blocked funds can help meet regulatory or compliance requirements in certain jurisdictions, especially when dealing with cross-border transactions where local regulations may require proof of funds.


6. Reduced Transaction Costs

Blocked funds can sometimes reduce the need for additional financial guarantees like letters of credit, which may come with higher fees and processing times. As a result, traders can benefit from a more cost-effective transaction setup without sacrificing security.


Blocked funds offer traders in importing and exporting a reliable, flexible instrument that protects financial interests and facilitates smooth trade relations across borders. This can be especially valuable for high-stakes industries like commodities, where financial security is paramount.


  • Issuance Procedure For Blocked Funds

    • Client will send us the filled in BLOCK FUND LETTER Application form. We will prepare and send the Final draft of BLOCK FUND LETTER to the Client.
    1. Client should conclude with their Beneficiary using the final draft provided by us. Once the draft is concluded, Client should send us the following:
    2. Final BLOCK FUND LETTER draft with their sign and stamp;
    3. Letter of Interest confirming acceptance for the draft and advising us to proceed further;
    4. Their Bank statement evidencing the availability of funds to cover the issuing Cost.
    • Mode of delivery - Physical or through SWIFT.
    • Upon receiving the above stated documents, client should send us the filled in Offshore Account opening form, as its mandatory for the client to open account with us to obtain a BLOCK FUND LETTER. Also, the standard Indemnity Documents of the bank will be provided to the Client for signing. The Client has to submit the KYC documents as per the list we will provide as a part of KYC and AML compliances including Transaction documents.
    • Also an eKYC declaration letter will be given to Client, which needs to signed and sealed and sent back to us.
    • Once we receive the Signed eKYC declaration letter, we will issue an invoice of 1,500 USD for eKYC which client needs to pay.
    • Upon receipt of this payment we will release a eKYC link to client
    • Client should upload the filled, signed and stamped documents, on the eKYC link
    • Our compliance team will confirm if the submitted documents are in order and then we will send two invoices from the Bank, one towards the BFL issuance cost and the second invoice towards account opening fee.
    • After Client transfers the BFL issuance cost as well as the account opening fee, within 10 working days we will set up the account and will issue the BFL which will be delivered to the Beneficiary / Beneficiary bank.
    • End of transaction