Pre-Shipment Finance Pre-shipment credit is provided to the exporters for meeting their need of getting the shipment ready. It is generally offered as Packing Credit (PC). The exporter has to submit the prescribed application form for obtaining packing credit together with the required papers to the bank. The documents required generally are the export order, letter of credit, proof of business address, financial papers like profit & loss account and the balance sheet. Banks also require the exporter to obtain an insurance cover from ECGC against payment risks. Pre-shipment credit is extended in both Indian rupees as well as in foreign currency. This facility entitles the exporter to borrow funds as pre-shipment credit in foreign currencies like US Dollar, Japanese Yen, Pound Sterling or Euro. Such credit is offered at internationally competitive interest rates to enable the exporter to take advantage of the same under stiff competitive environment.
Advances against Duty Drawback/Incentives Banks may also extend loans prior to shipments against the drawback/incentives receivable from the government covered by ECGC guarantee in certain exceptional cases. This type of advance is normally extended after the goods have been shipped. The exporter will have to present his case as a special one to the satisfaction of the bank. The bank in its own discretion may advance a loan for up to 90 days at any interest rate within the ceiling of BPLR (Benchmark Prime Lending Rate) minus 2.5%.
Post-shipment finance is provided at concessional interest rates as per RBI guidelines. The proof of shipment of goods, serves as the basis of grant of such facility. The basic purpose of this credit is to finance export receivables.
The following options are available to the exporter for post-shipment credit:
Export bills purchase/discounting
Export bills negotiated (against letter of credit)
Advances against bills for collection
Advances against duty drawback receivable from the government
Advances against exports on consignment basis
Advances against undrawn balances
Banks can extend post shipment finance on concessional rates for periods listed below: