Export finance

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  • Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit.Being essentially an export promotion organization, it functions under the administrative control of the Ministry of Commerce & Industry, Department of Commerce, Government of India. It is managed by a Board of Directors comprising representatives of the Government, Reserve Bank of India, banking, insurance and exporting community.
  • Export finance

    1. 1.  Need for such type of finance? The institutions which provides the credit,  EXIM BANK  COMMERCIAL BANK  ECGC
    2. 2.  RBI ensures a free flow of financial assistance to exporters at a concessional rate of interest against export order The commercial banks provide the loan at a reduced interest Commercial banks get re-finance facility by RBI and EXIM bank against the loan extended by them to the exporters
    3. 3.  Pre-shipment finance Post-shipment finance
    4. 4.  Provides working capital finance to an exporter Basic purpose is to enable the eligible exporters to procure raw materials, supplies, process or manufacture, warehouse or ship the goods meant for exports
    5. 5.  Packing credit Advance against incentives receivables from govt. covered by ECGC guarantee Advance against cheque /drafts received as advance payment
    6. 6.  Enables an exporter to pack the goods meant for exports Includes loan/advance/credit granted by a bank to an exporter to buy raw materials, supplies, etc. required for processing, manufacturing, packing of goods for exports Facility can be shared with supporting manufacturer or the sub-supplier
    7. 7.  Pre-shipment finance is granted for a short period of time as it is essentially a working capital finance. Initially it is 180 days subject to lead time In case of unforeseen circumstances the bank may give a 90 days extension Max. period is 270 days.
    8. 8. PERIOD OF CREDIT RATE OF INTERESTUpto 180 days not exceeding PLR minus 2.5 %age points.180-270 days not exceeding PLR plus 2.5 %age points.270-360 days fixed by the bank.
    9. 9.  Exporter should:  arrange the set of docs as stipulated in the L/C  submit the docs. along with the Standardized Letter to bank for collection/negotiation of docs.  This letter to the bank provides comprehensive coverage of the various points
    10. 10.  This form of finance is available after the shipment of goods This facility is extended to the exporters in whose name the goods were shipped OR an exporter in whose name export documents are transferred. It can be short term finance or a long term finance depending upon the nature of export. It is essentially a working capital finance granted on the strength of accounts receivables. This facility is extended only against the shipping documents which evidence that the goods have been shipped Credit is extended to finance export receivables for the period commencing from the date of submission of docs. to the bank to the date of realisation of export proceeds. The post shipment credit is essentially a form of fund based financing The concessional rate of interest is charged upto a maximum period of 6 months from the date of shipment of goods
    11. 11.  Negotiation/Payment/Acceptance of export docs. under L/C Purchase/ Discount of export docs under confirmed orders/ export contracts etc. Advances against export bills sent on collection basis Advances against undrawn balance of exports Advances against receivables from GOI Advances against retention money relating to exports Advances against approved deemed exports

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