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EXPORT FINANCE

EXPORT FINANCE IN INDIA PRE SHIPMENT FINANCE

EXPORT FINANCE IN INDIA

POST SHIPMENT FINANCE

PRE SHIPMENT FINANCE

POST SHIPMENT FINANCE

EXPORT ORDER RECEIPT

SHIPMENT DATE

PAYMENT REALISATION

PROCUREMENT OF RAW MATERIALS PRODUCTION,PROCESSING. PACKING WAREHOUSING TRANSPORTATION.

THE EXPENSES BETWEEN THE PERIOD OF SHIPMENT DISPATCH AND PAYMENT REALIZATION.

PRE SHIPMENT FINANCE


Deals with the Finance schemes available before the shipment has been made. It offer liquidity to the exporter to procure raw materials carry out processing, packing, transporting of the goods to be exported.

The documents required are the


Export order Letter of Credit Proof of Business address Financial Papers like Profit& Loss Account, Balance sheet.

Banks required the exporter to obtain the insurance cover from ECGC against payment risks. The rates of interest for export credit both in rupees and foreign currency for pre shipment and post shipment loans are prescribed by RBI.

PRE SHIPMENT CREDIT


It is extended in both Indian rupees as well as in foreign currencies. It is offered at internationally competitive interest rate to enable the exporter to take advantage of competitive environment. These loans are extended at LIBOR/EURIBOR/EURO LIBOR

LIBOR stands for London Inter Bank Offer Rate which refers to the rate of interest at which banks are ready to lend money to each other in London's Inter Bank Market. EURIBOR is Euro Inter Bank Offered Rate. The rate released by the European banking federation used for euro interbank loan transactions between banks in the Euro region. EURO LIBOR refers to LIBOR denominated in Euro.

Post shipment finance


Deals with the credit available after the goods have been shipped. It provides credit facility from the date of shipment of the goods to the time export payment is realized.

POST SHIPMENT CREDIT


Can be granted up to 100% of the invoice value. 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 or discounting. Export bills negotiated. Advances against bills for collection. Advances against duty draw back receivable for govt. Advances against export and consignment basis. Advances against undrawn balances.

Banks can extend post shipment finance and concessional rates for periods such as Demand bill
This period comprises the average period normally involved from the date of negotiation or purchase till the receipt of bill proceeds in the NOSTRO Account of the bank.

Usance Bills
The credit period is the maximum of 180 days.

ROLE OF EXPORT IMPORT BANK OF INDIA IN EXPORT FINANCE


The bank provides the following funds Lines of credit Suppliers credit Overseas buyers credit Finance for rupee expenditure for project export contracts(FREPEC). Preshipment rupee credit. Refinance of export credit Forfaiting.

LINES OF CREDIT

PRE SHIPMENT SUPPLIERS CREDIT

EXIM BANK

INDIAN EXPORTER

OVERSEAS BUYER

SUPPLIERS CREDIT
It is available both for project contracts as well as project reports. It also includes construction, turnkey/consultancy contracts undertaken overseas.

OVERSEAS BUYERS CREDIT Credit is directly offered to the overseas buyer for a specific project/ contract. FINANCE FOR RUPEE EXPENDITURE FOR PROJECT EXPORT CONTRACTS(FREPEC) This scheme will enable Indian project exporters to meet rupee expenditure required to be incurred for execution of overseas project export contracts such as Mobilization Purchase Acquisition of materials and equipments Mobilization of personnel Payments To meet project related overheads in Indian rupees. The purpose is to provide a boost to project export of companies having a good track record and sound financials.

PRE SHIPMENT RUPEE CREDIT


It is extended to finance temporary funding requirement of export contracts. Exporters could also avail of preshipment credit in foreign currencies to finance the cost of imported inputs for the manufacture of export products.

REFINANCE OF EXPORT CREDIT


Authorised dealers in foreign exchange can obtain from Exim Bank, 100% refinance of deferred payment loans extended for the export eligible Indian goods.

FORFAITING
It is a mechanism of financing exports through
o By discounting export receivables o Evidence by bills of exchange or promissory notes. o Without recourse to the seller o Carrying medium to long term maturities o On a fixed rate basis o Up to 100% of the contract value.