Need for such type of finance?

The institutions which provides the credit,

EXIM BANK COMMERCIAL BANK ECGC

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

Pre-shipment finance Post-shipment finance

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

Packing credit Advance against incentives receivables from govt. covered by ECGC guarantee Advance against cheque /drafts received as advance payment

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

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.

PERIOD OF CREDIT INTEREST Upto 180 days minus

RATE OF not exceeding PLR 2.5 %age points.

180-270 days plus

not exceeding PLR 2.5 %age points.

270-360 days

fixed by the bank.

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

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

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