UNDERSTANDING MAIN PROFESSIONAL POINTS – ACTIVITY

EXPORT FINANCE SCHEMES

*Prepared by Prof. Harkirat Singh

Professor & Consultant
IIFT, New Delhi

Please tick the correct answers:

1. Foreign buyers are now demanding higher credit periods along with
low price, good quality and strict adherence to delivery schedule.
Longer credit period is the main cause for financial requirement to
complete the export trade cycle.

Correct Incorrect

2. Export transaction can only be financed by bank finance.

Correct Incorrect

3. All exporters are eligible for export finance at concessional interest

rate.

Correct Incorrect

4. At preshipment stage bank provides Packing Credit Advance to

meet working capital requirements only and not for capital
expenditure.

Correct Incorrect

5. Packing credit advance is given to manufacturer exporter to acquire

raw material, processing, manufacturing, packing, transporting and
warehousing the goods.

Correct Incorrect

6. Letter of Credit or confirmed order is a must of all exporter for

preshipment advance.

Correct Incorrect

7. Packing Credit is given as demanded by exporter without any

margin at normal interest of the Bank for period more than 360
days.
 Correct Incorrect

8. Exporters are not eligible for packing credit advance in foreign

currencies from banks to reduce their cost of borrowing funds. Loan
in foreign currency to exporters does not constitutes natural
hedging.

Correct Incorrect

9. Foreign currency packing credit advance can be adjusted from the

funds in exporter's EEFC account with the bank Packing credit
advance is also adjusted by the exporter with rupee payment as
and when demanded by bank and does not attract concessional
interest rate. In both cases export of goods/service have taken
place.

Correct Incorrect

10. Packing Credit advance should not be more than the value of the
order in all cases and exporters are allowed not to maintain running
loan account.

Correct Incorrect

11. Only exporters are allowed to avail packing credit advance upto 270
days at concessional interest rates and sub suppliers who are not
exporting directly but supplying goods to exporter are also eligible
for export finance.

Correct Incorrect

Deemed exporters are not allowed for export finance at low interest
rates.

Correct Incorrect

When premiums of invoice currency is very high it is better for

exporter to avail Export Finance in Rupee than in Foreign
Currency.

Correct Incorrect
Postshipment advance is basically a bill finance for exporter after
shipment of the
goods and provided in Rupee or Foreign Currency as per
requirements.

Correct Incorrect

12. Postshipment credit is an extra advance to exporter in addition

to preshipment credit.

Correct Incorrect

13. Postshipment advance is given on the basis of Due date of the

draft and bill will be treated as overdue if not paid on due date.

Correct Incorrect

14. Export bill under D/A or D/P terms has the same meanings and
one once D/A bill with tenor is purchased its tenor cannot be
changed.

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15. In case of export bills, there is a system of Normal Transit Period by

FEDAI which has to be taken into account while calculating due date
of the D/A and D/P bills. While discounting export bill bank will
charge discount (interest rate) for such extra periods.

Correct Incorrect

16. There is different type of facilities given to exporter at

postshipment stage depending upon whether L/C or C/O is
submitted by the exporter.

Correct Incorrect

17. Preshipment advance can be availed in foreign currency and

postshipment advance in Rupee only.

Correct Incorrect

18. There is a scheme of Gold Card Holder by banks for tiny, small,
medium and large exporters which entitles number of cost reducing
benefits.
 Correct Incorrect

19. In case exporter make existing export transaction cycle efficient,

such approach will reduce cost of business operations by releasing
fund layered in various stages.

Correct Incorrect

20. Preshipment & Post shipment finance schemes are self adjusting
with completion of export business stages

Correct Incorrect
21. At post shipment handling of export documents under letter of
credit is called negotiation, sight export bills are purchased and
time or usance export bills are discounted. Bank charge concession
interest rates while negotiating, purchasing and discounting export
bills.

Correct Incorrect