Export Finance :-

• Pre and Post Shipment

 The institute
which provides the credits :-
• EXIM Bank
• Commercial Bank
• ECGC
Nature Of Export Finance :-

• RBI ensure a free flow of financial assistance

to exporters at a concessional rate of interest
against export order.
• The commercial banks provide the loan at
areduced rate of interest.
• Commercial banks get re-finance facility by
RBI and EXIM bank against the loan extended
by them to the exporters.
 Classification Of Export Finance :-
• Pre-Shipment.
• Post-Shipment.
 Pre-Shipment Finance :-
• Provides working capitalfinanceto an exporter.
• Basic purpose is to enable the eligible
exporters to procure raw
materials,supplies,process
ormanufacturer,warehouse or ship the goods
meant for exports.
Classification Of Pre-Shipment Finance
:-
• Packing Credit.
• Advance against incentives receivables from
govt.covered by ECGC gaurantee.
• Advance against cheque/drafts received as
advance payment.
 Packing Credit :-
• Enables an exporter to pack the goods meant
for exports.
• Includes loan/advances/credit granted by a
bank to an exporter to buy raw
materials,supplies, etc. required for
processing,manufacturer,packing of goods for
exports.
• Facility can be shared with supoorting
manufacturer or the sub-supplier.
 Period Of Finance :-
• Pre-Shipment Finance isgranted for a short
period of time as it essentially a working
capital finance.
• Initially it is 180 days subject to lead time.
• In case of unforeseen circumstances the bankl
may give a 90 days extension.
• Max period is 270 days.
 Rate Of Interest :-
Period Of Credit Interest Rate Of Interest
Upto 180 days minus . Not exceeding PLR
2.5% age points .
180-270 days plus .
Not exceeding PLR
270-360 days . 2.5% age points .

Fixed by the bank .

 Post Shipment Finance:-
• 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 leteer to the bank provides
comprehenshive coverage of the various
points.
 Features Of Post Shipment :-
• 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.
 Classification Of Post Shipment
Finance :-
• Negotiation/Payment/Acceptance of export docs under
L/C.
• Purchase/Discount of export docs under confirmed
orders/exports 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.
Thank You