Pre shipment and post shipment finance pdf
Pre Shipment and Post Shipment finance | Trade Finance GuidePre Shipment Finance is issued by a financial institution when the seller want the payment of the goods before shipment. The main objectives behind preshipment finance or pre export finance is to enable exporter to:. Packing credit facility can be provided to an exporter on production of the following evidences to the bank:. The confirmed order received from the overseas buyer should reveal the information about the full name and address of the overseas buyer, description quantity and value of goods FOB or CIF , destination port and the last date of payment. Pre shipment credit is only issued to that exporter who has the export order in his own name.
Pre Shipment Finance - IDBI Bank
Export finance whether short-term or medium term, is provided exclusively by the Indian and foreign commercial banks which are the members of the Foreign Exchange Dealers Association. Export-Import Bank of India commonly known as EXIM Bank also extends finance to exporters and to overseas projects abroad joint ventures and construction projects abroad. Pre-shipment finance refers to the financial assistance provided to the exporters before actual shipment of goods. Pre-shipment finance is provided to the exporters for the purposes like purchase of raw materials, their processing and converting into finished goods and packaging them. Pre-shipment credits are granted by the banks under concessional rates of interest at 7. Credit can be extended up to a maximum period of 6 months.
Export business is generally based on credit terms the exporter ships the goods and the payment is. In order to support the exporter from the problem of lack of finance the commercial banks provides finances to him at two distinct stages pre-shipment stage post shipment stage. Financial assistance extended to the exporter from the date of receipt of the export order till the date of shipment is known as pre-shipment credit. Pre-shipment finance facilities offer liquidity to the exporter. To purchase raw material, and other inputs to manufacture goods.
This type of export finance is granted from the date of extending the credit after shipment of the goods to the realization date of the exporter proceeds. Exporters dont wait for the importer to deposit the funds. Basic Features The features of postshipment finance are: Purpose of Finance Postshipment finance is meant to finance export sales receivable after the date of shipment of goods to the date of realization of exports proceeds. In cases of deemed exports, it is extended to finance receivable against supplies made to designated agencies. Basis of Finance Postshipment finances is provided against evidence of shipment of goods or supplies made to the importer or seller or any other designated agency. Types of Finance Postshipment finance can be secured or unsecured.
Export Pre Shipment and Post Shipment Finance in International Trade Packing Credit and PCFc in Foreign currency with Advance Payment and Overdraft.
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