POST SHIPMENT FINANCE

Presented to : Miss Kavita Shah

Presented by : Harshit Patel
Roll No : 535
 CONTENTS

Meaning of post shipment finance

Importance of post shipment finance
Forms of post shipment finance
Categories of post shipment finance
 MEANING OF POST SHIPMENT
FINANCE

Post shipment finance is provided to

meet working capital requirements after
the actual shipment of goods
It bridges the financial gap between the
date of shipment and actual receipt of
payment from overseas buyer thereof.
Whereas the finance provided after
shipment of goods is called post-
shipment finance.
Credit facility extended to an exporter
from the date of shipment of goods till
the realization of the export proceeds is
called post-shipment credit.
 IMPORTANCE OF POST SHIPMENT
FINANCE

To pay agents/distributors and others for

their services.
T pay for publicity and advertising in the
overseas markets.
To pay for port authorities, customs and
shipping agents charges.
To pay towards export duty or tax if any.
To pay for freight and other shipping
expenses
To meet expenses in respect of after sale
service.
 FORMS OF POST SHIPMENT
FINANCE

1) Export bills negotiated under L/C-

The exporter can claim post shipment
finance by drawing bills or drafts
under L/C. The bank insist on
necessary documents as stated in the
L/C, if all documents are in order the
bank negotiates the bill and advance
is granted to the exporter.
2) Purchase of exports bills drawn under
confirmed contracts- The banks may
sanction advance against purchase or
discount of export bills drawn under
confirmed contracts. If the L/C is not
available as security, the bank is
totally dependent on the credit
worthiness of the exporter.
3) Advance against bills under
collection- In this case the advance is
granted against bills drawn under
 confirmed export order L/C and
which are sent for collection.They are
not purchased or discounted by the
bank. However this form is not as
popular as compared to advance
purchase or discounting of bills.
4) Advance against claims of duty
drawback-DBK means refund of
customs duties paid on the import of
raw materials,components,parts and
packing materials used in the export
production.
5) Advance against goods sent on
Consignment basis- The bank may
grant post shipment finance against
goods sent on consignment basis.
 CATEGORIES OF POST SHIPMENT
FINANCE

1) Demand bills- A bill which is

articulated to be payable on demand is
called demand bill. The bill which is
drawn payable at sight or on
presentation or in which no time is
specified for repayment are reckoned
as demand bills.
2) Usance bill- The usance bill is one
which is expressed to be payable at a
specified future date are called usance
bills. These bills bear the terms like
after date or after sight. After date
suggest that the due date for the
payment of the bill will be calculated
from the date of the bill. After sight
means that the due date for the
payment of the bill will be calculated
 from the date of presentment to the
drawee for the acceptance of the bill.

3) Retention Money- In respect of certain

export capital goods and project
exports,the importer retains the part of
cost goods towards guarantee of
performance or completion of project.

4) Undrawn Balance- There are cases

where bills are not drawn to the full
invoice value of goods. Certain amount
is undrawn balance which is due for
payment after adjustments due to
difference in rates, weight, quality etc.
Also bank offer advance against such
undrawn balances upto 5%.

5) Incentives- Incentives- Incentives are

monetary gifts provided to an
employee based on performance,
which is thought of as one way to
entice the employee to continue
delivering positive results. Incentives
pay may come in the form of a bonus,
profit sharing or commission.