Export-Import

Procedures
&
Documentation

Index
Introduction to export
finance
Pre-shipment finance
Importance of export
finance at pre-shipment
stage
Features of pre-shipment
finance
Procedures for obtaining
pre-shipment finance
Forms of pre-shipment
finance

Post-shipment finance
Importance of export
finance at post-shipment
stage
Features of postshipment finance
Procedures for obtaining
post-shipment finance
Forms of post-shipment
finance

Introduction

Export finance means the credits required by

exporters for financing their export transactions
from the time of getting an export order to the time
of full realization of the payment from the
importers.

E
X
P
O
R
T
F
I
N
A
N
C
E

Pre-shipment
finance
Pre-shipment finance also known as PACKING CREDIT.
It is also known as advance credit facility obtained
by an exporter from a bank or financial institution.
The Reserve Bank of India defines it as any loan to
an exporter for financing the purchase , processing,
manufacturing or packing of goods.
It is an advance provided by a bank for helping the
exporter to purchase, process, pack and ship the
goods. Packing credit is working capital extended to
an exporter.

Importance of export
finance at pre-shipment
stage

To pay for raw materials .

Assemble.
To store the goods.
To pay for packing.
To import from the domestic market heavy machinery
& other capital goods.
To pay for consultancy services.
To pay for export documentation expenses.

Features of pre-shipment
finance

Eligibility
Purpose
Documentary
Forms and method of pre-shipment finance
Amount of packing credit
Period of packing credit
Rate of interest
Loan agreement
Maintenance of accounts
Disbursement of loan

Procedures for obtaining preshipment finance

Submitting application to the bank

Processing of application
Sanctioning of loan
Loan agreement
Manner of payment
Maintenance of accounts
Monitoring of the use of loan
Repayment of loan

Forms of pre-shipment
finance

Extended packing credit loan

Packing credit loan (Hypothecation)
Packing credit loan (Pledge)
Advances against back-to-back L/C
Advances against export incentives
Packing credit for imports against advance licence
entitlement
Special packing credit schemes

Post-shipment
finance

When an advance or a loan is needed by an Indian

exporter after completing the process of shipment
of goods, it is termed as Post-shipment Finance.
This finance is needed after making the shipment
but before realizations of payment from overseas
buyers.

Importance of export finance

at post-shipment stage

To pay to agents
To pay for publicity
To pay for port authorities
To pay towards export duty
To pay towards ECGC premium
To pay for freight
To pay for marine insurance premium
To pay for market surveys
After -sales-service
Participation in exhibitions
To pay for representatives

Features of postshipment finance

Eligibility
Purpose
Documentary evidence
Forms of post-shipment finance
Amount of post-shipment credit
Period of post-shipment finance
Rate of interest
Loan agreement
Repayment

Procedures for obtaining

post-shipment finance

Application to the bank

Scrutiny of application
Rate of interest
Loan agreement
Manner of payment
Maintenance of payment
Liquidation of loan

Forms of post-shipment
finance

Export bill negotiated under L/C

Purchase of export bills under confirmed orders
Advances against bills sent for collection
Advances against goods sent on consignment basis
Advances against duty drawback entitlement
Advances against undrawn balances of bills
Advances against deemed export
Advances against deferred payment