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Who is eligible for post shipment finance?

Who is eligible for post shipment finance?

First, the applicant has to be an Indian exporter with a proven track record. The credit amount should be within the maximum permissible bank finance (MPBF) of the borrower’s limit. A margin of around 10% under post-shipment credit is applicable. Adequate security might be required in some cases.

What is meant by post shipment finance?

Post Shipment Finance is a kind of loan provided by a financial institution to an exporter or seller against a shipment that has already been made. 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.

How many days are given in pre and post shipment finance?

Period of Credit: It is granted for a maximum period of 180 days and can be further extended for a period of 90 days with a prior permission of the RBI. It can be granted for short.

What is interest on Pcfc?

The rate of interest on PCFC for the period/s beyond 180 days should be the rate for initial period of 180 days prevailing at the time of extension plus 2%. If no export takes place within 360 days, the PCFC should be adjusted at the T.T. selling rate.

Is ECGC cover mandatory?

Export credit insurance is provided by India’s ECGC. The full form of ECGC stands for Export Credit Guarantee Corporation Limited (ECGC), it is an open cover to credit insurance & a mandatory requirement for it.

What are the different types of post shipment finance?

Types of post-shipment credit

  • Export bills purchased/discounted/negotiated.
  • Advances against bills for collection.
  • Advances against duty drawback receivable from government.
  • Advance against export on consignment basis.
  • Advance against undrawn balance.

What are preshipment documents?

Pre 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: Procure raw materials.

How is Pcfc account liquidated?

PCFC can be liquidated out of proceeds of export documents on their submission for discounting/rediscounting under the EBR Scheme detailed in paragraph 2.2. or by grant of foreign currency loans (DP bills).

Is Pcfc fund based or non fund based?

This is short-term advance. Packing Credit Finance is released in what forms? Pre-shipment finance is both a fund based and non-fund-based advance. Form of packing credit advance is dependent upon the stage of execution of export order.

Is ECGC is govt or private?

ECGC Ltd. (Formerly known as Export Credit Guarantee Corporation of India Ltd.) wholly owned by Government of India, was set up in 1957 with the objective of promoting exports from he country by providing credit risk insurance and related services for exports.

Which risk is not covered by ECGC?

ECGC does not cover those risks that are covered by the commercial insurers. Exporter can take comprehensive policy that covers both commercial and political risks. If the exporter wants, he can take only policy that covers political risks, depending on the requirements.

Why post shipment credit is required?

Post shipment credit is extended to exporters by bank with low interest rate till realization of their export proceeds. Post shipment loan helps exporters to get finance without waiting amount of sales from their overseas buyers.

What is FBD in banking?

Packing Credit Loan, FBN- Foreign Bills Negotiated, FBD- Foreign Bills Discounted, FDBD- Foreign.

What are the different methods of post shipment finance?

In the first two instances, the exporter submits the bill of lading or airway bill, commercial invoice, packing list, certificate of origin, purchase order and other necessary export documents with the bank. The bank extends post-shipment credit at a concessional interest rate by purchasing or discounting these bills.

What is Pcfc and how it works?

When an advance or a loan is granted, or another form of credit, is provided by a bank to an exporter for the purpose of financing the purchase, processing, manufacturing or packaging of goods before a shipment is called a pre-shipment credit.

How is Pcfc calculated?

RATE OF INTEREST: Interest rate on PCFC is based on ongoing LIBOR/ EURO LIBOR / EURIBOR for appropriate period at the time of the advance plus sanctioned spread.

Is ECGC a bank?

The ECGC Limited (Formerly Export Credit Guarantee Corporation of India Ltd) is a government owned export credit provider. It is under the ownership of Ministry of Commerce and Industry, Government of India based in Mumbai, Maharashtra.

What is export financing scheme of RBI?

The RBI first introduced the scheme of Export Financing in 1967. The scheme is intended to make short-term working capital finance available to exporters at internationally comparable interest rates.

What happens if pre-shipment advance is not adjusted by RBI?

(ii) If pre-shipment advances are not adjusted by submission of export documents within 360 days from the date of advance, the advances will cease to qualify for prescribed rate of interest for export credit to the exporter ab initio. (iii) RBI would provide refinance only for a period not exceeding 180 days as per instructions issued by RBI (MPD).

How to increase the post-shipment finance for export?

Purchase/Discount of Export Bills: there are chances of the post-shipment finance to get increased either through purchasing or giving a discount on the export bill. But this is only possible when the export bills are not covered under credit letter.

Can I refinance my packing credit from RBI?

For the packing credit covering such non-exportable portion, banks are required to charge commercial rate of interest applicable to the domestic advance from the date of advance of packing credit and that portion of the packing credit would not be eligible for any refinance from RBI.