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.

Who is eligible for post shipment finance?

are eligible for post-shipment finance on the production of the following documents: A letter from the concerned export house/trading house certifying that the goods supplied by the deemed exporter have actually been shipped for export purpose. To pay insurance charges for insuring goods against perils of sea.

What is meant by pre-shipment and post shipment finance?

1 Meaning: Pre-Shipment finance refers to the credit extended to the exporters prior to the shipment of goods for the execution of the export order. Post-Shipment Finance Post-shipment finance refers to the credit extended to the exporters after the shipment of goods for meeting working capital requirement.

What are the post shipment documents?

What documents are required for post-shipment credit?

• Bill of lading/airway bill.
• Commercial invoice.
• Packing list.
• Certificate of origin.
• Inspection certificate.
• Insurance certificate.
• Import Export Code (IEC) certificate.

How do you get pre-shipment finance?

1. Eligibility. Pre shipment credit is only issued to that exporter who has the export order in his own name.
2. Quantum of Finance.
3. Appraisal and Sanction of Limits.
4. Follow up of Packing Credit Advance.
5. Liquidation of Packing Credit Advance.
6. Overdue Packing.
7. Packing Credit to Sub Supplier.
8. Running Account facility.

What is the purpose of pre-shipment finance?

Difference Between Pre-Shipment And Post-Shipment Financing:

What are the types of pre shipment credit?

Major Types of Packing Credit

• Extended Packing Credit Loan.
• Secured Shipping Loans.
• Advances against Back-to-Back Letter of Credit.
• Red or Green Clause Letter of Credit.
• Advances against Export Incentives.
• Advances Against Duty Drawback.
• Packing Credit for Imports Against Entitlements under Advance Licence.

What is the purpose of pre shipment finance?

Why do we need pre-shipment finance?

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. Carry out manufacturing process.

What’s the difference between post shipment and post-shipment finance?

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. To pay to agents/distributors and others for their services.

How does post shipment finance work on consignment basis?

(d) Advance against Goods sent on Consignment Basis: When goods are, exported on consignment basis export proceeds are received after sale of goods In such cases, the overseas branch of exporter’s bank delivers documents against Trust Receipt and the post-shipment advance is adjusted against export proceeds realised later.

How is post shipment finance can be liquidated?

Post-shipment credit is to be liquidated by the proceeds of export bills received from abroad in respect of goods exported / services rendered. However, subject to mutual agreement between the exporter and the banker, it can also be repaid /prepaid out of balances in EEFC A/C or from proceeds of any other unfinanced (collection) export bills.

How to claim post shipment finance for exports?

Export bills negotiated under L/C: The exporter can claim post-shipment finance by drawing bills or drafts under L/C. The bank insists 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.