Pre-shipment is also referred as “packing credit”. It is working capital finance provided by commercial banks to the exporter prior to shipment of goods. The finance required to meet various expenses before shipment of goods is called pre-shipment finance or packing credit.
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. Such finance is extended to an exporter for the purpose of procuring raw materials, processing, packing, transporting, warehousing of goods meant for exports.
IMPORTANCE OF FINANCE AT PRE-SHIPMENT STAGE: * To purchase raw material, and other inputs to manufacture goods. *…show more content…
a) To complete proper documentation and compliance of the terms of sanction i.e. creation of mortgage etc.
b) There should be an export order or a letter of credit produced by the exporter on the basis of which disbursements are normally allowed.
In both the cases following particulars are to be verified: 1. Name of the Buyer. 2. Commodity to be exported. 3. Quantity. 4. Value. 5. Date of Shipment / Negotiation. 6. Any other terms to be complied with.
2. FOREIGN CURRENCY PRE-SHIPMENT CREDIT (FCPC) * The FCPC is available to exporting companies as well as commercial banks for lending to the former. * It is an additional window to rupee packing credit scheme & available to cover both the domestic i.e. indigenous & imported inputs. The exporter has two options to avail him of export finance. * To avail him of pre-shipment credit in rupees & then the post shipment credit either in rupees or in foreign currency denominated credit or discounting /rediscounting of export bills. * To avail of pre-shipment credit in foreign currency & discounting/rediscounting of the export bills in foreign currency. * FCPC will also be available both to the supplier EOU/EPZ unit and the receiver EOU/EPZ unit.
Eligibility: PCFC is