Important Things To Know About Export Pre-Shipment Finance

by Sanjeev Yadav SEO Consultant

Pre-shipment finance is generally issued when the sellers ask for payment before the shipment of the good by the financial institution. The objective of the Export Pre-shipment finance in Delhi or pre-shipment finance is to enable all the exporters to:

• To procure the raw materials

• To carry out the process of manufacturing

• To provide a safe and protected warehouse for raw materials and goods

• Pack and process the goods

• To ship the goods to buyers

• Meet all the financial cost of the business

What Are The Types Of Pre-Shipment Finance?

There are two types of pre-shipment finance. They are:

• Packing credit

• Advance against drafts and cheques which represents the advanced payments.

Pre-shipment finance is increasing using these forms:

• Packing Credit in Indian Rupees

• Packing credit in Foreign currency

What Are The Different Stages Of Pre-Shipment Finance?

There are several stages of Pre-Shipment finance. Some are as follows:

Sanctions And Appraisal Of Limits

Before any kind of allowance is made, the credit facilities of the bank checks all the different aspects of the profile of the product, economic as well as political details about the country. Along with this the bank also looks for the status report of the buyer. To check that all the information that is provided is correct, the bank can ask for the help of ECGC or other international consulting agencies. If you are seeking pre-shipment finance service in Delhi, make sure your documents and the providing information is correct.

Payment Of Packing Credit Advance

Once all the sanctioning of all the documents are completed by the bank makes sure that the exporter has the executed list of documents that were mentioned earlier. Payment or Disbursement is only allowed when all documents are executed properly.

In some cases, the exporter might not be able to provide the export on time of availing the packing credit. In such cases, the bank provides the exporter with something called special credit facility which is also known as the Running account packing.

The bank is the one who decides the duration of the needed for the packing credit which in turn depends on the time exporter will take to process goods. The maximum duration of the packing credit period is around 180 days but the bank can provide an extension of 90 days.

The Packing Credit

The exporter needs to submit the stock statement providing all the necessary information that needed about the stock. This is then used by the bank as a guarantee to secure all the packing credit in advance. The bank also decides the rate of the stock submission. Export Pre-shipment finance in Delhi follows the same pattern and even physically inspect things on their own.

Overdue Packing

In case if a borrower fails to liquidate all the packaging credit on the due date, the bank considers all the packing credit as an overdue. And if the situation remains same then the bank takes all the steps that are necessary to recover all the dues as their normal recovery procedure.

This was all that you should know about Pre-Shipment finance before digging in.