1 / 3

Pre Shipment Finance

Pre-shipment finance refers to the credit extended to exporters prior to the shipment of goods for the execution of an export order. It is also known as 'Packing Credit.u2019 Credit refers to any loan granted to an exporter for financing the purchase, processing manufacturing, or packing of goods as defined by the Reserve Bank of India.

financesevaloan
Télécharger la présentation

Pre Shipment Finance

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What is Pre-Shipment Finance

  2. What is Pre-Shipment Finance • what is pre-shipment finance refers to the credit extended to exporters prior to the shipment of goods for the execution of an export order. It is also known as 'Packing Credit.’ Credit refers to any loan granted to an exporter for financing the purchase, processing manufacturing, or packing of goods as defined by the Reserve Bank of India. • The period for which a packing credit advance may be given by a bank will depend upon the circumstances of the individual case, such as the time required for procuring, manufacturing, or processing and shipping the relative goods.   • It is primarily for the banks to decide the period for which a packing credit advance may be given having regard to the various relevant factors so that the period is sufficient to enable the exporter to ship the goods.

  3. Pre-shipment finance is of particular importance to small-scale manufacturers and exporters who do not possess sufficient financial resources to meet the expenditure involved in the production of goods for export. Exporters can get pre-shipment credit from: • (a) Indian commercial banks. • (b) Branches of foreign commercial banks in India. • Benefits • The customer receives funds in advance, which can be used to fund working capital needs, such as the purchase or manufacture of goods, or to arrange for transportation or storage etc. • The customer will have either an Export Order or a Letter of Credit to support his application, the cost of financing is cheaper than an overdraft. In general, financing costs may be cheaper if supporting sales are through a letter of credit rather than the export order. • The customer may be able to negotiate better contract terms with the buyer vis-a-vis competitors to get a lower cost of financing.

More Related