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Export Finance

Export Finance. Pre-Shipment Finance: (Packing Credit) Against confirmed direct order / LC. If the order is from a trading house, the exporter should give an undertaking that he is not availing this credit

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Export Finance

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  1. Export Finance • Pre-Shipment Finance: (Packing Credit) • Against confirmed direct order / LC. If the order is from a trading house, the exporter should give an undertaking that he is not availing this credit • Specific agreement to Bank that the amount will be used for procuring, manufacturing & shipping of goods meant for exports only • ECGC Guarantee to be submitted • Interest at 10% p.a. for initial 180 days, 13% p.a. for next 90 days. Beyond 270 days and upto 360 days , banks to decide interest rates • EXIM Bank’s scheme for extending credit in foreign currency for financing cost of imported inputs

  2. Export Finance • Post-Shipment Finance: • Purchase of export documents drawn under export order • Depends on importers credit worthiness • ECGC policy to be submitted • Orders with LC can be substituted for credit worthiness • Advances against export bills sent on collection • Amount granted as “separate loan” usually termed as post-shipment” loan. • Margin of 10% to 25% is stipulated • Not so popular when compared to negotiation /purchase /discount of export bills

  3. Export Finance • Post-Shipment Finance: • Advance against goods sent on Consignment basis • Bank will take an undertaking from the importer that the sale proceeds will be remitted by a specific date. • Advance against Undrawn Balance: • Undrawn balance is intentionally created to adjust exchange rate variation, difference in rates, weight at the time of receipt • Advance can be drawn on this undrawn balance upto 10% of value of that export order • 10% limit can be extended with RBI approval

  4. Export Finance • Post-Shipment Finance: • Advance against retention money: • Upto one year at concessional rate of interest upto 90 days • Can be extended beyond one year, when it will be treated as deferred payment advance • Advance against claims of duty drawback: • Duty drawback claim is to be submitted through the bank • Advance can be drawn on concessional interest • Drawback amount will be received by the bank and the advance is settled

  5. EXIM Bank • Set up in 1982 • Involved in: • Project finance • Trade finance • Overseas investment finance • Funded assistance: • Financial assistance to exporters • Rediscounting export bills • Financing technology & consultancy services • Refinancing export foreign credit

  6. EXIM Bank • Non-funded assistance: • Bank guarantees for bid bond • Advance payment & performance BG • For raising finance abroad • Objectives & functions: • Grant of loans and advances • Grant of lines of credits to Govt and Banks • Purchasing, discounting and negotiating export bills • Selling, discounting and negotiating in international markets

  7. EXIM Bank • Objectives & functions: • Negotiating and collecting bills under LC • Opening LC for imports • Buying and selling foreign exchange • Undertaking and financing research, techno-economic studies bearing on promotion and development of international trade • Handles values/orders/contracts more than Rs 50crores

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