The information provided here is part of Guide on howtoexport and import
Packing credit pre shipment finance to suppliers for exports through other export agencies, State Trading Corporation,MMTC etc.
Banks may grant export packing credit to manufacturer suppliers who do not have export orders/letters of credit in their own name and goods are exported through the State Trading Corporation/Minerals and Metal Trading Corporation or other export houses, agencies etc. Such advances will be eligible for refinance against terms and conditions. Banks should obtain from the export house a letter setting out the details of the export order and the portion thereof to be executed by the supplier and also certifying that the export house has not obtained and will not ask for packing credit in respect of such portion of the order as is to be executed by the supplier. Banks should, after mutual consultations and taking into account the export requirements of the two parties, apportion between the two i.e. the Export House and the Supplier, the period of packing credit for which the concessionary rate of interest is to be charged. The concessionary rates of interest on the pre-shipment credit will be available up to the stipulated periods in respect of the export house/agency and the supplier put together. The export house should open inland L/Cs in favor of the supplier giving relevant particulars of the export LCs or orders and the outstanding in the packing credit account should be extinguished by negotiation of bills under such inland LCs. If it is inconvenient for the export house to open such inland LCs in favor of the supplier, the latter should draw bills on the export house in respect of the goods supplied for export and adjust packing credit advances from the proceeds of such bills. In case the bills drawn under such arrangement are not accompanied by bills of lading or other export documents, the bank should obtain through the supplier a certificate from the export house at the end of every quarter that the goods supplied under this arrangement have in fact been exported. The certificate should give particulars of the relative bills such as date, amount and the name of the bank through which the bills have been negotiated. Banks should obtain an undertaking from the supplier that the advance payment, if any, received from the export house against the export order would be credited to the packing credit account.
Click here to go back to: Bank finance to exporters against Pre shipment and Post shipment.
Posts about overseas trade online
Bank finance to exporters as pre shipment finance What is crystallization of export bills? How does delinking of export bills work? Liquidation of Bank pre shipment finance to exporters Running account facilities for bank export finance Pre shipment bank finance to suppliers for exports through other agencies Conditions to get export loans from banks to sub suppliers Are construction projects eligible for Bank pre shipment loan? Bank Packing credit to exporters of Floriculture, Grapes and Other Agro-based Products What is Bank post shipment credit to exporters? Period of post shipment credit by bank to exporters
Related Read:How to find overseas (foreign) buyer?
Learn Exports and Imports free online click here to read