INTRODUCTION OF EXPORTS 

 
•  Selling goods abroad.
 
•  It refers to outflow of goods and
services and inflow of
  foreign exchange. 
•  It contribute largely to foreign exchange
pool.
CONTD. 
Ittrade
helpsand
to maintain
foreign healthy balance of
•

    exchange reserves. 

• It is a vehicle of growth and
development.
 
• It leads to national self-reliance and
reduces dependence on external
assistance.
EXPORT FINANCE  
• Export Finance project is ansources
attemptofto
throw light on the various
export finance available to exporters.
 
• The payment terms however depend
upon the availability of finance to
exporters in relation to its quantum,
cost and the periodstage.
at pre-shipment
and post-shipment
 OBIECTIVES OF EXPORT FINANCE 
• To cover commercial & Non-
commercial or political risks attendant
on granting credit to a foreign buyer.
 
• To cover natural risks like an
earthquake, floods.
 
Increase the foreign
the exchange
export. in our
•
country through
PRE-SHIPMENT FINANCE  
  
MEANING  
Pre-shipment is also capital
referred as “packing
credit”. It is working finance provided by
commercial banks to the exporter prior to
shipment of goods. Thebefore
financeshipment
requiredof
to
meet various expenses
goods
credit. is called pre-shipment finance or packing
• Eligible for pre-shipment credit
• Purpose of this finance
• Tenure of funding
• In what currency's can the exporter
obtain pre-shipment credit
• Cost of pre-shipment finance
 
PRE-SHIPMENT FINANCE
POST-SHIPMENT FINANCE  
•  MEANING:
                             Post shipment finance is
provided to meet working capital
requirements after the actual shipment of
goods. It bridges the financial gap between
the date of shipment andbuyer
actual receipt of
payment from overseas thereof.
Whereas the finance provided after
shipment of goods is called post-shipment
finance.
 
• IMPORTANCE OF FINANCE AT POST-
SHIPMENT STAGE:
1. To pay to agents/distributors and others
for their services.
2. To pay for port authorities, customs and
shipping agents charges.
3. To pay towards export duty or tax.
4. To pay for freight and other shipping
expenses.
5. To pay towards marine insurance
 premium, under CIF contracts.
FORMS/METHODS OF POST SHIPMENT
FINANCE  
  
1)   Export bills negotiated under L/C 
2)    Purchase of export bills drawn under
confirmed contracts  
3)    Advance against bills under collection 
4)     Advance against claims of Duty
Drawback (DBK)  
5)     Advance against Deferred payments 
 
LETTER OF CREDIT 
• DEFINITION:
        A Letter of Credit can be defined as “an
undertaking bywill
importer’s bank stating
that payment be made to the exporter
if the required documents are presented
to the bank within the validity of the L/C”.
 
Applicant:
goods    The buyer or importer of
•

• Issuing bank:               Importer’s bank,

who issues the L/C
• Beneficiary:  The party to whom the L/C
is addressed. The                               
                    Seller or supplier of goods.
• Advising bank: Issuing bank’s branch or
correspondent bank in
                    The exporter’s country to whom the
L/C is send for
                    Onward transmission to the
beneficiary.
• Confirming bank: The bank in
beneficiary’s country, which
                    Guarantees the credit on the request
of the issuing
                     Bank.
• Negotiating bank: The bank to whom
the beneficiary presents his
                    Documents for payment under L/C
    
PARTIES INVOLVED
OF CREDIT:IN LETTER
SOME IMPORTANT
CONCEPTS
FINANCE IN EXPORT
FORFEITING 
FORFEITING is the non recourse
discounting of export receivables
Forfeiting in Export Finance 
Forfeiting
exports is a mechanism of financing
• By discounting export receivables
• Evidenced by bills of exchange or
promissory notes
• Without recourse to the seller (viz.
exporter)
• Carrying medium to long term maturities
• On a fixed rate basis (discount)
• Up to 100 percent of the contract value.
Concept of Export Finance 
• The exporter may require short term,
medium term or long term finance
depending upon the types of goods.
The short-term
“workingfinance
capital”isneeds.
• required to
meet
• The exporter may also require “term
finance”.
• Export finance isallowed
short-term working
capital finance to an exporter.
Finance and credit are available notalso
only to help export production but
 to sell to overseas customers on credit.
SCHEMES
STAGE OF IN PRE-SHIPMENT
FINANCE  
SOME SCHEMES IN PRE-SHIPMENT STAGE OF
FINANCE    
 
•   PACKING CREDIT
 
 
• FOREIGN CURRENCY PRE-SHIPMENT
CREDIT (FCPC)
PACKING CREDIT  
SANCTION
ADVANCES:OF PACKING CREDIT
•

                                                There are

certain factors, which should be considered
while sanctioning the packing credit
advances.  
 
• DISBURSEMENT OF PACKING CREDIT:
                                                 After proper
sanctioning of credit limits, the disbursing
branch should ensure to inform ECGC the
details of limit sanctioned in the prescribed
format within 30 days from the date of
sanction.  
 
                                       
 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.
         
with. 6.Any other terms to be complied
 
   
  FOREIGN CURRENCY PRE-SHIPMENT CREDIT
(FCPC)    
 
•      The FCPCas is well
available to exporting
companies as commercial           
banks for lending to the former.
 
• Itpacking
is an additional window to rupee
credit scheme
 
• To avail of&pre-shipment credit in foreign
currency discounting/rediscounting
of the export bills in foreign currency.
• Pre-shipment credit in foreign currency
shall also beClearing
availableUnion)
on exports to
ACU (Asian countries
with effect from 1.1.1996.
 
• Eligibility
 
• Order or L/C
 
• Sharing of FCPC.
SOME SCHEMES UNDER OPERATION IN PRE-
SHIPMENT FINANCE  
 
1.DEFERRED CREDIT 
    a) Meaning
    b) How the payment is received?
    c) Period of financial credit support
    d) Amount of credit support 
2.REDISCOUNTING OF EXPORT BILLS
ABROAD (EBRD)SCHEME:  
3.FINANCE FOR RUPEE EXPENDITURE FOR
PROJECT EXPORT CONTRACTS (FREPEC)
  a) What is FREPEC program?
  b) What is the purpose of this credit?
   c) Who are eligible under FREPEC
program?
  d) How are disbursements made under
this program?
  e) How is a FREPEC loan to be
extinguished?
  f)  What is the security stipulated for
FREPEC loan? 
 
RESERVE BANK OF INDIA 
The
• RBI with its head quarters in
Mumbai
• RBI does not directly provide export
finance to the exporters, but it adopts
policies and initiates measures to other
encourage commercial banks and
financial institutions to provide liberal
export finance
• The Two Departments of RBI are:
• Industrial and credit department
• Exchange control department
These Departments administers various
policies related to export finance/credit
and foreign exchange. 
  
SCHEMES OFFERED BY RBI    
 
•EXPORT BILLS CREDIT SCHEME, 1963
    Under to
thisscheduled
scheme, RBI used to grant
advance banks against export
bills maturing within 180 days. Now this
scheme is not in operation.
•  PRE-SHIPMENT CREDIT SCHEME, 1969
    Underfacilities
this scheme, RBI provides re-
finance to scheduled banks that
provide pre-shipment loans to bonafide
customers.  
 
 
• EXPORT CREDIT INTEREST SUBSIDIES
 SCHEME, 1968:
• Under thisof
scheme, RBI1.5
provides interest
subsidies minimum % p.a. to to
banks, which provide export finance
exporters, provided that thewithin
banksthe
charge interest to exporter
ceiling prescribed by RBI.
 
• DUTY DRAW BACK CREDITtheSCHEME,
1976: Under this scheme, exporters
can avail an interest free advances from
the bank up to 90 days against shipping
bill provisionally certified byathe
customs authority towards refund of
customs duty.
GUIDELINES
under ISSUED
section1999
47 BYFEMA,
of THE RBI
 
Types of Exports covered:
•
• Export of Goods on Deferred Payment
Terms (e.g. Export of machinery,
equipment, manufactured products)
• Turnkey Projects (e.g. Setting up of
Sugar Plant, Cement Plant)
• Construction Projects (e.g. Construction
of Roads, Dams, Bridges)
• Consultancy & Technical Services (e.g.
Operation &referred
Maintenance Contracts)
collectively to as 'PROJECT &
SERVICES EXPORTS'.
MAJOR FINANCIAL AND    OTHER INSTITUTIONS  
  PRIMARY INSTITUTIONS: 
• EXIM BANK ( Export import bank of
India)
 
     ECGCI ( EXPORT CREDIT GUARANTEE
CORPORATION OF    INDIA LTD)  
 
 EXIM BANK ( Export
bank of India) import  
 •  September
Set up by an Act of Parliament in
1981.
• Commenced operations in March 1982.
 
• Export-Import Bank of India was set up
for the purpose of financing, facilitating
and promoting foreign trade in India.
  
MAIN OBJECTIVES OF EXIM BANK  
 
• To provide financial assistance (medium
and long term) to exporters and
importers.
 
• To function for
as the principal financial
institution coordinating the working
of institutions engaged in providing
export finance.
 
• To promote Foreign Trade of India.
 
• To deal with toallbe
matters that or
may be
considered incidental
conducive
objectives.to the attainment of above
• INDIAN BANKS.
• INDIAN PARTIES.
• OVERSEAS BUYERS.
• OVERSEAS BANKS.
 
 
• ADVISORY AND OTHER SERVICES.
 
• FINANCIAL GUARANTEES.
 
 
         ASSISTANCE OFFERED BY EXIM BANK 
FUND BASED ASSISTANCE 
NON-FUND BASED ASSISTANCE 
FUNCTIONS OF EXIM
  
ECGCI( EXPORT CREDIT GUARANTEE CORPORATION OF INDIA
LTD.)   
 
• In order to support
provide to
export credit and
insurance Indian exporters,
the GOI setCorporation
up the Export Risks
Insurance (ERIC) inexport
July,
1957. It was transformed into
credit guarantee corporation limited
(ECGC)
know as ECGC of India Ltd. is now
in 1964. Since 1983, it
Objectives Of ECGC:  
 
 
• To protect the exporters against credit
risks, i.e. non-repayment by buyers.
 
To
to protect
• the banksofagainst losses due
non-repayment loans by exporters
COVERS ISSUED BY ECGc    
 
1.STANDARD POLICIES  
2.SPECIFIC POLICIES  
3. FINANCIAL GUARANTEES  
4. SPECIAL SCHEMES
 
 

CONCLUSION
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