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For Exporter, how packing credit been decide ?

Vimal (Jr. Business Analyst) (126 Points)

31 October 2007

How Packing credit is been dicede for Exporter and what benifits actually exporter earn from packing credit?

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S.RAVICHANDRAN (FINANCE MANAGER) (422 Points)
Replied 31 October 2007

Depending on the export sales made by the exporter, the packing credit limites can be decided by the financier. There are two types ie., Pre-shipment and Post-shipment credits. Usually 75% or 90% of the Purchase orders on hand is given as credit by the banker/financier. Since export is a priority sector, the rate of interest is cheaper for Packing credit than other type of loans. Based on the export sales realisation, the pc limit is fixed. eg., If the turnover is 15 crores and realisation period is 90 days, then Rs.3.75 crores will be the limit. If the realisation period increases, then the limit also increases.

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SUDHIR BANSAL (senior accountant) (114 Points)
Replied 31 October 2007

Please provide the calculation of interest on Packing credit in foreign currency

Prakash Popat (3134 Points)
Replied 20 November 2007

Packing Credit ,Nothing but part of Working Capital,Based upon past performance and future outlook of the borrowers account bank decide quantum of same.