ABHINANDAN JAIN (CA Student) (886 Points)
15 June 2011Can anybody pls explain the meaning of Post Shipment Credit, Pre shipment Credit/Packing credit in case of export transaction...?
pls explain with the help of a example and also point out the differences between them...?
Shruthi
(PCC Student)
(111 Points)
Replied 17 June 2011
Pre Shipment/Packing Credit:
It is the loan given to exporters for the purpose of expenses such as Buying/Manufacturing the goods, Packing the goods and shipping expenses. The loan coverage is from the point of buying/Manufacturing till shipping(just before shipping).
The term of loan cant exceed 180 days i.e., the process of shipping must end with in 180days from the date of grant of loan.
This loan can be sanctioned by Bank if the exporter produce the Export order placed by the Foreign buyer.
Packing credit usually sanctioned in a lumpsum amount but disbursed at installments. Say Bank has granted Rs. 1 crore as packing credit which might be disbursed throu 5 accounts for Rs. 20 lacs each. Each account representing one export order and the date of closure of such such accounts must be done within 180 days from the date of disbursement of such account respectively
Post Shipment Credit:
This loan coverage extends from the time of Shipment of materials till the receipt of export bill amount.
To say in short, this is purchase or discounting of bills which is done at Export level.
Say you have shipped some material and the export bill amount which you are about to receive Rs. 10 lacs and the due date of such receipt is after 60 days.
Now you are in need of money in that intermediate gap. Now, you can approach you bank for purchase or discout of such export bill of 10 lacs along with necessary supportings like Bill of lading, Packing list etc. the Bank will sanction such amount after deducting some processing and loan charges and they will charge interest or commission. Later at the due date, Bank will realise such bill amount from the foreign party.
ABHINANDAN JAIN
(CA Student)
(886 Points)
Replied 18 June 2011
It seems that u have grt knowledge of above mentioned terms
thxs alot
CAclubindia
