Export Packing Credit.

industry used term - EPC RATES

This is a fluctuating rates linked with LIBOR (London Inter Bank offered Rates)
In international trading, both the parties are not aware of each other, hence, they employ a
world-renowned bank (globally) because they do not trust each other & deal through that
bank instead.
Export Packing Credit are of 2 forms
1. Pre-shipment Credit (Packing Credit)
2. Post-Shipment Credit
These are available to the exporters, for financing purchase, processing, manufacturing or packing of
goods prior to shipment.
This would mean any loan or advance extended to you by the bank on the basis of:
a) Letter of Credit opened in your favor or in favor of some other person, by an overseas buyer;
b) a confirmed and irrevocable order for the export of goods from India;
c) any other evidence of an order or export from India having been placed on the exporter or some
other person, unless lodgement of export order or Letter of Credit with the bank has been waived.
Packing Credit is granted for a period depending upon the circumstances of the individual case, such
as the time required for procuring, manufacturing or processing (where necessary) and shipping the
relative goods. Packing credit is released in one lump sum or in stages, as per the requirement for
executing the orders/LC.
The pre-shipment / packing credit granted has to be liquidated out of the proceeds of the bill dawn for
the exported commodities, once the bill is purchased/discounted etc., thereby converting preshipment credit into post-shipment credit.
Post Shipment Packing Credit
It runs from the date of extending credit, after shipment of goods to the date of realization of export
proceeds and includes any loan / advance granted on the security of any duty drawback allowed by
the Govt. from time to time. Post-shipment credit has to be liquidated by the proceeds of export bills
received from abroad in respect of goods exported.
The exporter has the following options at post-shipment stage:
i. To get export bills purchased /discounted / negotiated;
ii. To get advances against bills for collection;
iii. To receive advances against duty drawback receivable from Govt.
The exporter has the option to avail of pre-shipment and post-shipment credit either in rupee or in
foreign currency. However, if the pre-shipment credit has been availed in foreign currency, the postshipment credit has necessarily to be under EBR Scheme since foreign currency pre-shipment credit
has to be liquidated in foreign currency. The details of pre-shipment and post-shipment credit in
foreign currency are mentioned below

Packing credit limit is a facility sanctioned to an exporter in the Pre-Shipment stage. This facilitates the exporter to
purchase raw materials and manufacture or produce goods according to the requirement of the buyer and get it
packed for onward export.Packing Credit limit covers all the working capital needs of the exporter including raw
materials, wages, packing costs and all pre-shipment costs. Packing credit limit is available generally for a period of
90 days and the exporter has to pay lower rate of interest compared to Overdraft or Cash Credit facility.

Interest Rates on Packing Credit in Foreign Currency (PCFC) and Export

Bills Re-discounted (EBR)
Revised interest rates w.e.f.15.11.2011
1. Preshipment Credit in
Foreign Currency (PCFC)
(a) Upto 180 days
Not exceeding LIBOR / EUROLIBOR / EURIBOR + 3.50%
(b) Beyond 180 days and upto
360 days

Rate for initial period of 180 days prevailing at the time of

extension plus 2.00% (i.e. LIBOR / EUROLIBOR / EURIBOR
+ 5.50%)
(c) If no exports take place
within 360 days
PCFC to be adjusted immediately by sale of foreign currency
against rupee at prevailing TT selling rate. Interest to be
recovered at the rate applicable to cash credit advances as
based on the borrowers credit rating from the date of advance.
Interest recovered earlier at LIBOR/ EUROLIBOR/EURIBOR
related rates to be adjusted.
2. Postshipment Credit -

Export Bills Re-discounting

Scheme (EBR)
(a) On demand bills for transit
period (as specified by FEDAI)
LIBOR/ EUROLIBOR/ EURIBOR + 3.50%
(b) Usance bills (for total
period comprising usance
period of export bills, transit
period as specified by FEDAI
and grace period wherever
applicable).Up to 6 months
from the date of shipment
LIBOR/ EUROLIBOR/ EURIBOR + 3.50%
(c) Export bills (Demand and
Usance) realised after due date
but upto date of crystallisation.
Not exceeding LIBOR/ EUROLIBOR/EURIBOR + 3.50% +
2.00 % (i.e. LIBOR/ EUROLIBOR/EURIBOR + 5.50%)
3.Export credit not otherwise
specified (ECNOS) @
a. Pre-shipment Credit Rate applicable to cash credit advances as based on the
borrowers credit rating from 361
st
day till liquidation by
tender of export document.

On accounts linked to BPLR

BPLR + 2.5% (17.75%) from
the date of crystallisation
b. Post-Shipment Credit
On accounts linked to Base
Rate
Base Rate + 7.00 % (17.50%)
from the date of crystallisation
Note :These rates are exclusive of withholding tax