Export Finance : The RBI first introduced the scheme of Export Financing in 1967. The scheme is intended to make short-term working capital finance available to exporters at internationally comparable interest rates. Export credit is available both in rupee as well as in foreign currency. Pre-shipment finance can be of two types: 1) Packing Credit (EPC or PCL). 2) Advance against Govt. receivables, i.e. Duty Drawback, etc. Post-shipment finance can be of various types, as under :-- 1) Export bills purchased/discounted/ negotiated (FBP/FBD/FBN). 2) Advance against bills sent on collection. 3) Advance against exports on consignment basis. 4) Advance against undrawn balances. 5) Advances against Duty Drawback.Pre-Shipment Finance :- Pre-shipment finance, generally known as Packing Credit Loan (PCL) or Export Packing Credit (EPC), is essentially a working capital advance allowed for the specific purpose of procuring/ processing/manufacturing of goods meant for export. It could cover all costs prior to shipment of finished goods, i.e. packing, local transportation, labour charge, etc. Pre-sanction Guidelines :- 1) The borrower is bank's customer. 2) They should have Export/Import Code number (IEC) allotted by Director General of Foreign Trade. 3) Their name should not appear under the caution list of RBI. 4) They should not be under the Specific Approval list of ECGC.5) The total period of Packing Credit Loan should not exceed 180 days. Banks can grant extension beyond 180 days upto 360 days, based on their assessment and the need of customer. Any extension beyond 360 days, would cease to qualify for concessional rate of interest to exporter, ab initio. 6) Rate of interest is linked to Benchmark Marginal Cost of Funds based Lending Rate. ¢ Post-sanction Guidelines :- 1) No PCL(Packing Credit Loan) has been availed by him against the same order/LC from any other bank. For this reason only, the Bank which has granted the Pre-Shipment facility should note the fact of its credit facility on the reverse side of the original LC or original Contract so that it is a warning to any other bank which is handling the exporter’s documents. 2) Bank should call for Credit Report/Status Reports on the foreign buyers.3) The exporter should submit stock statements for the goods on which PCL has been allowed. 4) If the exports are covered under letters of credits, banks would need to be satisfied about the standing of the credit opening bank. 5) Banks may also look into the regulations, the political and financial conditions of the buyer's country. 6) After proper sanctioning of credit limits, disbursing branch should inform ECGC the details of limit sanctioned within 30 days from date of sanction in prescribed format. (*) Restricted Category :- For this, licence from competent authority is needed. (*) Negative Category :- It cannot be exported out of India.Post-Shipment Finance :- It nvolves handling of export documents, sending the documents to the foreign bank and collecting the funds thereof. involves handling of exports, sending it to the foreign bank/buyer and collecting proceeds thereof. The responsibility of an AD is increased in the post-shipment part, since the realisation of export proceeds of the export bills is monitored by Reserve Bank of India. Crystallization of Overdue Bills :- All export bills drawn in foreign currency, purchased, discounted or negotiated, enter into the forward foreign currency position of the bank, and the liability of the exporter is to realise the same by the given due date and deliver the foreign currency to the bank. In case of non-realisation of export bill by the given due date, the foreign currency liability of the exporter would continue, till the bill is realized or the liability is converted into the home currency, i.e., Indian rupee in our case, and liability fixed for the exporter.Period of Finance :- Concept of Normal Transit Period (NTP) is applicable to all export bills for calculating the due date or the notional due date. NTP at present is 25 days for all foreign currency export bills. (*) Notional Due Date, for demand bills will be 25 days from the date of handling. For Demand Bills, Post-Shipment advance at concessional interest rate for a period up to Normal Transit Period of Bill. For example :- A sight bill drawn in USD, submit to bank on 1.4.2022, Find the notional due date of bill? Ans :- NTP allowed will be 25 days from the date bill drawn, so NDD of bill is 25.4.2022 The advance will be allowed at the concessional interest rate for 25 days, after which advance treated as overdue(*) Notional Due Date, for Usance bills will be Usance period plus 25 days NTP. For Usance Bills, advance at concessional interest rate for transit period + usance + grace period if any, but in any case not exceeding maximum period of 365 days from date of shipment. For example :- A usance bill of 90 days in GBP, tendered to bank on 1.3.2022, the NTP will be? Ans :- 25 days + 90 days = 23.06.2022 In case of fixed due date export bill, where due date is linked to date of bill of exchange or Bill of lading. No normal Transit Period is allowed, as actual due date is already available.