POST SHIPMENT CREDIT

Post-shipment finance is a loan or advance granted

by a bank to an exporter of goods from India. This
facility is available to an exporter subsequent to
the date of shipment of goods up to the date of
realization of export proceeds.
Some key features of post-shipment finance are as follows:

 Finance is extended to either the exporter

(seller's credit) or the overseas buyer of the
goods (buyer's credit).
 Finance is extended against evidence of shipping
documents.
 Concessive rate of interest is available for a
maximum period of 180 days, starting from the
date of submission of documents. Normally, the
documents are to be submitted within 21days
from the date of shipment.
Post-shipment finance can be further classified as under :

 Negotiation of export documents under

Letter of Credit (LC).
 Purchase / Discount of export document

under confirmed orders / export contracts,

etc.
 Advances against export bills sent on

collection basis.
 PERIOD FOR POST SHIPMENT CREDIT
 In the case of routine exports, the maximum
period allowed for realization of export proceeds
is 6 months from the date of shipment.
 Banks can extend post shipment finance at a
lower interest rate up to the normal transit period
or the notional due dates (this is calculated as the
sum of the Normal Transit Period + Usance
Period, subject to a maximum of 180 days).
 Beyond that period, banks lend at non-concessive
rates or the normal commercial rates.