Introduction to Post Shipment Credit (INR)

Post Shipment Credit (INR) is a critical financial product designed to support exporters in India by providing necessary working capital after the goods have been shipped to the buyer. This type of credit helps exporters bridge the gap between the dispatch of goods and the receipt of payment from overseas buyers, ensuring the smooth operation of their business without cash flow disruptions.

In this blog, we will delve into the intricacies of Post Shipment Credit, explore its various forms, and understand how it benefits exporters. Whether you're a seasoned exporter or new to the field, this comprehensive guide will equip you with valuable insights to make informed decisions.

FAQs About Post Shipment Credit (INR)

1. What is Post Shipment Credit (INR)? Post Shipment Credit (INR) is a financial facility provided to exporters after the goods have been shipped. It is intended to cover the period between the shipment of goods and the receipt of payment from the overseas buyer.

2. How does Post Shipment Credit (INR) work? After an exporter ships goods, they can approach a bank or financial institution to avail Post Shipment Credit. The bank provides a loan against the export bills, which can be used to meet immediate working capital needs. Once the payment from the buyer is received, the exporter repays the loan.

3. What are the types of Post Shipment Credit (INR)?

• Export Bills Purchased/Discounted (EBP/EBD): Banks purchase or discount the export bills, providing immediate funds to the exporter.
• Advance Against Export Bills Sent on Collection: Banks provide an advance against export bills sent for collection.
• Advance Against Export on Consignment Basis: Exporters receive advances against goods shipped on a consignment basis.
• Advance Against Deemed Exports: This includes advance against supplies made to entities that are considered as deemed exports under the Foreign Trade Policy.

4. What are the benefits of Post Shipment Credit (INR)?

• Improved Cash Flow: Provides immediate working capital, ensuring smooth business operations.
• Risk Mitigation: Helps in mitigating the risk of payment delays from overseas buyers.
• Competitive Edge: Enables exporters to offer competitive credit terms to buyers, enhancing their marketability.
• Flexibility: Various forms of post shipment credit offer flexibility to meet specific business needs.

5. Who is eligible for Post Shipment Credit (INR)? Exporters holding a valid Import Export Code (IEC) and having a satisfactory track record with their bank are generally eligible for post shipment credit. Banks may have specific criteria regarding the exporter's creditworthiness and past performance.

6. How to apply for Post Shipment Credit (INR)? Exporters can apply for post shipment credit by submitting the necessary documents, including the export bills, shipping documents, and proof of shipment, to their bank. The bank will evaluate the application and determine the eligibility and terms of the credit facility.

Conclusion

Understanding Post Shipment Credit (INR) is essential for exporters looking to maintain a steady cash flow and minimize financial risks. By leveraging this financial tool, exporters can ensure the continued growth and stability of their business. Stay tuned as we explore each aspect of Post Shipment Credit in detail, providing you with practical tips and insights from an expert in the field.

Detailed Guide on Post Shipment Credit (INR)

Introduction

Post Shipment Credit (PSC) is a type of trade finance provided by banks or financial institutions to exporters. It is extended after the shipment of goods to help exporters bridge the gap between dispatch and payment receipt from overseas buyers. This type of credit ensures that exporters maintain liquidity and continue their operations without financial strain.

Types of Post Shipment Credit

Export Bills Purchased/Discounted (EBP/DBD):

• Sight Bills: Bills drawn payable at sight or on presentation.
• Usance Bills: Bills drawn payable at a future date.

Advance Against Export Bills Sent on Collection Basis:

• Banks provide advance against export bills sent for collection to provide liquidity until the actual payment is received.

Advance Against Export on Deferred Payment Terms:

• Advances are provided against exports with deferred payment terms as agreed with the buyer.

Advance Against Duty Drawback Receivable:

• Exporters can avail advances against duty drawbacks that are receivable from the customs authorities.