EXPORT FINANCE

MEANING
SOURCES

Process - 1

GETTING EXPORT READY

OPORTUNITY IDENTIFICATI ON

TENDER /PROPOSAL

CONTRACT

PRODUCTION

PAYMENT PERIOD

Process -2

NEGOTIATIONS STRATEGY

REGULATIONS AND TAX ISSUES

PAYMENT TERMS

MANAGING RISKS

Type of Finance
PRE-SHIPMENT FINANCE
POST-SHIPMENT FINANCE

Features of pre-shipment finance:ELIGILIBITY

EVIDENCE DOCUMENTARY AMOUNT OF FINANCE PURPOSE

 Features:PERIOD OF CREDIT AND RATE OF INTEREST DISBURSEMENT OF PACKING CREDIT ADVANCE MAINTENANCE OF ACCOUNTS,MONITORING AND REPAYMENT

Types or Forms of PreShipment Finance

Extended Packing Credit Loan Packing credit Loan (hypothecation)

Packing credit Loan (Pledge)

Secured shipping loan. Advance against red Clause L/C. Advance against cheque or Draft. Packing credit facilities for consultancy services. Packing credit facilities to Deemed exports. Pre-shipment credit in foreign currency(PCFC)

Features of Post-shipment Finance Eligibility Documentary evidence Purpose Amount of Finance Period of Credit and Rate of Interest. Disbursement of post shipment Finance. Maintenance of Accounts, Monitoring and repayment.

Pre-shipment Finance v/s Post-shipment Finance

Basis
1.Meaning
2.Purpose 3.Amount of finance. 4.Beneficiary 5.Form of Finance

Pre-shipment finance
Credit extended to exporters prior to shipment for execution.
Granted for specific purposes. Amount doesnt exceed the FOB value/domestic value-less. Extended to Indian exporters/Deemed exporters. Extended packing credit Loan, packing credit Loan n securing loan.

Post-shipment finance
Credit extended to exporters after shipment for meeting capital.
Extended for meeting WCR. Finance given to extend of 100% of invoice value of goods exported. Extended to Indian exporters and overseas importers. Discounting export bills, against-undrawn balances, retention money,gds on consignment.

6.Period of Credit

Granted for maximum period of 180days as per RBI.

Granted for period ranging from 90days to 12yrs depending on nature of exports.
Extended against DE of shipping documents certified by customs. Extended by commercial banks while MT and LT credits given by EXIM bank.

7.Documenta Extended against DE of confirmed export order or LC. ry evidence 8.Lending institutions
Extended by commercial banks of India.

Institutional framework for export finanace..

The institutional framework for providing financial assistance to indian exporters and overseas importers includes the following financial institutions: Reserve bank of india(RBI) Commercial banks Export-import bank of india(EXIM BANK) Export credit guarantee corporation of india(ECGC)

ROLE OF RBI IN EXPORT FINANCE..

RBI is the central banking institution of india.its main function is to authorise,extend and regulate export credit and transactions including foreign exchange affairs.although it does not provide direct financial assistance to the exporters.it has the following to departments for administering various policies relating to export finance,credit and foreign currencies:
Industrial and export credit department. Exchange control department.

RBI of india performs the following functions in providing export credit at concessional rates to indian exporters:
Administration of interest rates
Administration of rates of exchange,interest and discount. Working groups of bankers Improvement in credit delivery system Liberal refinance facility

General refinance

Financial assistance from exim of india..

Export import bank of india(EXIM BANK) was establish by an act of parliament on the 1st January 1982.it is the wholly government owned financial institution, set up for the purpose of financing, facilitating and promoting India's foreign trade. the bank commenced on the 1st march 1982.

FINANCIAL ASSISTANCE FROM COMMERCIAL BANKS

FUND BASED ASSISTANCE OF COMMERCIAL BANK: (A) PRE-SHIPMENT FINANCE: EXTENDED PACKING CREDIT LOAN. PACKING CREDIT LOAN (HYPOTHECATION). PACKING CREDIT LOAN (PLEDGE). SECURED SHIPPING LOAN.

(B) POST-SHIPMENT FINANCE.

DISCOUNTING OF EXPORT BILL. ADVANCE AGAINST BILLS SENT ON EXCHANGE. ADVANCE AGAINST GOODS SENT ON CONSIGNMENT BASE. ADVANCE AGAINST UNDRAWN BALANCE. (C) FINANCE AGAINST DEFFERED PAYMENT EXPORT.

 NON-FUND BASED ASSISTANCE OF COMMERCIAL BANK.

(A)BANK GUARANTEES:
BID BONDS.

PERFORMANCE GUARANTEE.
GUARANTEE FOR PAYMENT OF RETENTION MONEY. GUARANTEE FOR LOANS IN FOREIGN CURRENCY.

(B)CREDIT-WORTHINESS OF IMPORTERS.
(C)INFORMATION ABOUT FOREIGN EXCHANGE. (D)DOCUMENTS,RULES AND REGULATION. (E)INVOICING IN A FOREIGN CURRENCY.

(F) FORWARD EXCHANGE CONTRACTS.

(G) CURRENCY FOR INVOICING SERVICES.

Forfeiting scheme of EXIM Bank of India

Forfeiting comes from the French expression forfeit which means surrender of certain rights Forfeiting is a method . Forfeiting agency discounts. EXIM bank of India.

Mechanics of Forfeiting
Exporter

Current exchanges

Importer
Future exchanges

Forfeiting bank

Importer's bank

Advantages of Forfeiting
The exporter receives the payment immediately.

It converts a deferred payment export into a cash transaction.

It protects the exporter against all types of risk associated with the realization of export proceeds. It provides finance.

The method is useful for small &medium sized exporters.