Chapter No. Page No. 7 138 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT POST-SHIPMENT FINANCE CREDIT FACILITY EXTENDED TO AN EXPORTER FROM THE DATE OF SHIPMENT OF GOODS TILL THE REALIZATION OF EXPORT PROCEEDS IS KNOWN AS POST-SHIPMENT CREDIT.
Chapter No. Page No. 7 138 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT POST-SHIPMENT FINANCE POST SHIPMENT FINANCE CAN BE CLASSIFIED AS: � EXPORT BILLS PURCHASED / DISCOUNTED / NEGOTIATED. � ADVANCES AGAINST EXPORT BILLS SENT ON COLLECTION BASIS. � ADVANCES AGAINST EXPORTS ON CONSIGNMENT BASIS. � ADVANCES AGAINST DUTY DRAWBACK RECEIVABLES FROM GOVT. � ADVANCES AGAINST APPROVED DEEMED EXPORTS .
Chapter No. Page No. 7 138 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT POST-SHIPMENT FINANCE � POST SHIPMENT FINANCE : IS A WORKING CAPITAL FINANCE. � PRE-SHIPMENT FINANCE : IS AN INVENTORY-BASED FINANCE.
Chapter No. Page No. 7 138 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT PERIOD POST SHIPMENT OF FINANCE � IT WILL DEPEND ON THE TERMS OF CONTRACT. � EXCHANGE CONTROL REGULATIONS :FOR CASH EXPORTS IT CAN BE FOR A MAXIMUM PERIOD OF 180 DAYS FROM THE DATE OF SHIPMENT. � DEMAND BILLS: IT CAN BE GRANTED FOR THE NORMAL TRANSIT PERIOD (NTP) AS SPECIFIED BY FEDAI. � USANCE BILLS: MAXIMUM DURATION OF 180 DAYS FROM THE DATE OF SHIPMENT INCLUSIVE OF NTP AND GRACE PERIOD IF ANY. � NTP : AT PRESENT IT IS 25 DAYS FOR ALL FOREIGN CURRENCY BILLS, FOR IRAQ IT IS 120 DAYS FROM THE DATE OF SHIPMENT.
Chapter No. Page No. 7 139 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT DISCREPANCIES OBSERVED WHILE NEGOTIATING BILLS � L/C EXPIRED BEFORE SHIPMENT OR NEGOTIATION. � BILL OF EXCHANGE NOT DRAWN AS PER THE TERMS OF L/C. � DRAWING IN EXCESS OF L/C AMOUNT. � INVOICE IS EITHER INCOMPLETE OR INCORRECT. � DESCRIPTION OF GOODS IN ALL DOCUMENTS IS NOT CONSISTENT. � BILL OF LADING OR AIRWAY BILL IS NOT SIGNED IN TERMS OF UCPD. CONT….
Chapter No. Page No. 7 139 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT DISCREPANCIES OBSERVED WHILE NEGOTIATING BILLS � PRESENTATION OF CLAUSED BILL OF LADING, WHEN L /C IS FOR CLEAN BILL. � FULL SET OF DOCUMENTS NOT SUBMITTED. � INSURANCE DOCUMENTS INCOMPLETE. � CERTIFICATE OF ORIGIN NOT SUBMITTED OR NOT SIGNED BY OFFICIAL. � FEW DOCUMENTS / COPIES PRESENTED UNSIGNED. � GR FORM NOT PROPERLY FILLED UP.
Chapter No. Page No. 7 140 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT ADVANCE AGAINST EXPORT BILLS SENT FOR COLLECTION � POST-SHIPMENT ADVANCE CAN BE AVAILED AT THE TIME OF /AFTER THE TIME OF SENDING THE BILLS FOR COLLECTION. � PRE-SHIPMENT ADVANCE AVAILED, IF ANY SHOULD BE IMMEDIATELY LIQUIDATED AS SOON AS THE DOCUMENTS HAVE BEEN TENDERED TO THE BANK, TO COMPLY WITH ECGC GUIDELINES.
Chapter No. Page No. 7 140 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT CONSIGNMENT EXPORTS � GOODS MAY BE EXPORTED ON CONSIGNMENT BASIS AT THE RISK OF EXPORTER FOR SALE. � REMITTANCE OF SALE PROCEEDS IS MADE BY THE AGENT /CONSIGNEE. � CONSIGNMENT BASIS EXPORT LENDS SCOPE FOR A LOT OF MISUSE OF REPATRIATION OF PROCEEDS. � ADVANCES GRANTED ARE REQUIRED TO BE LIQUIDATED FROM THE REMITTANCE OF SALES PROCEEDS WITHIN 180 DAYS FROM THE DATE OF SHIPMENT. � THE RATE OF INTEREST ARE AT PAR WITH EXPORT ON OUTRIGHT SALES BASIS.
Chapter No. Page No. 7 141 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT ADVANCES AGAINST RECEIVABLES FROM GOVT. DUTY DRAWBACK ENTITLEMENTS � WHERE THE DOMESTIC COST OF PRODUCTION OF CERTAIN GOODS IS HIGH IN RELATION TO INTERNATIONAL PRICES, THE EXPORTER MAY GET SUPPORT FROM THE GOVT. UNDER EXPORT PROMOTION SCHEMES IN THE FORM OF REFUND OF EXCISE AND CUSTOM DUTY KNOWN AS DUTY DRAWBACK. � BANKS MAY GRANT POST-SHIPMENT ADVANCES TO EXPORTERS AGAINST THEIR DUTY DRAWBACK ENTITLEMENTS. THESE ADVANCES ATTRACT CONCESSIONAL RATE OF INTEREST UP TO A MAXIMUM PERIOD OF 90 DAYS FROM THE DATE OF ADVANCE.
Chapter No. Page No. 7 141 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT GUARANTEE COVER FOR POST- SHIPMENT EXPORT FINANCE � IN INDIA, GUARANTEE COVER FOR POST- SHIPMENT EXPORT FINANCE IS AVAILABLE BY POST- SHIPMENT GUARANTEE SCHEME OF THE EXPORT CREDIT GUARANTEE CORPORATION OF INDIA LTD, WHICH PROVIDES PROTECTION TO THE BANKS AGAINST NON- PAYMENT OF POST- SHIPMENT CREDIT BY EXPORTER.
Chapter No. Page No. 7 144 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT THE BILL OF LADING � IT IS A CLEAN, SHIPPED, OCEAN, CLEAN BILL IN FULL SET AND HAS BEEN ISSUED BY A STEAMSHIP COMPANY OR ITS ACCREDITED AGENT, AND IS MANUALLY SIGNED AND DULY STAMPED. � IT IS SELF CONSIGNED AND ENDORSED IN BLANK OR IN FAVOUR OF THE BANK. � IT BEARS A DATE NOT LATER THAN THE DATE OF EXPIRY OF L / C OR OF THE ORDER. CONT….
Chapter No. Page No. 7 144 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT THE BILL OF LADING � IT DOES NOT INDICATE PART SHIPMENT OR TRANS- SHIPMENT. � IT IS A FREIGHT PRE PAID BILL OF LADING OR AIRWAY BILL WHERE THE CONTRACT OF SALE IS ON c.i.f. OR c & f TERMS. � IT SHOWS THAT THE GOODS SHIPPED ARE IDENTIFIABLE AS THOSE SPECIFIED IN THE L C OR THE EXPORT ORDER. � IT INDICATES THAT THE STOWAGE OF THE GOODS IS IN ACCORDANCE WITH THE STIPULATION UNDER L C.
Chapter No. Page No. 7 144 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT MARINE INSURANCE POLICY � IT IS THE USUAL ONE IN A NEGOTIABLE FORM, WHERE THE SHIPMENT IS COVERED BY AN OPEN POLICY. � IF MADE OUT IN THE NAME, OF THE EXPORTER, CONTAINS THE USUAL BANK CLAUSE, AND IS ENDORSED IN BLANK OR IN FAVOUR OF THE BANK. � BEAR A DATE NOT LATER THAN THE DATE OF THE BILL OF LADING. � RELATES SOLELY TO THE GOODS MENTIONED IN THE BILL OF LADING AND THE INVOICE. CONT….
Chapter No. Page No. 7 144 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT MARINE INSURANCE POLICY � COVERS THE WHOLE OF THE CONTRACTUAL VOYAGE, AND MENTIONS THE NAME OF THE PORT OF SHIPMENT, PORT OF DESTINATION AND THE VESSEL CARRYING THE GOODS. � INSURES FOR THE FULL VALUE OF THE CARGO, GENERALLY 10% TO 20% OVER THE VALUE OF c.i.f. VALUE. � COVERS ALL RISKS UNLESS THE L/C OR THE ORDER SPECIFIES THE RISKS TO BE COVERED. � STATES THE PERIOD OF INSURANCE.
Chapter No. Page No. 7 144 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT MARINE INSURANCE POLICY � COVERS THE WHOLE OF THE CONTRACTUAL VOYAGE, AND MENTIONS THE NAME OF THE PORT OF SHIPMENT, PORT OF DESTINATION AND THE VESSEL CARRYING THE GOODS. � INSURES FOR THE FULL VALUE OF THE CARGO, GENERALLY 10% TO 20% OVER THE VALUE OF c.i.f. VALUE. � COVERS ALL RISKS UNLESS THE L/C OR THE ORDER SPECIFIES THE RISKS TO BE COVERED. � STATES THE PERIOD OF INSURANCE.
Chapter No. Page No. 7 146 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT PERMISSIBLE DEDUCTIONS � TRADE DISCOUNT AND LEGITIMATE TRADE CHARGES EG. REBATE FOR LATE SHIPMENT, QUALITY ALLOWANCE. � COMMISSION PAYABLE TO A SELLING AGENT. � AMOUNT PAYABLE DUE TO DIFFERENCE IN WEIGHT, QUALITY etc. ADVANCE PAYMENT AGAINST THE EXPORT RECEIVED BY THE BANKER AND PAID BY HIM TO THE EXPORTER. � AMOUNT OF DUTY PAID OR TO BE PAID ABROAD BY THE IMPORTER AND RECEIVABLE FROM THE INDIAN EXPORTER ENTITLED TO TARIFF CONCESSION UNDER THE GENERALIZED SCHEME OF PREFERENCES (GSP).
Chapter No. Page No. 7 148 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT NEGOTIATION UNDER RESERVE � WHERE THE CUSTOMER IS AN EXPORTER OF ESTABLISHED REPUTATION. � EXECUTES AN INDEMNITY DUE TO AN IRREGULARITY OF A MINOR IN NATURE. � UNDER THIS INDEMNITY, THE CUSTOMER SHOULD UNDERTAKE TO REFUND THE AMOUNT RECEIVED ON NEGOTIATION, INDEMNIFYING THE BANKER AGAINST ALL LOSSES, EXPENSES ETC., IN CASE THE DOCUMENTS ARE REFUSED BY THE FOREIGN BUYER. � BANKER MAY NEGOTIATE. � SUCH NEGOTIATION IS KNOWN AS NEGOTIATION UNDER RESERVE.
Chapter No. Page No. 7 149 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT DIRECT AND INDIRECT BILLS � DIRECT BILL : IT IS AN EXPORT BILL DRAWN IN THE CURRENCY OF THE OVERSEAS BUYER’S COUNTRY AND SENT TO A BANK IN THAT COUNTRY OR ANY OTHER COUNTRY, PROVIDED THAT THE PROCEEDS ARE REALIZED DIRECTLY IN THE CURRENCY IN WHICH THE BILL IS DRAWN. � INDIRECT BILL : IT IS AN EXPORT BILL DRAWN IN A CURRENCY OTHER THAN THAT OF THE OVERSEAS BUYER'S COUNTRY AND SENT TO A BANK IN THAT COUNTRY OR IN ANY OTHER COUNTRY FOR COLLECTION AND THE PROCEEDS ARE REALIZED IN THE CURRENCY IN WHICH IT IS DRAWN IN AN INDIRECT MANNER.
Chapter No. Page No. 7 150 International Finance CROSS BORDER BANKING EXPORT FINANCE – POST SHIPMENT ENDORSEMENT ON L/C ON NEGOTIATION OF THE BILL: � THE AMOUNT SHOULD BE ENDORSED ON THE REVERSE OF THE LETTER OF CREDIT, IN THE FOREIGN CURRENCY AS WELL AS IN EQUIVALENT RUPEE. � BALANCE IF ANY AVAILABLE SHOULD ALSO BE MENTIONED.
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