Pre Shipment Credit

Pre Shipment Credit

Pre-shipment Credit means any loan or advance granted or any other pre shipment credit provided by a bank to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment, based on the letter of credit opened in his Favour or in Favour of some other person, by an overseas buyer or a confirmed and irrevocable order for the export of goods from India or any other evidence of an order for export from India having been placed on the exporter or some other person, unless lodgment of export orders or letter of credit with the bank has been waived.

The period for which a packing credit advance may be given by a bank will depend upon the circumstances of the individual case, such as the time required for procuring, manufacturing, or processing and shipping the relative goods.  

It is primarily for the banks to decide the period for which a packing credit advance may be given having regard to the various relevant factors so that the period is sufficient to enable the exporter to ship the goods.  

If pre shipment credit interest rate advances are not adjusted by submission of export documents within 360 days from the date of advance, the advances will cease to qualify for concessive rate of interest to the exporter ab initio. RBI would provide refinance only for a period not exceeding 180 days.  

Individuals, Firms, Companies, or any other legal entity engaged in the export of goods can avail themselves of this facility.