POST SHIPMENT FINANCE UNDER INTERNATIONAL BUSINESS
Post-shipment finance may be defined as loan or advance granted by the bank to the exporter after the date of shipment of goods till the date of realisation of export proceeds. It includes any advance granted on the security or in consideration of the amount of duty drawback or any kind of receivable in the form of incentives to be received from Government.
While granting advances for post-shipment, banks are guided by the directives of RBI, the rules of Foreign Exchanger Dealers' Association of India, the Trade Control and Exchange Control Regulations and the International Conventions and Codes of the International Chamber of Commerce. The quantum of credit, depends on export sales and receivables.
Compliance of Exchange Control Provisions
Post-shipment finance is granted under various methods. Exporter seeks the sanction of appropriate type advance from the bank, depending upon the actual requirement. Bank scrutinizes the following documents to verify the compliance of exchange control provisions by the exporter:
(a) Whether the documents are drawn in permitted currencies and the payment receivable is under permitted method of payment.
(b) Whether the relevant GR/PP is duly certified by the customs authorities and the particulars contained are consistent with the particulars in other documents and export contract/firm order/letter of credit.
(c) The documents are submitted for negotiation within the prescribed period and in case of delay, delay is supported by sufficient documentary proof.
(d) Usance bill is in consonance with the time limit fixed.
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