Arranging Finance for Exports From eximbank
Financial Assistance is a main role of eximbank in India .Financial assistance from eximbank to the exporters India is generally provided by the Commercial banks before shipment as well as after shipment of goods. The assistance provided before shipment of goods.The assistance provided before shipment of goods is known as pre-shipment finance and that provided after the shipment of goods is known as post shipment finance.Pre-shipment finance is given for working capital for purchase of raw material. Processing, packaging, transportation, ware-housing etc. of the goods meant for export.Post-shipment finance is provided for bridging the gap between the shipment of goods and realization of exports proceeds.
The latter is done by the eximbank by purchasing or negotiating the exports documents or by extending advance against exports bills accepted on collection basis.While doing so, the eximbank adjust the pre-shipment advance, if any, already granted to the exporter. Hence, all of this it is called the export import bank of India
1. Preshipment Finance or import export loans,an application for pre-shipment advance should be made by you to your banker along with the following documents:
i) Confirmed exports order/contract of L/C etc. in original. Where it is not available, an undertaking to the effect that the same will be produced in the eximbank, within the reasonable time for verification and endorsement, should be given.
ii) An undertaking that the advance will be utilized for the specific purpose of procuring /manufacturing/shipping etc., of the goods meant for exports only. As stated in the relative confirmed exports order or the L/C.
iii) If you are a sub-supplier and want to supply the goods to the Exports /Trading/ Star Trading House or Merchant Exporter, an undertaking from the Merchant Exporter or Exports/Trading/Star Trading House stating that they have not/ will not avail themselves of packing credit facility against the same transaction of the same purpose till the original packing credit is liquidated.
iv) Copies of income Tax/Wealth Tax Assessment Order for the late 2/3 years in the case of sole proprietary and partnership firm.
v) Copy of Importer’s Code Number.
vi) Copy of valid RCC held by you and /or the Exports /Trading/star Trading House Certificate.
vii) Appropriate policy /guarantee of the ECGC.
viii) Any other documents as required by the Bank.
Post shipment Finance in Indian Rupees.
Post Shipment finance is finance provided against shipping documents. It is also provided against duty drawback claims. It is provided in the following forms.
a) Purchase of Exports Documents drawn under Exports Order.
b) Advances against Exports Bills sent on Collection.
c) Advance against Goods sent on Consignment Basis.
d) Advance against Undrawn Balance.
e) Advance against Retention Money.
f) Advance against Claim of Duty Drawback.
g) Negotiation of Exports Documents Drawn under L/C.
Understanding risks in International Trade.
While selling abroad, you undergo the following risks:
1) Credit risk,
2) Currency risks.
3) Carriage risks.
4) Country risks.
These risks can be insured to a great extent by taking appropriate steps. Credit risk against the buyer can be covered by insisting upon an irrevocable letter of credit from the overseas buyer to be issued by a bank of good standing.
An appropriate policy from Exports Credit Guarantee Corporation of India can also be obtained for this purpose. Country risks are also covered by the ECGC.
As regards currency risk, i.e. possible loss due to ad verse fluctuation in exchange rates, you should obtain forward cove r from your bank authorized to deal in foreign exchange.
Let us see, how does the export import bank work?
Exim Bank is managed by a Board of Directors, which has representatives from the Government, Reserve Bank of India, Export Credit Guarantee Corporation (ECGC) of India. A financial institution, public sector banks, and the business community.
The Bank’s functions are segmented into several operating groups including:
Corporate Banking Group
which handles a variety of financing programs for Export Oriented Units (EOUs), Importers, and overseas investment by Indian companies.
Project Finance / Trade Finance Group
handles the entire ranges of export credit services such as supplier’s credit. Pre-shipment credit, buyer’s credit, and finance for export of projects & consultancy services. Guarantees, forfeiting etc.
Lines of Credit
Group Lines of Credit (LOC) is a financing mechanism that provides a safe mode of non-recourse financing option to Indian exporters, especially to SMEs. And serves as an effective market entry tool.
Agri Business Group,
to spearhead the initiative to promote and support Agri-exports. The Group handles projects and export transactions in the agricultural sector for financing.
Small and Medium Enterprises Group
to the specific financing requirements of export oriented SMEs. The group handles credit proposals from SMEs under various lending programs of the Bank.
Export Services Group
offers variety of advisory and value-added information services aimed at investment promotion.
Fee based Export Marketing Services
Bank offers assistance to Indian company is, to enable them establish their products in overseas markets.
Besides these the Support Services groups, which include: Research & Planning Corporate Finance, Loan Recovery, Internal Audit, Management information Services. Information Technology, Legal, Human Resources Management and Corporate Affairs.
Exim Bank Headquarter
Center One Building, Floor 21, World Trade Center,Complex,
Cuffee Parade, Mumbai 400 005
Phone: 91 22 22185272,
Fax: 91 22 22182572,