1. Need of post-shipment credit
  2. Person eligible for post-shipment credit
  3. Approaches to avail post-shipment credit
  4. Documents are needed for post-shipment credit
  5. Trade finance
  6. Basis For Comparison Between Pre-Shipment Finance And Post-Shipment Finance

Need of post-shipment credit

  • It provides assets for the gap between once your product ar shipped and once you receive payment for them   
  • Allows flexibility in extending credit amount to your overseas purchaser
  • No want for collateral to amass funds
  • Helps you focus your energy on growing your business

A few things to look at out for once availing of post-shipment credit:

  • Borrow solely what you’ll be able to repay. Defaulting on payments can hurt your quality for future finance
  • Thoroughly check the terms and conditions of any government profit you would like to avail of
  • Financing comes at a value. grasp of its impact on your bottom line before applying for it

That said, post-shipment credit is an efficient, collateral-free method for exporters to manage their assets and grow their business. it’s a key web that helps India’s exporters play within the international market.

Person eligible for post-shipment credit

  • All sorts of exporters, together with merchandiser exporters, manufacturer exporters, export homes, commercialism homes, and makers World Health Organization provide to merchandiser exporters, export homes and commercialism homes 
  • Both people furthermore as firms concerned in export
  • Any alternative legal entity engaged within the export of products

Approaches to avail post-shipment credit

It isn’t simply banking that provide post-shipment credit, or the other reasonably trade finance. you’ll be able to additionally approach a non-banking money corporation (NBFC) or foreign trade investor for it:

  • Banks: several banks – nationalized, private, foreign, regional rural, cooperative – extend post-shipment credit. they provide alternative types of trade finance furthermore, like foreign currency loans, lines of credit (a charge account credit limit you’ll be able to borrow, repay and redraw from as you wish), advances against deemed exports and undeliberated balance. Most industrial banks advance post-shipment credit up to Rs.10 large integer. 
  • Export-Import (Exim) Bank of India: A government-owned specialized institution, the Exim Bank offers trade finance like lines of credit, buyer’s credit, company banking merchandise and project-based finance. It sanctions loans between Rs.10 large integer and Rs.50 large integer. Loans on top of Rs.50 large integer need clearance from the working party on export finance, that includes representatives from the run, Exim Bank, credit Guarantee Corporation of Asian nation and also the exporter’s bank, and typically from the commerce and finance ministries.     
  • Non-banking money companies (NBFC): These provide export-specific money services like bill discounting, lines of credit, factorization (selling unpaid invoices to a factorization company at a discount) and dealing capital loans (a loan to finance everyday operations).

Documents are needed for post-shipment credit

You will be expected to submit shipping documents that function proof that the products are shipped for export. These include:

  • Bill of lading/airway bill
  • Commercial invoice
  • Packing list
  • Certificate of origin
  • Inspection certificate
  • Insurance certificate
  • Import Export Code (IEC) certificate
  • Additionally, an inventive copy of the letter of credit is necessary if credit has been availed underneath the letter of credit

Apart from these documents, the investor may demand extra documents counting on the kind of post-shipment credit availed.

Trade finance

Based on the stage at that the funding is provided, export finance is split into pre-shipment and post-shipment finance. As their name suggests, pre-shipment finance is that the credit advanced to the exporters before the cargo of products, whereas post-shipment finance refers to the credit extended once the products are already shipped.

Trade finance refers to finance for the aim of trade, which has each domestic furthermore as international trade. Trade dealing is usually supported by money intermediaries like banks, within the variety of Letter of Credit, Insurance, Export Order, etc.

A trader, i.e. bourgeois appearance forward to a bourgeois, to pay for the products listed, the bourgeois needs to mitigate the chance, and for that he/she demands the bourgeois to document the products shipped. during this method, banks/financial establishments might give support within the variety of Letter of Credit, Insurance, etc. 

Basis For Comparison Between Pre-Shipment Finance And Post-Shipment Finance


•           Pre-shipment finance may be a facility of extending assets finance, to the bourgeois of the products, so as to export them in another country

•           Post cargo finance may be a variety of the loan extended by the bank to the bourgeois against the cargo of products that is already done.


•           Pre-shipment: to assist the exporters to obtain stuff, labour, supplies, therefore on manufacture, package, store and transport the products.    

•           Post-shipment, to finance export assets right from the date documents are submitted to the exporter’s bank until the date of realization of return from exported product.


•           In Pre-shipment, Export company or company commercialism product through export homes.

•           In Post-shipment, bourgeois himself or the person in whose name export documents are transferred.

Source of Repayment:

•           Pre-shipment returns from the contract         

•           Post-shipment returns from exports

Risk concerned

•           In Pre-shipment, Payment and performance risk

•           In Post-shipment, Payment risk solely

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Banking Professional with 16 Years of Experience. The idea to start this Blogging Site is to Create Awareness about the Banking and Financial Services.

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