Role of Commercial Banks

All the financial requirements of an exporter, from the time he enters into a sale contract and
starts working on it and till he receives final payment from the importer, are met by commercial banks.  The facilities available from banks are generally divided into two broad heads:
1 Pre-Shipment Finance
2 Post-Shipment Finance 
Role of Commercial Banks

1 Pre-shipment Finance or packing credit is the advance granted to the exporter to procure, process, manufacture, pack and prepare the goods for export.  In other words, it is the facility extended to the exporter before and till the goods are shipped for export. 

2 Post-shipment Finance refers to the credit facilities extended to the exporter from the time goods are shipped and till the export proceeds are realized.  Post-shipment finance my take any of the following forms: 

a) Negotiation of a bill drawn under a letter of credit;

b) Purchase of a bill not drawn under a letter of credit;

c) Advance against bill sent for collection and

d) Advance against duty drawback.

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