Packing Credit
Packing Credit
The basic purpose is to enable the exporter to procure process, manufacture or store the goods for export. Packing credit refers to the credit granted by bank to an exporter to enable him to pack the goods. This is a short-term working capital advance.
The salient features of the scheme are:
1. Eligibility Criteria: Packing credit loan is sanctioned only on receipt of confirmed export order or irrevocable letter of credit. The persons who are eligible for packing credit are:
(a) Export/Trading/Star Trading/Super Star Trading House or exporter who has received the letter of credit or confirmed export order from the overseas buyer directly and
(b) Supplier of goods or supporting manufacture of the export house who has not received the export contract directly but would be executing the contract through the export house. In such an event, he has to produce the letter from the export house/exporter indicating the details of the order received such as description of goods, quantity and value with an undertaking that the export house/exporter would not avail the packing credit to the extent mentioned in the letter. In this case, the export house/exporter and the supporting supplier would share the total pre-shipment finance eligible for executing the export order. In the absence of confirmed order/letter of credit, packing credit may be sanctioned by the bank based on the cable provided minimum details of description of goods, quantity, value and name of overseas buyer are available. The regular order or letter of credit has to follow subsequently.
2. Purpose of Finance: Packing credit is a purpose-oriented advance. This is made available for the purpose of purchasing raw materials and supplies for manufacturing or producing goods or purchasing goods, processing costs, packing, packaging and warehousing etc. This is a short-term advance.