POST-SHIPMENT CREDIT (PSC)
'Post-shipment Credit' means any loan or advance granted or any other
credit provided by an institution to an exporter of goods from India from the date of extending credit after shipment of goods to the date of realization of export proceeds. It also includes any loan or advance granted to an exporter, in consideration of, or on the security of, any Duty Drawback or any receivables from Government Of India. PS Finance can be classified as under:
a. Negotiation/Payment/Acceptance of export documents under LC.
b. Purchase/Discount of export documents under confirmed orders/export contracts etc.
c. Advances against export bills sent on collection basis.
d. Advances against exports on consignment basis.
e. Advances against undrawn balances on exports.
f. Advances against receivables from Government of India.
g. Advances against retention money relating to exports.
h. Advances against approved deemed exports.
PS Credit is generally availed by exporters to get immediate payment against the goods (or services) shipped by them abroad. For availing this facility from Bank, documents are to be submitted within 21 days
How PS is a “Source of Earning for Bank”
Post shipment finance is meant to finance export receivables. In Post-Shipment sought of credit, Bank charges nearly Rs.20000 as commission per sanction.
The rate of interest charged for this facility by the same is as follows:
Name of the Item
Rate of interest
For Bill Upto 10Days sight
For Bills up to 3months
For Bills over 3months
0.30% for first 3months+0.10% per month in excess of 3 months sight
The interest scheme is given as under:
Name of the Item
Rate of Interest
On demand bills for transit period (as specified by FEDAI)
not exceeding 0.75% over LIBOR
(LIBOR is 5.35%)
2.Against usance bills (credit for total period comprising usance period of export bills, transit period as specified by FEDAI +grace period wherever applicable) up to 6 months from the date of shipment
not exceeding 0.75% over LIBOR(that is, not more than 6.10%)
3.Export bills (demand or usance) realized after due date but up to date of crystallization
0.75% + 2.0%points (that is, 8.10%)
Thus, banks earn mainly through commission and rate of interest charged under Post-Shipment Credit granting sort of transaction. Foreign Currency earned may be kept as deposit with the bank, or, it may also use it for trade purposes, so, as to earn exchange profit