Forex

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  • Topic: Debt, Currency, Interest rate
  • Pages : 17 (5342 words )
  • Download(s) : 34
  • Published : November 3, 2008
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CONTENTS

1.PRE-SHIPMENT EXPORT CREDIT1

1.1Pre-shipment Credit in Foreign Currency (PCFC)1

1.1.1Definition1

1.1.2General1

1.1.3Scheme1

1.1.4Source of Funds for Banks2

1.1.5Spread3

1.1.6Period of Credit3

1.1.7Disbursement of PCFC4

1.1.8Liquidation of PCFC Account4

1.1.9Cancellation/Non-execution of Export Order5

1.1.10Running Account Facility for All Commodities5

1.1.11Forward Contracts6

1.1.12Sharing of EPC under PCFC6

1.1.13Supplies from One EOU/EPZ/SEZ Unit to Another EOU/EPZ/
SEZ Unit7

1.1.14Deemed Exports7

1.1.15Refinance8

1.1.16Other Aspects8

1.2Diamond Dollar Account (DDA) Scheme8

2.POST-SHIPMENT EXPORT CREDIT9

2.1Definition9

2.2Rediscounting of Export Bills Abroad Scheme (EBR)9

2.2.1General9

2.2.2Scheme9

2.2.3Eligibility Criteria10

2.2.4Source of On-shore Funds10

2.2.5Facility of Rediscounting ‘with recourse’ and ‘without recourse’11

2.2.6Accounting Aspects11

2.2.7Restoration of Limits and Availability of Export Benefits
such as EEFC Account12

2.2.8ECGC Cover12

2.2.9Refinance12

2.2.10Export Credit Performance
12
3. GOLDCARD SCHEME FOR EXPORTERS13

4.INTEREST ON EXPORT CREDIT13

4.1Interest Rate Structure on Export Credit in Foreign Currency13

*Appendix15

*Index to key words16

1.PRE-SHIPMENT EXPORT CREDIT
1.1 Pre-shipment Credit in Foreign Currency (PCFC)
1.1.1 Definition
'Pre-shipment credit' means any loan or advance granted or any other credit provided by a bank to an exporter for financing the purchase, processing, manufacturing or packing of goods prior to shipment, on the basis of letter of credit opened in his favour or in favour of some other person, by an overseas buyer or a confirmed and irrevocable order for the export of goods from India or any other evidence of an order for export from India having been placed on the exporter or some other person, unless lodgement of export orders or letter of credit with the bank has been waived. 1.1.2 General

With a view to making credit available to exporters at internationally competitive rates, authorised dealers have been permitted to extend Pre-shipment Credit in Foreign Currency (PCFC) to exporters for domestic and imported inputs of exported goods at LIBOR/EURO LIBOR/EURIBOR related rates of interest as detailed below. 1.1.3 Scheme

(i) The scheme is an additional window for providing pre-shipment credit to Indian exporters at internationally competitive rates of interest. It will be applicable to only cash exports. (ii) The exporter will have the following options to avail of export finance: (a) to avail of pre-shipment credit in rupees and then the post-shipment credit either in rupees or discounting/ rediscounting of export bills under EBR Scheme mentioned in paragraph 2.2. (b) to avail of pre-shipment credit in foreign currency and discount/rediscounting of the export bills in foreign currency under EBR Scheme. (c) to avail of pre-shipment credit in rupees and then convert drawals into PCFC at the discretion of the bank. (iii) Choice of currency

(a) The facility may be extended in one of the convertible currencies viz. US Dollars, Pound Sterling, Japanese Yen, Euro, etc. (b) To enable the exporters to have operational flexibility, it will be in order for banks to extend PCFC in one convertible currency in respect of an export order invoiced in another convertible currency. For example, an exporter can avail of PCFC in US Dollar against an export order invoiced in Euro. The risk and cost of cross currency transaction will be that of the exporter. (iv) Banks are permitted to extend PCFC for exports to ACU countries. (v) The...
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