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Need for international trade finance

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Need for international trade finance
NEED FOR INTERNATIONAL TRADE FINANCE
We understand that for a business organisation, a normal source of finance is a bank or a financial institute. Finance is also obtained for local business requirements. All banks are not allowed to offer international trade finance. Apart from that, there are specially created institutes like EXIM bank and EXPORT CREDIT GAURANTEE COPORATION (ECGC). We need to understand international trade finance in greater detail by also discussing role of EXIM bank and role of ECGC.
Exporters should be given support in the form of international trade finance (also known as export credit), because of following reasons:
1. The supply chain in global business is very lengthy. It may take 75 to 80 days to send material via marine transport because of this, length of operating cycle increases in comparison to local business. Not many exporters can bear this burden. They should be provided with easy credit for their export business.
2. Even in export business, credit period of 60 or 90 days is offered to a foreign customer. Export business is highly competitive and because of that customers will demand and will get long credit period. This further causes delay in getting payment of export sale. An exporter should be supported by appropriate credit or loan.
3. There are special types of risk factors in export business. For example exchange rate fluctuation. If interest of exporters against such risk factors I not protected, he will not get encouragement to do global business.

TYPES OF EXPORTS FINANCE
Export finance /assistance is divided in following fine categories:
1. Pre-shipment finance (packing credit)
2. Post¬¬¬-shipment finance
3. Buyers credit
4. Medium terms and long term finance for exports
5. Supply of material on credit by PSUs and Government Institutes

1. Pre-shipment credit to manufactures exporters
This credit is offers to an exporters for his business and manufacturing activities .For the preparation of export
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