Post shipment credit is extended to exporters by bank with low interest rate till realization of their export proceeds. Post shipment loan helps exporters to get finance without waiting amount of sales from their overseas buyers.
Post shipment credit means any loan or advance granted or any other credit provided by a bank to an exporter of goods or (and) services from the date of extending credit after shipment of goods or (and) rendering of services to the date of realization of export proceeds as per the period of realization prescribed by FED, and includes any loan or advance granted to an exporter, in consideration of, or on the security of any duty drawback allowed by the Government from time to time. Banks serves with low interest rate to exporters under post shipment credit based on the guidelines of Reserve Bank.
Since the current instructions of FED, the period prescribed for realization of export proceeds is 12 months from the date of shipment, and if amount has not been realized from overseas buyer within the stipulated period, bank can crystalize such export bills with commercial interest rate.