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What is pre-shipment finance?

April 26, 2017Finance pre-shipment

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What is pre-shipment finance?

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A. Financial assistance provided by the commercial banks to exporters before the shipment of goods is called pre-shipment finance. Pre-shipment finance is given for working capital for purchase of raw material, processing, packaging, transportation, ware-housing etc. of goods meant for export. Pre-shipment finance is presently given to Indian exporters at a concessional rate of 10% for a period of 180 days. Pre-shipment credit for a further period of 180 days to 270 days is given at 12%.