FACILITIES FOR IMPORTERS AND EXPORTERS

An LC is a written undertaking by a bank (issuing bank) on behalf of the importer to pay the exporter a specified amount upon presentation of stipulated documents. It provides payment security to the exporter and ensures document-based delivery assurance to the importer.

An LC that reinstates itself after each drawing up to a fixed limit.

A Sight LC requires the issuing bank to make payment immediately upon presentation of compliant documents, while a Usance (deferred payment) LC allows payment after a specified period (e.g., 30, 60, 90 days) from the date of shipment or presentation of documents.

An LC guaranteeing contractual performance obligations, used in construction contracts.

Pre-shipment finance, also called Packing Credit (PC), is working capital credit extended to exporters before shipment to procure raw materials, process, and pack goods. It is available to exporters holding a confirmed export order or an irrevocable LC.

It authenticates and forwards the LC to the beneficiary without adding its guarantee.

Under RBI guidelines, Packing Credit (pre-shipment credit) is generally sanctioned for a period up to 270 days, though the normal operative period is 180 days. Extensions beyond 180 days may attract higher interest rates.

A bank authorized by the issuing bank to pay, negotiate, or accept drafts under the LC.