5 A BFM Facilities for experters and importers

A Letter of Credit is a written undertaking by an importer's bank (issuing bank) to pay the exporter a specified amount, provided the exporter presents documents that strictly comply with the terms and conditions of the LC.

Short-term pre-shipment loan to finance export order production.

Under a Sight LC, payment is made immediately upon presentation of compliant documents, whereas under a Usance (deferred payment) LC, payment is made at a future date — typically 30, 60, 90, or 180 days after the date of shipment or bill of lading.

Generally up to 180 days from the date of shipment.

Pre-shipment credit, also called Packing Credit, is a short-term working capital loan extended by banks to exporters to finance the purchase, processing, and packing of goods before shipment. Exporters holding a confirmed export order or LC are eligible.

RBI scheme allowing banks to rediscount export bills at LIBOR-linked rates.

Pre-shipment Rupee credit can be extended up to 360 days from the date of first disbursement, though the normal period is up to 180 days as per RBI guidelines.

Importer pays exporter before goods are shipped.