MEANING OF EXPORT FINANCE Export finance refers to financial assistance assi stance extended by banks and other financial institutions to businesses for the shipping of products outside a country or region. Export financing enables MSMEs to expand its reach to a global audience.An exporter should first gain understanding of some documents commonly required by required by export finance institutions. These documents are mandatory requirements for most types of export finance as sistance. Export finance assistance is extended at various stages of exports. Loans or advances are granted by financial institutions to exporters for financing the purchase, processing, manufacturing or packing of goods prior to shipment which is known as pre-shipment credit .Loans or advances are granted by financial institutions to exporters from the date of extending credit after shipment of goods to the date of realization of export proceeds which is known as post as post shipment credit . Banks and financial institutions extends factoring services to exporters where-in it buys the accounts receivable of the exporter at a discount in exchange for immediate money. SOURCES OF EXPORT FINANCE: Commercial banks which are members of the Foreign Exchange Dealer’s Association Dealer’s Association provide finance at a concessional rate of interest and are refinanced by the Reserve Bank/ Export Import. Bank of India In case they do not wish to avail refinance they Bank of India. In case they do not wish to avail refinance , theyare entitled for an interest rate subsidy. Export Import Bank of India, in i n certain cases, participates with commercial commercial bank in extending medium term loans to exporters. Other Related Institutions: Reserve Bank of India being the central bank of country lays down the policy frame work and provides guidelines. guidelines. The RBI functions functions as refinancing refinancing institution for short short and medium term loans respectively, respectively, provided by commercial banks. Export Credit & Guarantee Corporation (ECGC) also plays an important role through various policies and guarantees guarantees providing cove coverr for commercial and political risks involved in export trade. Syndicate Bank is is one of the oldest and major commercial commercial banks of India. It was founded by T M A Pai,, Upendra Pai and Vaman Kudva. Pai Kudva. At the time of its establishment, establishment, the bank was known as Canara commercial banks of India, Industrial and Banking Banking Syndicate Limited Limited . The bank, along with 13 major commercial was nationalised on 19 July 1969, by the Governm Government ent of India India.. The bank is also well in tune with t he demands of modern banking with specialisation in Foreign Exchange, Export Credit, Industrial Finance, Housing Finance and Treasury Operations. The Bank has initiated various measures to increase the flow of credit to export sector. The coverage under the SyndExport Gold Card Scheme, a unique scheme for eligible exporters offering concessional concessional and preferential preferential terms, was broadened to include more number of exporters. Rupee export credit was offered at very competitive interest rates within the ceiling prescribed by RBI. The Interest Subvention Scheme, as designed byReserve Bank of India, has been made available by the Bank to its customers customers in certain specified sectors, sectors, thus passing on the benefits benefits of concessional concessional interest. interest.
Schemes provided by bank to exporters :Syndicate Bank is offering a special package of softer loan terms to eligible exporters under the SyndExport Gold Card scheme Under the scheme the bank would give a slew of benefits to exporters with a demonstrated track record of satisfactory dealings. The benefits include a 0.25 per cent cut in interest rate on pre-shipment credit and a concessional rate of post shipment credit which would involve softer rate applicable up to 90 days for an extended period of up to 365 days. Special rates would also be offered on the processing of credit facilities at rates which are 25 per cent lower than what is applicable to other exporters. EXPORT CREDIT INSURANCE SCHEME The scheme of export financing by the Bank was introduced. The financial assistance was provided by Bank to the exporters at two stages. The first was by way of Packing Credit (PC) for working capital to purchase raw material, processing, packing and warehousing of goods meant for export. The second stage namely, Post Shipment (PS) finance was provided by the Banks against the shipping documents after liquidating the PC advances.
Credit Guarantee Scheme CGMSE provides credit guarantee cover to the collateral free credit provided to exporters by the bank. Synd Small Credit scheme To meet the genuine credit requirement of Micro and Small Entrepreneurs of small means engaged in manufacturing, retail trade, small business, artisan activities, handicraft making etc. The services rendered at its overseas branch in London include corporate lending, participation in Syndication , handling Letters Of Credit and Guarantees transactions extending correspondent banking services to Indian Banks, trade finance, NRI services, short-term financing, ECBs and International treasury services. Tax benefit, rupee cost averaging, and systematic transfer plan, rebalancing etc.•• These benefits are not offered by other options single handedly. So these are enough to drive the investors. Investors could also try to i ncrease the spectrum of services offered.
