Page 97 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes The exporter may also be allowed a Running Account Facility if his track record is satisfactory
to help him overcome difficulties arising due to long production periods and seasonal availability
of raw materials. In such cases, the exporter is granted PC without submitting a firm export
order or letter of credit. However, he is expected to submit the same with the bank within a
reasonable period. Banks are authorised to use their own judgements in this respect. Box 5.1
below shows SBI’s PCFC scheme:
Box 5.1: Pre-shipment Credit in Foreign Currency (PCFC)

SBI’s Pre-shipment Credit in Foreign Currency (PCFC) is just what you need, when you
are looking for funds in foreign currency. Avail it to meet your manufacturing, processing
and packing fund requirements at international interest rates. Not just this, you can also
cover the cost of both domestic as well as imported inputs of your export requirements.
SBI’s PCFC gives you choice of four different currencies in which to operate the scheme –
the US Dollar, Pound Sterling, Euro and the Japanese Yen.
SBI has 64 branches across the country handling the PCFC facility for your exclusive
convenience. Our Foreign Department, based at Kolkata, is the nodal centre for raising
and deploying offshore and onshore funds for lending under PCFC.
Getting Started – Opening a PCFC
Make sure you have firm export orders or confirmed letters of credit, and you will find
that obtaining the PCFC facility from SBI is a cakewalk. Of course, you also need to satisfy
other credit norms.
Now for the icing on the cake – we let you have a running account facility with us for
PCFC if you are an exporter with a good track record. The specified eligibility factor is
that your over dues should not exceed 5% of the average annual export realisations during
the preceding three calendar years. In cases where a running account facility has been
extended, you must produce a letter of credit or a firm export order within a reasonable
period of time.

More good news for existing clients – there is no need for a separate sub-limit for PCFC
for you! The PCFC can be made available within the export packing credit available to
you provided the outstanding amounts under both rupee and foreign currency facilities
do not exceed the sanctioned limits.
Operating PCFC
PCFC is to be repaid only with the proceeds of the export bill tendered, under the export
bill-rediscounting scheme.

In case of cancellation of the export order, the PCFC line may be closed by selling an
equivalent amount of foreign exchange at the TT selling rate that is prevalent on the date
of liquidation.
How do the schemes operate?
PCFC and EBR schemes go hand in hand. The operation of these schemes is in three stages,
viz.:
(i) Disbursement of PCFC
(ii) Disbursement of EBR and simultaneous repayment of PCFC and
(iii) Repayment of EBR.
Contd...

92 LOVELY PROFESSIONAL UNIVERSITY