Packing Credit

1. Packing credit is a loan/ cash credit facility sanctioned to an exporter in the Pre-Shipment stage. This loan facilitates the exporter to purchase raw materials at competitive rates and manufacture or produce goods according to the requirement of the buyer and organize to have it packed for onward export.
2. The lending institutions seek a Letter of Credit opened in favour of the exporter from the overseas buyer along with the irrevocable (cannot be canceled once drawn) Purchase Order favouring the exporter. Packing Credit facility will cover all the working capital needs of the exporter including raw materials, wages, packing costs and all pre-shipment costs.
3. Packing credit is available for generally a period of 90 days and the exporter has to pay lower rate of interest compared to traditional Overdraft or Cash Credit facility.

Exporters use this facility so they can bid the most competitive price for export thus gaining more business opportunities for export.