What Is PCFC Packing Credit and How Does It Work?

PCFC packing credit is pre-shipment finance that an Indian bank lends in a foreign currency, such as US dollars or euros, so an exporter can buy and process inputs for goods it will export. RBI calls it Pre-shipment Credit in Foreign Currency and describes it as an additional window for providing pre-shipment credit at internationally competitive interest rates.

• Definition: Packing credit means credit given to an exporter to finance the purchase, processing, manufacturing or packing of goods before shipment, against a letter of credit, a confirmed order or other evidence of an export order (paragraph 4(1)(xxix)).
• Inputs covered: Banks may extend PCFC for domestic and imported inputs of exported goods (paragraph 294).
• Cash exports: The scheme applies only to cash exports, and the rupee export credit rules apply to it unless RBI says otherwise (paragraph 295).
• Currency: PCFC is given in a convertible currency such as US dollars, pound sterling, Japanese yen or euro (paragraph 297(1)).
• Interest: Banks set the rate using a widely accepted Alternative Reference Rate in the currency concerned, under their Board-approved policy (paragraph 303).
• Period: PCFC is available for a maximum of 360 days (paragraph 304).
• Bank funding: Banks fund PCFC from foreign currency balances such as EEFC accounts, from lines of credit with overseas banks, and from buy-sell swaps in the domestic forex market (paragraphs 298, 300 and 302).

PCFC sits inside your overall export credit limit. RBI says the limit is fixed in rupees and split between rupee and foreign currency parts based on your needs (paragraph 307). For the wider picture of loans before and after shipment, see pre-shipment and post-shipment finance.

PCFC packing credit is open to exporters of goods making cash exports, usually against a letter of credit or firm export order. RBI also allows it for manufacturers sharing an export order, for supplies between EOU, EPZ and SEZ units, for some deemed exports and for Diamond Dollar Account holders. Each bank still decides eligibility under its own credit policy.

PCFC packing credit works in four stages: the bank sanctions an export credit limit, you draw PCFC in a foreign currency against an order, you ship the goods, and the export bill or proceeds repay the loan. Export documents must normally liquidate the PCFC within 360 days of the advance.

1. Get an export credit limit sanctioned by your bank. RBI asks banks to streamline procedures so that no separate sanction is needed for PCFC once the packing credit limit is authorised (paragraph 314).
2. Lodge a letter of credit, confirmed order or other evidence of an export order, unless your bank has waived lodgement or given you a running account (paragraph 4(1)(xxix)).
3. Choose the currency. You can draw PCFC in one convertible currency against an order invoiced in another, but the cross-currency risk and cost are yours (paragraph 297(2)).
4. Draw the funds. If PCFC is used to pay for domestic inputs, the bank applies the appropriate spot rate to convert it (paragraph 312).
5. Ship the goods and submit the export documents to the bank. Pre-shipment advances not adjusted by export documents within 360 days lose export credit status from the start (paragraph 235).
6. Liquidate the PCFC from the export bill, by discounting or rediscounting under the EBR Scheme or by a foreign currency loan against DP bills (paragraph 315).
7. Make sure the buyer pays the full export value within nine months from shipment, or twelve months if invoiced or settled in rupees, unless your AD bank extends the period (Regulation 5, FEMA 23(R)/2026-RB). See export realisation period.

The key PCFC packing credit limits are a maximum period of 360 days, interest set on an Alternative Reference Rate plus the bank's spread, and liquidation through export bills, EEFC balances or rupee funds. The table below summarises each rule from Chapter XV of the Credit Facilities Directions.

If PCFC packing credit is not repaid from exports within 360 days, the advance stops counting as export credit from the date it was given. The bank adjusts the PCFC at the TT selling rate and repays its overseas lender (paragraph 305). If exports do not happen at all, the bank charges its domestic lending rate plus any penal charges.

• Status lost: Advances not liquidated from export bills within 360 days are not treated as export credit from the start (paragraph 292).
• Higher rate: If exports do not happen at all, the bank charges its domestic lending rate plus any penal charges under a transparent Board-approved policy (paragraph 293).
• Exchange loss: Adjustment at the TT selling rate means you bear the cost of buying the foreign currency to close the loan (paragraph 305).
• Running account: Misuse or diversion of PCFC for domestic use leads to withdrawal of the running account facility (paragraph 322).
• Later exports: If export proceeds stay unrealised for over a year past the due date, further exports need full advance or an irrevocable letter of credit (Regulation 13, FEMA 23(R)/2026-RB).

Talk to your bank before day 360. RBI lets banks extend PCFC on the same terms as rupee packing credit, and further extension is on terms the bank fixes (paragraphs 304 and 305). If the order is cancelled, repay early with accrued interest (paragraph 318). For unpaid bills after shipment, see export proceeds not realised.

PCFC packing credit is governed by Section F of Chapter XV of the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025, dated 28 November 2025 and updated as on 1 October 2026. Interest is also subject to the Interest Rates on Advances Directions, and export realisation follows FEMA 23(R)/2026-RB.

• Ignoring currency risk: Drawing PCFC in one currency against an order invoiced in another leaves the cross-currency risk and cost with you (paragraph 297(2)). See currency risk management.
• Missing 360 days: Letting the advance run past 360 days without export documents removes its export credit status (paragraph 235).
• Double funding: Using PCFC for imported inputs already covered by suppliers' credit is not allowed; PCFC then covers only domestic inputs (paragraph 301).
• Diverting funds: Using running account drawals for domestic purposes leads to penal provisions and withdrawal of the facility (paragraph 322).
• Expecting early benefits: Export benefits such as EEFC credit come only after the bill is realised. Converting PCFC to post-shipment credit does not trigger them (paragraph 336).
• Assuming a fixed rate: RBI sets no single PCFC rate, so compare the benchmark and spread each bank quotes before you draw.

Every rule, deadline and form on this page is linked to its official source, checked on the dates below.

1. Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025 (Updated as on October 1, 2026), RBI/DOR/2025-26/154, Para 4(1)(xxix); Chapter XV paras 234-247, 291-339, 340-364 (checked 8 Oct 2026)
2. Reserve Bank of India (Commercial Banks – Interest Rates on Advances) Directions, 2025, RBI/DOR/2025-26/161, Chapter V, paras 42-44 (checked 8 Oct 2026)
3. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB (amended up to 22 September 2026), Regulations 5 and 13 (checked 8 Oct 2026)
4. Master Circular: Rupee / Foreign Currency Export Credit and Customer Service to Exporters, 1 July 2015 (historical), PCFC section: LIBOR/EURIBOR related rates; 360 days (checked 8 Oct 2026)