What Are the RBI Guidelines on Pre-Shipment and Post-Shipment Export Credit?

Pre-shipment finance is a bank loan that pays for buying, making or packing export goods, or for the working costs of delivering export services, before shipment. Post-shipment finance is a bank loan from the date of shipment or service delivery until the foreign buyer pays. RBI defines both terms in paragraph 4(1) of its Credit Facilities Directions.

• Packing credit: Rupee loan to buy, process, manufacture or pack goods, or to meet working capital for services, on the basis of a letter of credit or confirmed export order (Credit Facilities Directions, para 4(1)(xxix)).
• PCFC: Pre-shipment credit in a foreign currency such as US dollars, euro, pound sterling or yen, priced off an Alternative Reference Rate in that currency (Credit Facilities Directions, paras 294 and 297). See packing credit in foreign currency.
• Bills purchased: The bank purchases, discounts or negotiates your export bill and pays you before the buyer does (Credit Facilities Directions, para 266(1)).
• Collection advances: The bank lends against export bills sent on collection basis, where it does not buy the bill outright (Credit Facilities Directions, para 266(2)).
• Duty drawback: The bank advances money against duty drawback that Customs has provisionally certified and that is covered by ECGC guarantee (Credit Facilities Directions, paras 266(3) and 283).
• EBR: Post-shipment credit in foreign currency, where the bank discounts usance bills from its foreign currency funds or rediscounts them abroad (Credit Facilities Directions, para 340). See export factoring and bill discounting.
• Special cases: Advances against undrawn balances, retention money on turnkey projects, consignment exports and goods sent for exhibition and sale (Credit Facilities Directions, paras 271 to 282).

These rules apply to banks. RBI first introduced export financing in 1967 to give exporters short-term working capital at internationally comparable rates (Credit Facilities Directions, Chapter XV background). Your own sanction letter sets the exact limits, margins and rates within these rules.

Pre-shipment and post-shipment export finance is open to exporters of goods and exporters of tradable services who have a letter of credit, export order or export contract. Each bank decides eligibility, limits and security under its own Board policy, so meeting the RBI conditions does not guarantee a sanction.

Pre-shipment and post-shipment export finance works as one cycle. The bank releases packing credit against an order, the exporter ships and submits export documents, the bill proceeds clear the packing credit, and the buyer's payment clears the post-shipment credit. The export entry stays open in EDPMS until the money is realised.

1. Apply for an export credit limit. RBI asks banks to assess limits on need and track record, without denying credit only for lack of collateral (para 389). Limits are usually sanctioned for a year and reviewed annually (para 385).
2. Lodge the letter of credit or firm export order. Exporters with a good track record may get this requirement waived and give periodic statements of orders on hand instead (para 390).
3. Draw packing credit in one lump sum or in stages, as the order needs. Each sanction is usually kept as a separate account to track its period and end use (paras 236 and 237).
4. Use the money to buy, process, manufacture or pack goods, or to meet service costs such as wages and consumables.
5. Ship the goods or deliver the services. Goods exporters file the EDF as part of the shipping bill at EDI ports, and service exporters file it within 30 days from the end of the invoice month, or for services other than software on or before the date of payment (Regulation 3). See EDF form for exports.
6. Submit the export documents to the bank. The bank purchases, discounts or negotiates the bill and uses the proceeds to clear the packing credit, which converts it into post-shipment credit (para 240).
7. The foreign buyer pays. The proceeds clear the post-shipment credit (para 267), and the export must be realised within nine months, or twelve months if invoiced or settled in INR (Regulation 5(1)). See export realisation period.

The time limits for pre-shipment and post-shipment export credit run from 360 days for packing credit to 365 days for usance bills. Each limit is set out in Chapter XV of RBI's Credit Facilities Directions. Your bank may sanction a shorter period, and the table shows the outer limits.

If pre-shipment credit is not adjusted by export documents within 360 days, the advance stops counting as export credit from the date it was given. If the export never happens, the bank charges its domestic lending rate plus penal charges. Overdue post-shipment bills keep the FEMA realisation duty open in EDPMS.

• Credit status: Packing credit not liquidated within 360 days is not treated as export credit from the start (paras 235 and 292).
• Failed export: Where exports do not take place at all, the bank charges the domestic lending rate plus penal charges, if any, under a transparent Board-approved policy (para 293).
• PCFC unused: If no export takes place within 360 days, PCFC is adjusted at the bank's TT selling rate for the currency (para 305).
• Overdue bills: For bills discounted under EBR, the bank charges interest from the due date to the date of crystallisation under its interest rate policy (para 359).
• Running account: Breach of terms means the advance is not export credit at all, and the facility can be withdrawn (paras 244 and 245).
• FEMA duty: Clearing a loan does not end the realisation duty. If proceeds stay unrealised more than one year past the due date, further exports need full advance or an irrevocable letter of credit (Regulation 13).

Speak to your bank before the 360-day or due date passes. A bank may allow substitution with another order (para 242), repayment from EEFC or rupee funds (paras 240 and 267), and, under FEMA, an extension of the realisation period when you give reasons (Regulation 5(1), second proviso). See extension of the export realisation period.

Chapter XV of the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025 governs pre-shipment and post-shipment export credit by banks. The FEMA Export and Import of Goods and Services Regulations, 2026 separately govern export declarations and realisation. The table lists the clauses this page relies on.

• Idle advances: Drawing packing credit without a firm shipment plan and missing the 360-day limit in para 235.
• Loan equals realisation: Assuming that repaying the bank closes the export. The EDF stays open in EDPMS until the buyer pays (para 268). See EDPMS closure.
• Double financing: Taking packing credit from one bank and submitting documents to another without disclosure. The second bank must use the proceeds to clear the first bank's credit (para 242(2)).
• Currency risk: Ignoring exchange risk on PCFC drawn in one currency against an order invoiced in another. That cross-currency risk and cost stays with the exporter (para 297(2)). See hedging rules for exporters.
• Old rules: Relying on older guidance that mentions a concessional interest rate or RBI refinance. The current Directions leave the rate to each bank's Board-approved policy (para 291).
• Service paperwork: Service exporters applying without an export contract, invoices or EPC registration, which para 257 asks banks to check.
• Late EDF: Forgetting the services EDF, due within 30 days from the end of the invoice month under Regulation 3(2).

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, RBI/DOR/2025-26/154, DOR.CRE.REC.73/07-01-001/2025-26 dated 28 November 2025 (updated as on 1 October 2026), Para 4(1)(xxviii) and (xxix); Chapter XV paras 234 to 396 (PDF https://rbidocs.rbi.org.in/rdocs/notification/PDFs/154MD.PDF) (checked 8 Oct 2026)
2. Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, Notification FEMA 23(R)/2026-RB dated 13 January 2026, amended up to 22 September 2026, Regulations 3(1), 3(2), 5(1) and provisos, 13 (checked 8 Oct 2026)
3. RBI circular RBI/2025-26/195, DOR.STR.REC.393/04.02.001/2025-26: Interest Subvention for Pre- and Post- Shipment Export Credit under Export Promotion Mission (EPM) – Niryat Prothsahan, 19 January 2026, Paras 1 to 3 (checked 8 Oct 2026)
4. RBI A.P. (DIR Series) Circular No. 20, RBI/2025-26/194: Export and Import of Goods and Services, 16 January 2026, Paras 1, 4 and 7 (checked 8 Oct 2026)