Packing Credit : The basic purpose of packing credit is to enable the eligible exporters to procure process, manufacture or store the goods meant for export. Packing credit refers to any loan to an exporter for financing the purchase, processing, manufacturing or packing of goods as defined by the Reserve Bank of India. It is a short term credit against exportable goods.
Packing credit is nominally granted on secured basis. Sometimes clear advance may also be granted. Many advances are clean at their initial stage when goods are not yet acquired. Once the goods are acquired and are in the custody of the exporter banks usually convert the clean advance into hypothecation / pledge. Let us first discuss the detail procedure of packing credit.