Pre-shipment export credit facility is a type of loan extended for the purchase of raw materials, processing and converting them into finished goods, warehousing, packing, transporting the goods until the time of shipment.
1.The Bank may avail the facility against NBE or Development Bank of Ethiopia (DBE) or other bank’s guarantee or against its own accord i.e. against irrevocable sales contract to be presented by the customer. This account shall be reviewed periodically to ensure its proper performance and the advance shall be settled from the proceeds of the respective irrevocable letter of credit without fail.
2.If the facility is to be availed against NBE/DBE/other bank guarantee, the eligibility, amount, tenure and other criteria of the pre-shipment export loan shall be set per the respective directive.
If the facility is to be availed against irrevocable sales contract:
– The applicant shall present valid sales contract/a bona-fide order from a foreign buyer.
– The selling price of the exportable item shall be within acceptable range.
– Each advance shall not exceed 70% of the sales contract.
– The facility shall require opening of irrevocable letter of credit for each advance made by the Bank.