Banks play an important role in facilitating international trade, as they enable the exporter and importer operating at different locations to receive and pay for the goods sold and bought. Describe in brief the instrume

A Letter of Credit with a special clause which allows the beneficiary (exporter) to avail of pre-shipment advance (a type of export finance granted to an exporter, prior to the export of goods) for procuring, manufacturing and export of the goods is called Red Clause Letter of Credit. This special clause used to be printed (highlighted in red colour), hence it is called "Red Clause" credit. The issuing bank undertakes to repay such advances, even if shipment does not take place. In case of a "Green Clause" credit, the exporter is entitled for an advance for storage (warehouse) facilities of goods. The advance would be granted only when the goods to be shipped have been warehoused, and against an undertaking by the exporter that the transportation documents would be delivered by an agreed date. Rupee Export Credit (pre-shipment and post-shipment): Bank provides both pre and post shipment credit to the Indian exporters through Rupee Denominated Loans as well as foreign currency loans in India. Rupee Export Credit is available generally for a period of 180 days from the date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI. Pre-shipment Credit in Foreign Currency (PCFC): Bank offers PCFC in the foreign currency to the exporters enabling them to fund their procurement, manufacturing/processing and packing requirements. PCFC is generally available for a period of 180 days from date of first disbursement. In deserving cases extension may be permitted within the guidelines of RBI. Export Bill Rediscounting: Bank provides financing of export by way of discounting of export bills, as a post shipment finance to the exporters at competitive international rate of interest. This facility is available in four currencies i.e. US$, Pound Sterling, Euro and JPY. Bank Guarantees: Bank, on behalf of exporter constituents, issues guarantees in favour of beneficiaries abroad. The guarantees may be Performance and Financial. For Indian exporters, guarantees are issued in compliance to RBI guidelines.