Pre-shipment finance is required for procurement of goods, processing the raw materials, packing, baling and storage, transporting the goods to the port of shipment, freight, inspection and other charges and export duty. It is essentially a short term credit. It is liquidated by negotiation/ purchase of export bills. Pre- shipment credit is in most cased granted against irrevocable/ confirmed LCs or firm contracts received by the exporter form overseas buyers. In all cases, credit- worthiness and reputation of the foreign buyer needs to be ascertained before extending such credits. The credit-worthiness and performance of the exporter are also taken into consideration for sanction of the credit limit.