question_answer 24)

Differentiate between the following (i) Sight and usance drafts (ii) Bill of lading and airway bill (iii) Pre-shipment and post-shipment finance

Answer:

(i) Sight and Usance Drafts In the case of sight draft, the drawer instructs the bank to hand over the relevant documents to the importer against payment. But in the case of usance draft, the drawer- instructs the bank to hand over the relevant documents to the importer against acceptance of the bill of exchange. (ii) Bill of Lading and Airway Bill Bill of lading is a document prepared and signed by the master of the ship acknowledging the receipt of goods on board. It contains terms and conditions on which the goods are to be taken to the port of destination. On the other hand, Airway Bill is a document wherein an airline/shipping company gives its official receipt of the goods on board its aircraft and at the same time gives an undertaking to carry them to the port of destination. (iii) Pre-shipment and Post-shipment Finance Pre-shipment finance is provided to an exporter for financing the purchase, processing, manufacturing or packaging of goods for export purpose while the post-shipment finance is provided to the exporter from the date of extending the credit after the shipment of goods to the export country.