Normal Transit Period:
‘Normal transit period’ means the average period normally involved from the date of negotiation / purchase / discount till the receipt of bill proceeds in the Nostro account of the bank.
If the shipment is done on 30th April 16 (30.04.2016) & documents are submitted on 01st May 2016 (01.05.2016) then post-shipment finance start from 01.05.2016. Normal transit period is 25 days , so the bills purchased payment should come on or before 26.05.2016.
Also, the bank gives 3 days of grace period to the exporter if the export proceeds don’t come in the Normal transit period.
The Normal transit period is used for Sight Bills.
Notional Due Date:
The Notional due date is used when there is an Usance bill.
Notional Due Date = Usance Period + Normal Transit Period + Grace Period
= 90 + 25 + 3
= 118 days.
As per the above date of document submission date 01.05.2016, the Notional due date will be 26.08.2016 i.e. 118 days from 01.05.2016.