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  • FIN522 Presentation On Letter of Credit: Abhijeet Rathod Id: 8462 14 Oct'10

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    Rakesh Punarvasu
    32 views8 pages
    The document discusses letters of credit and documentary collections as methods of payment in international trade. It defines key terms related to letters of credit like applicant, beneficiary, opening bank, advising bank, and confirming bank. It also outlines the letter of credit cycle and types of letters of credit. Additionally, it defines important terms for documentary collections like buyer, seller, remitting bank, and collecting bank and outlines the documentary collection process.

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    The document discusses letters of credit and documentary collections as methods of payment in international trade. It defines key terms related to letters of credit like applicant, beneficiary, opening bank, advising bank, and confirming bank. It also outlines the letter of credit cycle and types of letters of credit. Additionally, it defines important terms for documentary collections like buyer, seller, remitting bank, and collecting bank and outlines the documentary collection process.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    32 views8 pages

    FIN522 Presentation On Letter of Credit: Abhijeet Rathod Id: 8462 14 Oct'10

    Uploaded by

    Rakesh Punarvasu
    The document discusses letters of credit and documentary collections as methods of payment in international trade. It defines key terms related to letters of credit like applicant, beneficiary, opening bank, advising bank, and confirming bank. It also outlines the letter of credit cycle and types of letters of credit. Additionally, it defines important terms for documentary collections like buyer, seller, remitting bank, and collecting bank and outlines the documentary collection process.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as ppt, pdf, or txt
    of 8

    FIN522

    Presentation on Letter of Credit

    Abhijeet Rathod
    Id: 8462
    14 Oct’10
    +
    Positive
    Cash in
    Advance
    Methods of Payment Risk Assessment
    -
    Negative

    Letters of Credit
    •Standby
    •Insurance •Commercial (Acceptances)
    Vendor •Confirmed
    •Ex-Im Bank
    Financing •Transferable
    •CEFO
    •Back-to-Back
    •Assignment of Proceeds
    Foreign
    Receivables Foreign Exchange

    Exporter Neutral Importer


    (Seller) (Buyer)
    (Beneficiary)
    Zone (Applicant)

    Open Account Documentary


    Collection

    -
    t

    +
    n
    hi pme
    S

    Negative Positive
    Letter of Credit Terms
    Involved Parties:
    Term Definition Activity
    Applicant Importer Buy
    Beneficiary Exporter Sell
    Opening Bank Importer’s Bank Issues L/C
    Advising Bank Exporter’s Bank Advises L/C
    Confirming Bank Advising Bank or 3rd Confirms L/C
    Party Bank
    Paying Bank Any bank as Pays the Draft
    specified in L/C
    Letter of Credit Terms
    Activities & Terms

    • Advice • Irrevocable
    • Amendment • Issuance
    • Confirmed • Negotiation
    • Discrepancy • Revocable
    • Documentation
    • Draft –
    – Sight Draft
    – Time Draft
    Types of Letters of Credit
    • Back-to-Back
    • Confirmed
    • Straight
    • Negotiation
    • Sight
    • Standby
    • Transferable
    • Usance
    Export Letter of
    Credit Cycle

    5. Product
    is Shipped

    1. 1.

    Beneficiary Buyer & Seller Agree 2. Applicant


    Exporter/Seller 4. Application Importer/Buyer
    Letter of
    6. Credit 2.
    Documents 8.
    Documents

    10.
    3. Letter of Credit
    7. Documents

    Exporter’s Bank/ Importer’s Bank/


    Advising Bank 9. Issuing Bank
    Documentary Collection Terms
    • Buyer
    • Seller
    • Remitting Bank
    • Collecting Bank
    • Bill of Exchange/Draft
    • Time/Usance Bill of Exchange
    Documentary
    Collection

    2.
    Product is
    Shipped

    1. 1.

    Exporter/Seller Buyer & Seller Agree Importer/Buyer

    5.
    3.
    Documents 6.
    & Draft Documents
    5.

    4. Documents & Draft

    Exporter’s Bank/ Importer’s Bank/


    Remitting Bank 5. Collecting Bank

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