Definition Types amp Parties Compiled By Janata Bank Staff College Dhaka Bankers role in Foreign Trade Methods of Payment Origin of the term Letter Of Credit Define Letter Of Credit The letter of credit is a ID: 556890
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Letter Of Credit:Definition, Types & Parties
Compiled By:Janata Bank Staff CollegeDhakaSlide2
Bankers role in Foreign TradeSlide3
Methods of Payment-Slide4
Origin of the term Letter Of CreditSlide5
Define Letter Of CreditThe letter of credit is a
commitment by the buyer’s bank on behalf of the buyer (importer) to effect payment to the seller (exporter) / beneficiary subject to fulfillment of certain conditions by the seller.Slide6
Define Letter Of Credit…Continued… Letter Of CreditSlide7
Define Letter Of redit…Continued…Slide8
Flow Chart of Doc. Credit
Flow Chart of Doc. Credit
Advising Bank
Confirming Bank
Reimbursing Bank
Shipra
Biswas, Faculty Member ,JBSCSlide9
Parties To A Letter Of CreditApplicant
BeneficiaryIssuing BankAdvising BankConfirming bankNominated BankConfirming BankReimbursing BankSlide10
Types of Letter of Credit :Irrevocable letter of credit :
(Article of 3 of UCP-600 says that a credit is irrevocable even if there is not indication to that effect. It therefore, indicates that (under UCP-600) there is only one type of credit, named Irrevocable Letter of Credit)Slide11
Types of Letter of Credit :Revocable letter of credit
Sight letter of creditDeferred letter of creditConfirmed letter of credit :Transferred Letter of CreditRevolving letter of creditRed Clause letter of creditGreen Clause letter of creditBack to Back Letter of CreditStandby letter of creditSlide12
Letter Of Credit
Applicant : means the party on whose request the credit is issued. =The buyer, or customer, is the Applicant. Beneficiary: means the party in whose favour a credit is issued = The seller of the goods or the provider of the services.Slide13
Parties To A Letter Of Credit
Issuing Bank is the bank that issues a letter of credit at the request of an applicant or its own behalf. Issuing bank undertakes to honor a complying presentation of the beneficiary without recourse. The Issuing Bank’s credit replaces the buyer's credit. Risks to the Issuing Bank-Insolvency of the Applicant Fraud Risk, Sovereign and Regulatory Risk and Legal Risks Slide14
Parties To A Letter Of CreditAdvising Bank: Advising bank is the bank that advises the credit at the request of the issuing bank. An advising bank that is not a confirming bank advises the credit and any amendmend without any obligation to honor.
-----The Advising Bank is an agent of the Opening Bank. Verifies the authenticity of the Opening Bank. Slide15
Parties To A Letter Of Credit
Nominated Bank: Nominated bank is the bank with which the credit is available or any bank in the case of a credit available with any bank. Risks to the Nominated Bank -has made a payment to the Beneficiary against documents that comply with the terms and conditions of the Credit and is unable to obtain reimbursement from the Issuing Bank Slide16
Parties To A Letter Of Credit
Confirming Bank: Confirming bank is the bank that adds its confirmation to a credit upon the issuing bank's authorization or request. This decision is up to confirming bank only. once it adds its confirmation to the credit confirming is irrevocably bound to honor or negotiate as of the time it adds its confirmation to the credit. Even if the issuing bank fails to honor, confirming bank must pay to the beneficiary. --The Confirming Bank is usually the Advising Bank, but it confirms that the credit exists. --It can negotiate the documents, and can accept the letter of credit the Opening Bank will not pay. Slide17
Parties To A Letter Of Credit
Reimbursing Bank :Reimbursing Bank shall mean the bank instructed and/or authorized to provide reimbursement pursuant to a reimbursement authorization issued by the issuing bank.Slide18
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