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12 letter of credit

12 letter of credit

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Published by Hax33b
Banking Law and Practice in Pakistan,Complete Notes on BLP
Helpful for MBA Students

Contributed by Haxeeb
CIIT Lahore
Banking Law and Practice in Pakistan,Complete Notes on BLP
Helpful for MBA Students

Contributed by Haxeeb
CIIT Lahore

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Published by: Hax33b on Jul 17, 2008
Copyright:Attribution Non-commercial

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07/08/2013

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Letter of Credit-Types,Letter of Credit-Types,Procedure & ModalitiesProcedure & Modalities
Facilitating international trade is the mostFacilitating international trade is the mostimportant activity of international banking.important activity of international banking.
Exporter (seller) and Importer (buyer) are twoExporter (seller) and Importer (buyer) are twoimportant players in international tradingimportant players in international tradingactivity.activity.
 
 
Requirements of ExporterRequirements of Exporterand Importerand Importer
What the seller (exporter) wantsWhat the seller
 
(exporter) wants
 
3)3)Contract fulfillmentContract fulfillment(payment)(payment)4)4)Convenience (of Convenience (of Receiving payment in aReceiving payment in a bank in his own country) bank in his own country)5)5)Prompt PaymentPrompt Payment6)6)Expert Advice.Expert Advice.
What the buyer (Importer) wantsWhat the bu
 
yer (Importer) wants
3)3)Contract fulfillment (Goods)Contract fulfillment (Goods)4)4)Convenience of using anConvenience of using anintervening third party inintervening third party inwhom both have confidence,whom both have confidence,such as a bank.such as a bank.5)5)Credit -possibility of obtaininCredit -possibility of obtaininfinance.finance.6)6)Expert advice and assistance.Expert advice and assistance.
 
 
Letter of credit provides the mechanism toLetter of credit provides the mechanism tofulfill the above requirements of exportersfulfill the above requirements of exportersand importers.and importers.
Function of Letter of Credit:Function of Letter of Credit:
Letter of credit is one of the methods of financingLetter of credit is one of the methods of financinginternational trade. Other methods-Open accountinternational trade. Other methods-Open accountmethod. Documentary collection and Payment inmethod. Documentary collection and Payment inadvance.advance.
Letter of Credit---Defined:Letter of Credit---Defined:
A letter of credit can be defined as an instrument issuedA letter of credit can be defined as an instrument issuedby a bank in which the bank furnishes its credit which by a bank in which the bank furnishes its credit whichis both good and well known, in place of the buyer’sis both good and well known, in place of the buyer’scredit, which may be good but is not so well known.credit, which may be good but is not so well known.

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good presentation but need some more details regarding application form
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fantastic
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