LETTER OF CREDIT AND ITS TYPES

PRESENTED BY: EDEL DIAS 04 AASHISH PARAB 12 RAHUL SRIVASTAV 20 SUBMITTED TO: PROF. IMRAN KAZI
1

2

LETTER OF CREDIT ?
3

4

In different geographical boundaries; Complying with different legal structures; Using different currencies; Accustomed to different trade practices;
5

The Road to international trade is not a bed of roses, but safe driving on it is possible only with appropriate knowledge.

6

A LETTER OF CREDIT SOLVES THE ISSUE FOR BOTH THE BUYER AND THE SELLER;
BUYER
7 SELLER

8

Commercial Letter of Credit Stand By Letter of Credit
9

Commercial Letter of Credit
10

Sight LC
Tra sferable

Usa ce LC
Revolvi g LC
11

LC

Sight LC
This means that the payment of the LC will be made , at sight, immediately on presentation of the documents as required by the LC.

The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.

LC & OTHER DOCS.

12

Usance LC
This means that the payment of the LC will be made , at USANCE, a certain number of days, say 30 days, (credit period) after presentation of the documents as required by the LC.
The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.

13

Transferable LC
When a LC is issued in the name of beneficiary ³A´ intending it to be transferred either in part or in full in favour of additional or other beneficiaries ³B´ , ³C´ and so on, then it is called a Transferable LC.
14

Revolving LC
Automatic restoration of the amount drawn against one set of documents thus obviating the necessity of opening a fresh LC for every shipment. A credit may revolve:1. In terms of a fixed amount over a period of time; 2. In terms of a period of time with freedom to draw multiple times without fixing the amount per drawal.
15

Among the types of LCs that we have seen till now there are other sub-types of LC in use.
16

If the Issuing Bank designates or nominates a particular bank to pay, accept, or negotiate the Credit on complying presentation then such an LC is termed as Restricted LC.
17 

An L/C that is available to the beneficiary by presentation of documents to the issuing bank. 

The issuing bank's engagement to pay extends only to the beneficiary. 

There is no other bank involved in between the issuing bank and the beneficiary i.e. no Negotiating Bank, No confirming Bank, No Nominated Bank.
18

If the amount of the LC is to be paid merely on presentation of a draft or bill of exchange or a Receipt unaccompanied by any other document then it is called a CLEAN LETTER OF CREDIT.
19

Stand By Letter of Credit
20 

The stand-by letter of credit is a guarantee declaration in the broadest sense.  It is normally issued only by banks in SA as the Federal Bank of SA prohibits Banks from issuing Guarantees.  SBLCs are used to guarantee the following types of payment and performance  Repayment of Loans 
Fulfillment of sub-contracts  Securing the payment of goods to third parties.
21

22

23

The seller has to comply with the terms of the LC which will stipulate specific documents to be submitted to the bank as evidence of having shipped / supplied the goods to the destination identified by the Buyer.

The Bank, on receipt of such documents, would be satisfied.

So will the Buyer.
24

25

The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to d elete the image and then insert it again.

26

Dr. KB Vijayakumar, Ph.D.,

27

Sales Contract

The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.

Inform Seller

Advise of LC To Seller·s Bank
28

Sales Contract

The image cannot be displayed. Your computer may not have enough memory to open to open the image, or the image may have been enough memory the image, or the image may have been corrupted. Restart your computer, computer, and then open the file again. corrupted. Restart your and then open the file again. If the red xIfstill appears, still may have to may have to delete the image and the red xyou appears, you delete the image and then insert it again. then insert it again.

Inform Seller

Advise of LC To Seller·s Bank
29

The LC

be

This means that the LC cannot be cancelled after issue and communication to us. UCP 600 has revised this article and reiterated that even if it is not explicitly stated in the LC it shall be deemed to be Irrevocable. This has come into effect from 01.07.2007. 30

The LC can be
This means that the LC issued in the name of XYZ CO. can be transferred in favour of ABC CO. The transfer will not affect the validity of the LC. This transfer can be done only if the LC explicitly states that the LC is transferable.
31

The LC

be

Then, we can insist that the issuance of the LC be confirmed by either our own bankers or any bank of international repute.

Such banks will then verify and confirm that the LC has indeed been issued.

32

The LC is acceptable to us if it is

33

The LC is acceptable to us if it is

34

The LC is acceptable to us if it is

35

The Primary Requirement is the LC

36

Sign up to vote on this title
UsefulNot useful