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The documents presented under a documentary credit are scrutinized as per the International standards of scrutiny and negotiated if they strictly comply with the LC terms. This is called a clean negotiation.
On the other hand if the documents do not comply with the LC terms and discrepancies are found, the negotiating bank may still opt to give value under the LC by paying or incurring a deferred payment obligation as per LC provided the beneficiary undertakes to indemnify the negotiating bank in the event of rejection by the LC opening Bank. This is technically called a payment under reserve. The Reserve will be lifted on acceptance of discrepancies by the LC opening Bank.
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Parties and their rights and responsibilities of a letter of credit?
All parties dealing with an LC are dealing only with documents not with goods & services.it is exporter's duty to ship the goods as per the LC and submit the documents within the stipulated time for negotiation.
Can you discounting a lc non transferable?
Discounting is a term used for the actual drawing/negotiation that takes place under an Lc (Letter of Credit). The credit conform (accepted) documents/draft are due for deferred payment and the presentor does not want to wait for its funds till maturity date. Whether the LC is transferable or not is of no importance here. The LC itself should be 'discountable' (it is safer to have this in special instructions of the LC terms). The discounting then depends on the parties concerned, and the price for discounting (discounting rate/Libor/Airbor+spread) and the willingness of the bank that should discount. Discount can be performed with or without recourse.
What does Lc at sight mean?
When buyer's bank pays to seller's bank upon receipt of documents and after having verified that documents are meet are requirements written in the lc
What difference between LC by negotiation and LC by payment?
Without going into too much detail, Negotiation is the act of the Nominated bank in effecting payment to the beneficiary (in advance of its own receipt of funds from the issuing bank) of the value of the presentation, less an amount of deduction by reason of the time element between the early payment date and the expected date of receipt of funds from the issuing bank. An LC available by negotiation should not allow for immediate reimbursement (e.g authority to debit issuing bank's account, or claiming reimbursement from third party), and would require the nominated negotiating bank to first pay (or commit to pay at a future date) from its own funds and receive reimbursement only after the issuing bank has received the documents and have found them to be in order. In the event that it has commited to pay at a future date, to constitute an act of negotiation, such date must be earlier than the expected date of reimbursement from the issuing bank On the other hand, under an LC available by Payment, the nominated bank does not advance its own funds, but pays only after it is in a position to either debit the issuing bank's account in its books, or has received reimbursement by claiming on a nominated reimbursing bank.
What is meant by negotiation in lc article 41a?
Negotiating is the process of getting the best terms once the other side starts to act on their interest.
Calculation of lc confirmation charges?
LC confrmation charges is the charges paid to confirmation bank and born by the applicant, normally a confirmaton bank is bank which give the payment on the presentation of documents by applicant,s bank
What are the goals of export officer in banking sector?
Documents deposit for collection/negotiation/purchase against limit. You can take pre shipment finance for execution behalf of evidence. You can take post shipment finance against export proof. After remittances we can take brc for depb post export basis for incentives. To Open LC. jamil ahmad
What is the best under bone motorcycle?
Yamaha 125z and yamaha 135 lc
What is the meaning of Payment will be effected provided the stipulated documents are presented and terms and conditions of the LC are complied with?
It means the bank will release your money after they approve your document presentation and get approval from the applicant of the letter of credit. If all documents are included and comply with the instructions of the LC, payment can be released according to the payment schedule (i.e. "Draft at 30 days after ship date").
What is the difference between restricted LC and confirmed LC?
A confirmed letter of credit is one where the exporter's bank asks for additional guarantee from another bank of its choice that if the buyer's bank is unable to honour it's obligations then the confirming bank will make the payment on the behalf of the buyer's bank. Here, the confirming bank may be in the same country as the exporter or a well reputed international bank.A restricted letter of credit is one in which the negotiation can only be done by the bank which is chosen by the bank issuing the LC. Authorization from the issuing bank to pay the beneficiary is restricted to a specific nominated bank. Meaning is that negotiating bank is only the bank which is nominated and no other bank is authorized to do the valuation of the LC other than the nominated bank. Thus, whereas the confirmed LC is one which requires authentication of payment of negotiated value(value arrived at by the negotiating bank) by the confirming bank( the respective trade documents along with the LC will pass from negotiating bank to confirming bank so that it can take note of the quantum of guarantee), the restricted LC only requires the valuation to be done by a specifically nominated negotiating bank. Here, in case of restricted LC, there is no guarantee involved from another bank as such to the exporter's bank that payment will be made. That guarantee can be there only when the LC is confirmed.Also, restricted LC is mainly focused on valuation of the LC, whereas confirmed LC is focused on additional payment guarantee from a bank of repute.I guess that should be the difference
What does LC stand for in LC connector?
LC stands for Lucent Connectors
What is a Usanse LC?
LC for 30,60,90,or 120 days is called Usanse LC
