文档介绍：Learning Objectives
Background
Definition
Main Parties
Procedure
Contents
Characteristics of L/C
Types
odation
limitations
经贸学院国贸系
Background
Roles that banks may play in international trade
Banks can act as a channel munication, keeping participants informed of the progress of a transaction and taking appropriate steps in case of problems. (Clean and documentary collections)
经贸学院国贸系
Net works of correspondent banking relationships simplify payment between traders.
Banks can maintain control over goods (Documentary collections).
Banks can give their financial backing to transactions (Letter of credit).
Banks can apply international codes of practice (UCP500, URC522).
经贸学院国贸系
What is L/C?
l A bank’s written payment undertaking
l On behalf of a buyer
l To pay a seller
l A given sum of money
Upon presentation of documents representing the supply of specified goods
LThese documents meeting the terms of the L/C
LAnd being presented within a specified time
And at a specified place
经贸学院国贸系
Briefly speaking, a documentary credit is a conditional bank written undertaking of payment.
经贸学院国贸系
Main Parties involved
l Applicant (Buyer/importer): Applies to the Issuing Bank for a letter of credit in favor of the beneficiary (seller). Also as known as accountee or accreditor.
As for the importer, he is only requested to pay a certain proportion of deposit instead of the total amount of the Credit at the time of application.
经贸学院国贸系
Issuing Bank
l Opening Bank: The bank who issues the letter of credit. Gives the primary payment undertaking of the letter of credit.
Question: What factors should the issuing bank consider before granting DC facilities to his customer?
经贸学院国贸系
Answer:
Credit standing of customer
Cash cover as security
Exchange risk
Nature and control of goods
Type of credit
经贸学院国贸系
Advising bank(notifying bank)
Communicates with the seller about the letter of credit. Verifies that the L/C is gen