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Submitted by
Anil Nandyala (B11005)
Ankita Singh (B11007)
Sumit Khandelwal (B11048)
Bank Guarantee
 Definition
 Process Flow
 Types of Bank Guarantee
 Benefits
 Bank Charges
 Documents Required
 BG A...
Letter of Credit
 Definition
 Types of Letter of Credit
 Process Flow
 LC Discounting
 Hedging
 Benefits
 Common Re...
 An assurance by the bank ensuring that the
liabilities of a debtor will be met
 Ensure payment to beneficiary in case o...
 Performance guarantee
 Fix the financial liability upon the banker in the
event of failure in performance
 Advance pay...
 Reduces many business transactions risks
 Reliable security instrument in both
international and domestic trade
 Provi...
 Limit Based BG:
 Working Capital Finance is required
 1% fees charged
 FD based BG
 For foreign BG you have to 110% ...
 Address Proof
 Identity Proof
 Business Proof
 Last 3 years P&L and BS(duly signed by CA)
 Last 1 year Bank Statemen...
Sr .No. Particulars Amount
A Value of contracts expected to be bid 1000.00
B EMD Guarantee (generally 3% to 5% of A), Here...
 An arrangement where by bank at customer’s
request undertakes to pay his creditor
 Used worldwide for settlement of tra...
 Revocable L.C
 Can be cancelled at any time by any party
without consent
 Irrevocable L.C
 Cannot be cancelled at any...
 Seller discount’s the bill
DISCOUNTING:
Duration
Interest rates
 Forwards or Future contracts
 Options
 Opens door to international trade by provide
secure payment
 Bank substitutes to buyer
 Bank Expertise is made availab...
 Time Lines
 Shipment fails
 Documents on time
 Expiry of LC
 Discrepancy Within LC
 Compliance with Documents & Con...
 Commercial Invoice
 Transport Documents
 Bill of Lading
 Air bill
 Insurance Documents
 Inspection Certificates
 C...
Assessment of LC Rs in Mn Rs in Mn
Total Purchase A 100
Purchase under LC (x%) B=A*X% 60
Period under LC (Y days) Y 30 day...
Comb
Comb
Comb
Comb
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Comb

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Transcript of "Comb"

  1. 1. Submitted by Anil Nandyala (B11005) Ankita Singh (B11007) Sumit Khandelwal (B11048)
  2. 2. Bank Guarantee  Definition  Process Flow  Types of Bank Guarantee  Benefits  Bank Charges  Documents Required  BG Assessment
  3. 3. Letter of Credit  Definition  Types of Letter of Credit  Process Flow  LC Discounting  Hedging  Benefits  Common Reason for LC failure  Documents Required  Assessment of LC
  4. 4.  An assurance by the bank ensuring that the liabilities of a debtor will be met  Ensure payment to beneficiary in case of non-performance by applicant  Aim at preventing frauds and helping banks serve genuine customers  Facilitates more confidence to do the business  Issued for a period till the execution of a contract
  5. 5.  Performance guarantee  Fix the financial liability upon the banker in the event of failure in performance  Advance payment guarantee  Provides security to importer if exporter does not deliver under the terms and conditions  Deferred payment guarantee  Customers make payment in certain installments and on specified dates  Foreign bank guarantee  Issued in foreign currency to beneficiary outside the country for overseas obligations
  6. 6.  Reduces many business transactions risks  Reliable security instrument in both international and domestic trade  Provides immediate funds to the business in the form of payment guarantees  Gives ample time to make payments in case of deferred payment guarantees  Provides better negotiable terms and conditions to the buyer and seller
  7. 7.  Limit Based BG:  Working Capital Finance is required  1% fees charged  FD based BG  For foreign BG you have to 110% margin  For Inland BG you have to keep 100 %margin  5500 is the minimum fees charged on BG
  8. 8.  Address Proof  Identity Proof  Business Proof  Last 3 years P&L and BS(duly signed by CA)  Last 1 year Bank Statement of the firm  If existing loan, detailed document of the same  Individual IT Returns of the individual/partners/directors for the last 3 years  SEBI formalities in case of listed companies
  9. 9. Sr .No. Particulars Amount A Value of contracts expected to be bid 1000.00 B EMD Guarantee (generally 3% to 5% of A), Here we will assume 5% 50.00 C Expected value of the new contract (25% of A), It may vary from company to company 250.00 D Performance Guarantee (Normally 10% of C) 25.00 E Advance Payment / Security Deposit Guarantee (5% of C),This may vary from project to project. 12.50 F Fresh Guarantees required (B+C+D+E) 337.50 G Existing bank guarantees (Assumption) 100.00 H Guarantees expiring during the year 25.00 I Guarantees requirement (F+G-I) 412.50 J Total guarantees limits required 412.50
  10. 10.  An arrangement where by bank at customer’s request undertakes to pay his creditor  Used worldwide for settlement of trade between exporter and importer  Sophisticated and popular method of payment
  11. 11.  Revocable L.C  Can be cancelled at any time by any party without consent  Irrevocable L.C  Cannot be cancelled at any time without advising the seller  Sight L.C  Documents are released to creditor on payment  Usance L.C  Documents are handed over on commitment on payment at a future date(available to 180 days)
  12. 12.  Seller discount’s the bill DISCOUNTING: Duration Interest rates
  13. 13.  Forwards or Future contracts  Options
  14. 14.  Opens door to international trade by provide secure payment  Bank substitutes to buyer  Bank Expertise is made available to help complete trade transactions completely  Payment for the goods shipped can be remitted to your own bank or bank of your own choice  Payment will be made to seller when T&C of the L.C are compiled with  Importer can control shipping dates for the goods being purchased
  15. 15.  Time Lines  Shipment fails  Documents on time  Expiry of LC  Discrepancy Within LC  Compliance with Documents & Conditions
  16. 16.  Commercial Invoice  Transport Documents  Bill of Lading  Air bill  Insurance Documents  Inspection Certificates  Certificate of origin
  17. 17. Assessment of LC Rs in Mn Rs in Mn Total Purchase A 100 Purchase under LC (x%) B=A*X% 60 Period under LC (Y days) Y 30 days Lead Time under LC in Case of offsite Z 90 days LC Requirement C=(B*(Y+Z)/365) 19.73
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