Types of LC. Trade cycle - sight. Trade cycle - usance. LC Document : Draft, Invoice, Packing List, How to examine LC

1. INTERNATIONAL TRADE
Course 3 Yudy Yunardy S.E., M.M.

2. WHO AM I ?
Fifteen years of Banking experience, six
years’ experience in Trade Finance
Operations background with Unsecured
Loan experience, equipped with another
seven years’ experience in Management
Information Analyst and Dashboard
Reporting. Vastly experienced in Bank
Indonesia reporting (LBU, SID, LBBU, BMPK
etc.)

3. EMPLOYMENT SUMMARY
2014 Present Indonesia Banking School
2013 2014 Deutschebank AG
2011 2012 Misys Plc
2010 2011 DBS Indonesia
2010 2010 ANZ Bank
2005 2010 RBS Bank
2004 2005 Vendor at Bank Mandiri, BCA and Circle K
1999 2004 HSBC Bank
1998 1999 MetLife Insurance
1997 1998 Demographic Institution FEUI
1996 1997 Private Investment Manager

4. RULES
1.Disable your comm. device
2.Presence 80% minimum
3.Time alloc. 08.00 – 10.30

5. TEXTBOOK
Koch, Timothy
(2015), Bank
Management,
The Dryden Press

6. GRADING EVALUATION
1. Participation 5%
2. Quiz / exercise 10%
3. Assignment 15%
4. Midterm 35%
5. Final 35%

7. LAST WEEK’S QUESTION
Answer

8. LAST WEEK’S ASSIGNMENT
Answer
• E-commerce will be booming in 2015, because
of bigger mobile device trends, always
connected to internet, the battle to win
customer loyalty will force us to engage in B2B
as well as B2C
• Social media makes it easy to become a seller in
facebook, wordpress, tumblr or site that will
focus solely on shopping
• Analytical engine will become more intrusive but
also more accurate in predicting our needs and
wants

9. LAST WEEK’S ASSIGNMENT
in billion dollars 2012 2013
A gricultural pro ducts 1,647.65 1,744.83
F uels and mining pro ducts 4,128.61 3,996.98
M anufactures 11,467.50 11,848.00
A gricultural pro ducts (A o A ) a 1,371.37 1,450.26
N o n-agricultural go o ds (N A M A ) 16,585.50 16,850.38
T o tal Wo rld M erchandise Expo rt 18,615.13 19,040.07
B 2C Sales wo rldwide 1,058.00 1,233.00
Percentage to total world merchandise export 5.68% 6.48%
Percentage to NAM A world export 6.38% 7.32%
Percentage to fuel and mining world export 25.63% 30.85%
Percentage to clothing world export 252.38% 267.89%
Value

10. PREVIOUSLY…

11. LC CONCEPTS

12. ADVISING BANK
The bank in the seller’s country which is requested by issuing
bank to notify the LC to beneficiary
APPLICANT
Issuer, a party whose request a bank is to issue an LC
(importer/ buyer)
BENEFICIARY
The party in whose favour the LC is to be issued and the
party who must comply with the T&C of the LC in order to be
entitled to receive its proceeds (seller/exporter)
ISSUING BANK
Bank that issues LC at the request of applicant
TERMINOLOGY

13. NEGOTIATING BANK
Bank that negotiates or discounts the beneficiary’s BoE
PAYING BANK
Bank that makes payment to beneficiary against presentation of
stipulated documents
REIMBURSING BANK
Bank nominated by the issuing bank to pay claims under the LC
to the negotiating or paying bank
BILL OF EXCHANGE
A written, unconditional order by one party (the drawer) to
another (the drawee) to pay a certain sum, either immediately (a
sight bill) or on a fixed date (a term bill), for payment of goods
and/or services received
TERMINOLOGY

14. TRADE CYCLE - SIGHT
ISS.BANK
IMPORTER
ADV.BANK
EXPORTER
S C
4. Goods
1.ApplyLC
9. Uang
10. Docs
7. Uang
2. Issued LC
6. Docs
8. Uang
5. Doc’s
3.AdviseLC

15. TRADE CYCLE - USANCE
ISS.BANK
IMPORTER
ADV.BANK
EXPORTER
S C
4. Goods
1.ApplyLC
10.Uang
9.Docs
11. Uang
2. Issued LC
6. Docs
12. Uang
5.Doc’s
3.AdviseLC
7. Acceptance
8.Acceptance

16. TYPES OF LC

17. 1. Revocable vs Irrevocable LC
2. Sight vs Usance LC
3. Confirm vs unconfirm LC
4. Resticted vs unrestricted LC
5. Transferable LC
TYPES OF LC

18. 6. Back to Back LC
7. Revolving LC
8. Standby LC
9. Red Clause & Green Clause
LC
TYPES OF LC

19. DOCUMENTS IN LC

20. Transport Document
• Marine Bill of Lading
• Airway Bill
• Freight Forwarders
• Delivery Order
Commercial Documents
• Invoice
• Packing List
• Insurance
• Certificate of Origin
• Certificate of Analysis
Official Documents
 Certificate of Origin
 Health Certificate
 Consular Invoice
 Legalised Invoice
Financial Documents
 Bills of Exchange
 Promissory Note
DOCUMENTS IN LC

21. DOCUMENTS - TITLEBills of Lading
• A receipt for goods, a contract for carriage and a document of title
• Issued by Carrier or his agent and bears evidence that goods have
actually been loaded on board a named vessel
• Issued in several originals (as a set), but only one is sufficient to take
possession of goods
• BL can be consigned to issuing bank, applicant, or to order
• The consignor can then transfer it by endorsement
• If it is to order, it becomes a bearer instrument.
• Clean BL = It does not bear any clause/endorsement indicating
defective condition of the cargo or its packaging

22. DOCUMENTS – ‘NOT’ TITLE
Delivery Order
Airway Bills
Non-negotiable B/L
Original B/L sent directly to buyer :
- consigned to order
- consigned to buyer
Freight Forwarders Receipt

23. DOCUMENTS – DRAFT

24. DOCUMENTS – INVOICE

25. DOCUMENTS – PACKING LIST

26. LET’S TAKE A LOOK AT LC

27. SAMPLE OF LC
MT 700
SENDER: ABC BANK, MELBOURNE, AUSTRALIA
RECEIVER: IOB, MUMBAI, INDIA
:27: SEQUENCE OF TOTAL 1/1
:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE
:20: DOCUMENTARY CREDIT NUMBER EL20088033319
:31C: DATE OF ISSUE 150105
:40E: APPLICABLE RULES UCP LATEST VERSION
:31D: DATE AND PLACE OF EXPIRY 150609 OPENING BANKS COUNTERS
:50: APPLICANT HOT AND SPICY PTE LTD
240 YARROWEE STREET
SEBASTOPOL
VICTORIA, AUSTRALIA 3356

28. SAMPLE OF LC
:59: BENEFICIARY AACHI MASALA PTY LTD
41, NORTH CAR STREET,
CHENNAI, INDIA-600007
:32B: CURRENCY CODE, AMOUNT AUD 60,000.00
:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION
:42C: DRAFT AT SIGHT
:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA
:43P: PARTIAL SHIPMENTS NOT ALLOWED
:43T: TRANSHIPMENTS ALLOWED
:44E: PORT OF LOADING ANY INDIAN PORT
:44F: PORT OF DISCHARGE ANY AUSTRALIAN PORT
:44C: LATEST SHIPMENT DATE 150525

29. SAMPLE OF LC
:45A: DESCRIPTION OF GOODS MANGO PICKLE, GARLIC PICKLE,
SAMBAR POWDER, RASAM POWDER,
DHAL POWDER AS PER PERFORMA
INVOICE NO 123456.
CFR AUSTRALIA
:46A: DOCUMENTS REQUIRED
1. SIGNED COMMERCIAL INVOICE
2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED
FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.
3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE

30. SAMPLE OF LC
:47A: ADDITIONAL CONDITIONS
1. A COPY OF ALL DOCUMENTS TO BE SENT TO APPLICANT WITHIN 5 DAYS AFTER
SHIPMENT DATE
2. THIRD PARTY DOCUMENTS ACCEPTABLE
3. ALL DOCUMENTS TO BE FORWARDED TO ABC BANK, MELBOURNE, AUSTRALIA IN
TWO LOTS BY BLUE DART COURIERS.
4. CHARGES ADDITIONAL TO FREIGHT NOT ACCEPTABLE
5. THIS LC IS TRANSFERRABLE BY INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA
:71B: CHARGES ALL BANK COMMISSIONS AND CHARGES OUTSIDE AUSTRALIA, PLUS
ADVISING AND REIMBURSING COMMISSIONS, ARE FOR THE ACCOUNT OF THE
BENEFICIARY.
:48: PERIOD FOR PRESENTATION DOCUMENTS TO BE PRESENTED WITHIN 15 DAYS
AFTER THE DATE OF SHIPMENT BUT WITHIN THE CREDIT VALIDITY.
:49: CONFIRMATION INSTRUCTIONS WITHOUT
:57A: ADVISE THROUGH BANK INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA

31. EXERCISE
MT 700
SENDER: ABC BANK, MELBOURNE, AUSTRALIA
RECEIVER: IOB, MUMBAI, INDIA
:27: SEQUENCE OF TOTAL 1/1
:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE
:20: DOCUMENTARY CREDIT NUMBER EL20088033319
:31C: DATE OF ISSUE 150609
:40E: APPLICABLE RULES UCP LATEST VERSION
:31D: DATE AND PLACE OF EXPIRY 150105 OPENING BANKS COUNTERS
:50: APPLICANT HOT AND SPICY PTE LTD
240 YARROWEE STREET
SEBASTOPOL
VICTORIA, AUSTRALIA 3356

32. EXERCISE
:59: BENEFICIARY AACHI MASALA PTY LTD
41, NORTH CAR STREET,
CHENNAI, INDIA-600007
:32B: CURRENCY CODE, AMOUNT AUD 60,000.00
:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION
:42C: DRAFT AT SIGHT
:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA
:43P: PARTIAL SHIPMENTS NOT ALLOWED
:43T: TRANSHIPMENTS NOT ALLOWED
:44E: PORT OF LOADING ANY INDIAN PORT
:44F: PORT OF DISCHARGE ANY INDONESIAN PORT
:44C: LATEST SHIPMENT DATE 150525

33. EXERCISE
:45A: DESCRIPTION OF GOODS CUTE 15 YEARS OLD GIRLS, RPG,
FLAMETHROWER, M-16, AR-15,
KALASHNIKOV AK-47,
INVOICE NO 123456.
CIF AUSTRALIA
:46A: DOCUMENTS REQUIRED
1. SIGNED COMMERCIAL INVOICE
2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED
FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.
3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE