NumeroUno Business Consultants provide LC Confirmation and

1. LC Confirmation and LC Discounting
Popular LC Confirmation and LC Discounting Service Provider
By: NumeroUno
Contact:
Email: info@numerouno.net.in
Website:LC Confirmationand
LC Discounting
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2. LC Confirmation and LC Discounting Content
Introduction LC Confirmation
How that works and work flow
Function, Feature and Process
Introduction LC Discounting
Special Hints for exporter
Procedure sequences
Thanking You
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3. Introduction LC Confirmation
WhatisaLetterofCredit(LC)?
ConfirmationofL/Cisthatthe1stpaymentobligationsundertakenseverallybycountriesbankforthebeneficiaryonthefarsidetheissuebank.
LCConfirmationAsecondguarantee,additionallytoaletterofcredit,thatcommitstoexpenseoftheletterofcredit.Aconfirmedletterofcreditisusuallyusedoncethesupplybankoftheletterofcreditcouldhavequestionabletrustinessandthereforethemarketerseekstogetasecondguaranteetoassurepayment.
TherolesoftheAdvisingBankare:
ToattesttheLCtoconfirmthattheLCcomesfromarealsupply. AuthenticationiseitherwithinthekindofsignatureverificationorviaSWIFTauthentication;and
ToinformthevendoronthearrivalofLCinhisfavorsoncetheLCispreparedforassortment.
AnissueBankthatutilizestheservicesofanAdvisingBankorsecondAdvisingBanktoadviseaLCshoulduseanequivalentbanktoadviseanyconsequent amendment(s).Ifthere’samodificationtotheletterofcredit,thetermsandpolicyofthefirstLCConfirmationcanstayineffecttillthevendorcommunicateshisacceptanceonthemodificationtotheAdvisingBankorgiftdocumentsthatgowiththeamendedterms.
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4. How that works and work flow
Whennegotiatingthetermsofsale,thevendorwouldneedaletterofcreditrequestingtheadvisingbanktofeatureitsconfirmation.TheclientincludesthisrequestoncesubmittingtheapplyingforLCConfirmationtohisbank.Inmostinstancestheissuedcreditstates:"Pleaseadvisebeneficiaryaddingyourconfirmation"orwordstosimilarresult.Note:hismaybearequest,notademand.TheadvisingbankforvariedreasonscoulddeclinetofeatureitsconfirmationandeasilyadvisetheLCConfirmationwhilenotengagementonitshalf.
Onceaddingconfirmation,typicallanguageenclosedwithintheletterwouldbe, “Weherewithensurethiscreditandtherebyunderneathtakethateveryonedraftsdrawnunder,andintractcompliancewiththetermsdeclaredinthataregoingtobepunctuallyhonoredonpresentationanddeliveryofdocumentsassuchas,ifbestowed,atthisworkplaceonorbeforetheterminationdate.”
Itshouldtobenotedthatletterofcredittransactionsinvolvesurerisks,withlegalrisks,restrictiveandsovereignrisks,andfraudrisks.Riskstotheindividualembodylateorearlycargo,qualityandLCDiscounting.Merchandisecouldalsobebrokenintransitorshort-shipped.It’svitalthatsellersreviewthenecessitiesandgiftalldocumentsontime.
Officialdocumentsconjointlyembodyorigincertificates,embassygroupaction, licensees,andscrutinycertificates.Finally,insurancedocumentswhichwillbebestowedembodycertificatesandinsurancepolicies.
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5. Function, Feature and Process
Functions:Enterprisethecreditrisksoftheissuebankforthebourgeoisthusonfacilitateexporterreceivepaymentspriortouponobligingpresentation;itareoftendividedinto2forms:openconfirmationandsilentconfirmation.
Features:Reductionofrisksandaccelerationofthecapitalturnover: ConfirmationofL/Cwillfacilitateexportersstoptherisksfromtheissuebank,thecountryriskofissuebankandalsotheexchangemanagementrisks. Doubleguarantee:excepttheconditionalpaymententerprisecreatedbytheissuebank,theexporterswillgetextraconditionalpaymententerprisefrombankorbusinessconsultants,puttingtheexportersbeneathdoublepaymentguarantee.Paymentassortmentguarantee:TheexportersuponpresentationthatfitstheLCConfirmationneedsandapprovaloftheBankwillgainthenon-recoursepaymentsorpaymentsguarantees.
Process:Banksprovidesinsurrectionupontheissuebeneficiaryonceadvisingtheletterofcredit;LCConfirmationtheexporterpresentstheobligingdocumentstoBankandBankmakesnon-recoursepaymentsorirreversiblepaymentsguaranteestotheexporteronceexaminationandapproval;Bankmailsthedocumentstotheforeignissuebanktosaycompensationandcanconfirmthepaymentoncetheforeignpaymentreceived.
Charges:2‰oftheconfirmedquantity,withminimumofchargedquarterly. Thefeecanrisesubjecttothedegreeofrisksoftherelevantcountriesorbanks.
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6. Introduction LC Discounting
OverviewofLCDiscounting
Forbusinessesthatexportorimport,lettersofcreditarethemonetarysecurityofinternationaltrade.Aletterofcreditpermitsanexportertocreatethatorderiscrammedandshippedbeforepaymentisformedandalsotheimporterisbondedcashcanboughttheproductsshippedoverseas.LCDiscountingpermitsexporterstogettheircashquicker.
TheLetterofCreditfromtheprimebanksormonetaryestablishmentsistakenintoaccountasawholesecurity.ALCDiscountingcouldbelettersfromBankGuaranteeingthataBuyersCredittoavendoraregoingtobereceivedontimeandfortherightquantity.
InordertoLCDiscounting,theseller’sbankcancontactthebanksupplyingtheletterofcreditprovidedbytheclient.UponconfirmingthetermsclosethatLCwiththesupplyingbank,thefinancialorganizationwillthenpresentthevendorwithaproportionofthefullworthofthatanticipatedpayment.
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7. Special Hints for exporter
SpecialHintsonLCDiscountingforExporters:
Keepinmindthatyoujustcannotgetanypaymentfrombanksunlessyoucreateayieldingpresentationunderaletter.
Usuallylettercreditdiscountingandletterofcreditnegotiationemployedinidenticalthatmeansintradefinancelanguage.
Letterofcreditdiscountingisexpoundedtothelettersofcreditthatareonthemarketwithcredit,acceptanceornegotiation.
Atsightletterscreditshouldn’tneedanydiscountmechanismassupplyingbanksorconfirmingbanksshouldhonoratsightcreditsasshortlyastheyverifythatbeneficiary’spresentationisyielding.
Ifyou’dprefertodiscountalettercredityoumustattempttogetdiscountapprovalfromyourbankbeforeletterisissued.You’llgetyourbanksdiscountapprovalanddiscountconditionsbyapplyingthemwithadraftletterofcredit.
Confirmedlettersofcreditwillbediscountedadditionalsimplythanunofficiallettersofcredit.ForthisreasonattempttohavetheletterofcreditconfirmedbyyourbanktoeaseuptheLCDiscountingprocess.
Atsightlettersofcreditshouldn’tneedanydiscountmechanismasconfirmingbanksshouldhonoratsightcreditsasshortlyastheyverifythatbeneficiary’spresentationistheconditionsoftheLCDiscounting.Letterofcreditisexpoundedtothelettersofcreditthatareonthemarketwithcredit,acceptanceornegotiation.
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8. Procedure sequences
SequenceStepoftheLCDiscountingProcess:
Thefollowingarethesequenceofstepstakenbythebanksonreceiptofcompletedapplicationforms.
Applicationformisestablishedandapproved.
Personalinterview/discussionsareheldwiththecustomersbythebank’sofficials.
Bank'sFieldInvestigationteamvisitsthebusinessplace/workplaceoftheapplicant.
Allthedocumentssubmittedareverifiedbythebankwiththeoriginalsthusonmakesurethelegitimacyofidentical.
Bankverifiesthefollowrecordoftheapplicantwiththegeneralinformationsharingbureau(CIBIL).
Incaseoffreshprojectsthebankanalysesthebackgroundoftheapplicant/firm/companyandtheTechnicalfeasibility/financialviabilityoftheprojectbasedonvariousparametersandalsotheexistingmarketconditions.
Dependingonthesizeoftheprojectthefileisputupforsanctiontotheappropriatelevelofauthority.
Letterofcreditisn’tachequehoweverratherit’saconditionalpaymententerpriseofthesupplyingbank.Forthisreasonasabeneficiaryofallwouldliketomeetobligationsunderaletterofcreditbeforeconsideringyourselftobeeligibleofthesupplyingbank’spayment.ThebeneficiaryshallreceivediscountedpriceforexportdocumentsuponLCDiscounting.Withintheeventincomearen’tforthreturningfromthesupplyingBank,BankGuaranteeshallnotclaimcompensationfromthebeneficiary.
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9. Thank You
By: NumeroUno
Contact:
Email: info@numerouno.net.in
Website:LC Confirmationand
LC Discounting
NumeroUno Business Consultants