This document provides an overview of various bank products including remittances, letters of credit, documentary collections, and letters of guarantee. It defines each product and describes key aspects such as types, parties involved, documents required, and regulations. Remittances involve the transfer of funds between parties and can be individual, corporate, or partial/full settlement. Letters of credit are arrangements where banks settle international trade using documents and ensure payment if terms are met. Documentary collections similarly use documents but are less complicated and riskier than letters of credit. Letters of guarantee are unconditional undertakings by banks to pay beneficiaries upon request if the applicant defaults.

1. Banking
PRESENTATION OF SAMPLE BANK PRODUCTS
REMITTANCES, LETTERS OF CREDIT, DOCUMENTARY COLLECTION, LETTERS OF GUARANTEE
1

2. Presentation of Sample Bank Products: Remittance 2
Remittance

3. Presentation of Sample Bank Products: Remittances 3
Remittance
Is free transfer of funds between two parties
Buyer
(importer)
Seller
(exporter)
Practice
Regulations
Trade
Law
CBE
Instructions
International
Anti Money
Laundry
Practice
Bank
Guidance

4. Presentation of Sample Bank Products: Remittances 4
Remittance
Types :
Individual
Corporate
Full Settlement 100 % of Proforma Invoice
Partial Settlement
Payment %
Payment Type
Advance Payment
Post Payment
Routing :
Non-Banking Institutions : Transfer offices
Western Union
MoneyGram
Al-Rajhi
Banks
Illegal transfers

5. Presentation of Sample Bank Products: Letter of Credit 5
Letter of Credit
L/C or ILC & ELC

6. Presentation of Sample Bank Products: Letter of Credit 6
• Definition:
– A Letter of Credit, simply defined, is a written instrument issued by a bank at the request of its
customer, the Importer (Buyer), whereby the bank promises to pay the Exporter (Beneficiary)
for goods or services, provided that the Exporter presents all documents called for, exactly as
stipulated in the Letter of Credit, and meet all other terms and conditions set out in the Letter
of Credit.
• If the Letter of Credit is issued in course of international trade
– the Letter of Credit should comply with CBE regulations,
– and are also subject to provisions of Uniform Customs and Practices for Documentary Credit
(UCPDC) framed by International Chamber of Commerce (ICC)
currently applied UCP600 since Jan’2017

7. Presentation of Sample Bank Products: Letter of Credit 7
• Synopsis :
Letter of Credit therefore:
– Are an arrangement by banks for settling international commercial
transactions.
– Provide a form of security for the parties involved.
– Ensure payment, provided that the terms and conditions of the Letter of
Credit have been fulfilled.
– Mean that payment by such means is based on documents only, and not
on merchandise or services involved.

8. Presentation of Sample Bank Products: Letter of Credit 8
8. Payment of L/C
8. Payment of L/C at term

9. Presentation of Sample Bank Products: Letter of Credit 9
Terms Definition Activity
Applicant ‫الطالب‬ Importer ‫المستورد‬ Buy
Beneficiary ‫المستفيد‬ Exporter ‫المصدر‬ Sell
Issuing/Opening Bank ‫بنك‬‫االصدار‬ Importer’s Bank ‫بنك‬‫المستورد‬ Issues L/C
Advising Bank ‫بنك‬‫المبلغ‬ Exporter’s Bank ‫بنك‬‫المصدر‬ Advises L/C
Confirming Bank ‫بنك‬‫التعزيز‬ Advising Bank or 3rd Party Bank ‫بنك‬‫الطرف‬‫الثالث‬ Confirms L/C
Paying Bank ‫بنك‬‫الدفع‬ Any bank as specified in L/C ‫بنك‬‫مشمول‬‫االعتماد‬ Pays the Draft

10. Presentation of Sample Bank Products: Letter of Credit 10
> Types of Letter of Credit
• Revocable & Irrevocable Letter of Credit
– Irrevocable LC : A letter of credit is deemed to be an irrevocable credit, which can neither be
amended nor cancelled without an express agreement of all the parties concerned. i.e. the
applicant, issuing bank, beneficiary and confirming bank (if any).
– *Revocable LC : The concept of “ Revocable Credit “ which was in effect till UCPDC 500 (till 30th
June, 2007) has been withdrawn under the latest revision. Thus an LC can only be irrevocable in
nature.

11. Presentation of Sample Bank Products: Letter of Credit 11
> Types of Letter of Credit
• Sight Credit & Acceptance (Usance) Credit
– Sight Credit : is the LC prescribes the condition of ‘ payment at sight ‘, in this the beneficiary gets
the benefit of immediate payment upon presentation of the proper documents laid down as per the
terms of LC at the paying bank.
– Usance Credit: If the beneficiary decides to grant a period of credit to importer after sight such a
LC is called Acceptance Credit. The period of credit is called Usance, in this type of LC the beneficiary
draws a usance draft on the buyer or issuing bank or confirming bank depending on the terms. This
draft is presented along with documents and the beneficiary is advised that the amount in the draft
will be paid to him on prefixed future date .

12. Presentation of Sample Bank Products: Letter of Credit 12

13. Presentation of Sample Bank Products: Letter of Credit 13
> INCOTERMS
Published by ICC Paris,
published 1936 latest revision in 2000
• Necessary due to different terms of trade in each country
• To avoid misunderstandings, trouble recommendable to use
Incoterms.

14. Presentation of Sample Bank Products: Letter of Credit 14
> INCOTERMS

15. Presentation of Sample Bank Products: Letter of Credit 15
> Documents
• Invoice
• Bill of Lading (B/L)
• Air Transport Document
• Insurance Document
• Certificate of Origin
• Inspection Certificate
• Others

16. Presentation of Sample Bank Products: Letter of Credit 16
> Documents
Bill of Lading (B/L) Specimen
(Article 20 of UCP 600)
• Embodies the proprietary right to the goods afloat
• Indicates port of loading and port of discharge
• Indicates the name of the carrier
• Normally issued in 3 folds

17. Presentation of Sample Bank Products: Letter of Credit 17
> Documents
Commercial Invoice Specimen
(Article 18 of UCP)
A commercial invoice usually includes the
following information:
 Name and address of the seller and the buyer
 Amount and currency
 Description of goods
 Other information required by the credit
 Need not to be signed

18. Presentation of Sample Bank Products: Letter of Credit 18
> Documents
Insurance Certificate Specimen
(Article 28 of UCP600)
• Insurance Policy – Insurance Certificate
• Issued for at least 110 % of the value of the goods
• Indicates amount and risks covered

19. Presentation of Sample Bank Products: Letter of Credit 19
> Documents
Certificate of Origin Specimen
• Gives evidence of the origin of the goods
• Used in the importing county to check possible import
restrictions or to calculate the customs duty
• As a rule issued by a competent Chamber of Commerce

20. Presentation of Sample Bank Products: Letter of Credit 20
> Documents
Inspection Certificate Specimen
• As a rule issued by a appropriate authority, either
a governmental entity or a private inspection
company
• Gives evidence, that the goods were inspected
and indicates results

21. Presentation of Sample Bank Products: Letter of Credit 21
> Documents
EURO 1 Certificate Specimen
• As a rule issued by a appropriate authority, either
a governmental entity or a private inspection
company
• Gives evidence, that the goods were inspected
and proves conformity to EU standards

22. Presentation of Sample Bank Products: Documentary Collection 22
Documentary Collection
D/C or IBC (International Bills Collection)

23. Presentation of Sample Bank Products: Documentary Collection 23
> Definition
Basic Definition
A documentary collection is a trade transaction in which the exporter hands over the task of
collecting payment for goods supplied to his or her bank, which sends the shipping
documents to the importer’s bank together with payment instructions.
Cons
D/Cs are less complicated -> No revision
and cheaper than letters of credit -> 0.3%
Against
Riskier for the exporters
a. they do not have a verification process
b. offer limited recourse if the importer does not pay
International Standards
The URC 522 are the Uniform Rules for Collections. URC 522 came into effect on 01 January 1996.

24. Presentation of Sample Bank Products: Documentary Collection 24
Terms Definition Principal Activity
Drawee ‫المسحوب‬‫عليه‬ Importer ‫المستورد‬ Buy
Principal ‫المستفيد‬ Exporter ‫المصدر‬ Sell
Remitting Bank ‫بنك‬‫االصدار‬ Importer’s Bank ‫بنك‬‫المستورد‬ Issues D/C
Presenting Bank ‫بنك‬‫المبلغ‬ Exporter’s Bank ‫بنك‬‫المصدر‬ Collects D/C
Collecting Bank ‫بنك‬‫التعزيز‬ Any 3rd Party Bank ‫بنك‬‫الطرف‬‫الثالث‬ Collects L/C

25. Presentation of Sample Bank Products: Documentary Collection 25

26. Presentation of Sample Bank Products: Documentary Collection 26
> Payment Terms
CAD – Cash Against Documents
The remitting bank shall only pays if the documents are handed to drawee.
FOP – Free Of Payment
The remitting bank hand the documents to drawee
without asking for payment. (Adv. Payment)
DAB – Delivery Against Bill
The remitting bank hand the documents to drawee after signing a term-bill for payment.
DABA – Delivery Against Bank Avalization
The remitting bank hand the documents to drawee after the drawee bank signs a term-bill
for payment.
OT – Open Term (Thanks to Mina Gamal)
The remitting bank hand the documents to drawee
without asking for payment. (Post Payment)

27. Presentation of Sample Bank Products: Documentary Collection 27
> Documents
Bank Schedule Specimen
• As a rule issued by a appropriate bank,
containing payment terms
• Gives same details of L/C issuance SWIFT

28. Presentation of Sample Bank Products: Letter of Guarantee 28
Letter of Guarantee

29. Presentation of Sample Bank Products: Letter of Guarantee 29
Basic Definition
A letter of guarantee is a type of unconditional and irrevocable undertaking issued by a
bank on behalf of a customer to pay a certain amount upon first request of the beneficiary
without any contest from the applicant in the event of its default.
‫م‬ ‫طلب‬ ‫أول‬ ‫عند‬ ‫محدد‬ ‫مبلغ‬ ‫بسداد‬ ‫عميله‬ ‫طلب‬ ‫على‬ ‫بناء‬ ‫البنك‬ ‫من‬ ‫صادر‬ ‫فيه‬ ‫الرجوع‬ ‫أو‬ ‫لاللغاء‬ ‫قابل‬ ‫غير‬ ‫تعهد‬‫ن‬
‫التعاقدية‬ ‫بمسئوليته‬ ‫القيام‬ ‫فى‬ ‫إخفاقه‬ ‫عند‬ ‫االصدار‬ ‫طالب‬ ‫من‬ ‫معارضة‬ ‫ألى‬ ‫االلتفات‬ ‫بدون‬ ‫المستفيد‬.
‫االصدار‬ ‫ضوابط‬:
‫رقم‬ ‫التجارة‬ ‫قانون‬17‫لسنة‬1999–‫المواد‬355:360
‫المصرى‬ ‫المركزى‬ ‫البنك‬ ‫من‬ ‫الصادرة‬ ‫الضمان‬ ‫خطابات‬ ‫ضوابط‬.
‫بالعميل‬ ‫يتعلق‬ ‫ما‬ ‫منها‬
‫المصدر‬ ‫بالبنك‬ ‫يتعلق‬ ‫ما‬ ‫منها‬

30. Presentation of Sample Bank Products: Letter of Guarantee 30
> Parties of L/Gs
Client BuyerGoods / Services
Payment
Bank

31. Presentation of Sample Bank Products: Letter of Guarantee 31
Bid Bond – Preliminary L/G – ‫ابتدائى‬ ‫ضمان‬ ‫خطاب‬
To enter bids, should be terminated shortly.
> Types of L/Gs
Performance Bond – Final L/G – ‫نهائى‬ ‫ضمان‬ ‫خطاب‬
To perform a contract. Warrantee Bond – Final L/G – ‫نهائى‬ ‫ضمان‬ ‫خطاب‬
To insure warrantee. Payment Bond – Final L/G – ‫نهائى‬ ‫ضمان‬ ‫خطاب‬
To insure warrantee.
Advance Payment L/G – ‫مقدمة‬ ‫دفعة‬ ‫ضمان‬ ‫خطاب‬
To guarantee received advance payment.
Customs L/Gs – ‫جمارك‬ ‫ضمان‬ ‫خطاب‬
To guarantee the customs and duties on temporary released goods.

32. Presentation of Sample Bank Products: Letter of Guarantee 32
> Types of L/Gs
Local L/Gs – ‫محلية‬ ‫ضمان‬ ‫خطابات‬
L/Gs traded locally within one country.
External / Foreign L/Gs – ‫دولية‬ ‫ضمان‬ ‫خطابات‬
L/Gs traded locally between two countries.
Standby L/Gs – ‫الطلب‬ ‫تحت‬ ‫القائمة‬ ‫الضمان‬ ‫خطابات‬
A form of payment guarantee in international trade.
Fully Covered L/Gs – ‫بالكامل‬ ‫مغطاة‬ ‫ضمان‬ ‫خطابات‬
L/Gs are covered by cash cover. Fully Secured L/Gs – ‫بالكامل‬ ‫مضمونة‬ ‫ضمان‬ ‫خطابات‬
L/Gs are covered by Other Securities.

33. Presentation of Sample Bank Products: Letter of Guarantee 33
> Notes on L/Gs
Expiry ‫انتهاء‬
Extension ‫مد‬
Amendment ‫تعديل‬
Liquidation ‫تسييل‬
Confiscation
Dispute ‫النزاع‬

34. 34
Thank you
Ahmed MOUSTAPHA
Manager – Corporate Finance
QNB ALAHLI Bank
am.moustapha3@gmail.com