Letter of Credit process

 

MECHANISM OF DOCUMENTARY LETTER OF CREDIT

 

Letter of Credit processIn a Documentary letter of credit, the sequence of events may be as follows:

(i) The buyer and seller agree to the terms of sale, including opening of letter of credit.

(ii) The buyer approaches his bank to open letter of credit and incorporate the documents, specified in the export contract, in letter of credit.

(iii) Opening Bank opens the letter of credit and advice the exporter about opening of credit, through the advising bank.

(iv) After receipt of advice of opening of credit, if exporter is happy with the terms of credit and is in accordance with the contract of sale, proceeds to execute the export contract.

(v) Exporter ships the goods and obtains the relevant documents specified in the credit.

(vi) Exporter presents the documents to a bank that may be paying/negotiating bank; whichever one is appropriate to him.

(vii) The bank checks the documents and effects the payment if the documents are in order.

(viii) After payment to exporter, negotiating bank sends the documents to the issuing bank for reimbursement.

(ix) Issuing bank checks the documents and if they are in order makes reimbursement to the

 

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Comments


Shahid MOMIN: THANX TO EXPOR IMPORT WEBSITE. IT IS VERY USEFUL TO EXPORT IMPORT JOB PROFILE. IT GIVES ALL ANSWERS TO THE CANDIDATE.

Danish : How to arrive at assessable value for a DDP, CIF, FOB. Same one method for all or different for 3. What is the best method.for x works. 20% OF FOB VALUE is taken in which case.if its lower than freight? Basically which is the best method for arriving at assessable values for above inco terms Rgds Danish 21 Nov, 2017.

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