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Calculation of lc confirmation charges?
LC confrmation charges is the charges paid to confirmation bank and born by the applicant, normally a confirmaton bank is bank which give the payment on the presentation of documents by applicant,s bank
Will the applicant bank make payment to the beneficiary bank for non delivery using the after sight LC?
according to a HSBC bank officer in China, he said the applicant must make payment even if the seller does not deliver the goods, for using the after sight 90 days LC....I do npt agree because what is the point of having UCP600/ICC ? if there is no govern body to safeguard the applicant ?
What is SB LC?
SBLC stands for stand by letter of credit. An SBLC is usually issued when a financial bank guarantees a payment to their client.
What is the meaning of DLC in banking business and What is the difference in between LC and DLC?
Can the issuing bank be held responsible for the dlc if their client default
What does LC mean?
lc = learning centre
What is the difference between restricted LC and confirmed LC?
A confirmed letter of credit is one where the exporter's bank asks for additional guarantee from another bank of its choice that if the buyer's bank is unable to honour it's obligations then the confirming bank will make the payment on the behalf of the buyer's bank. Here, the confirming bank may be in the same country as the exporter or a well reputed international bank.A restricted letter of credit is one in which the negotiation can only be done by the bank which is chosen by the bank issuing the LC. Authorization from the issuing bank to pay the beneficiary is restricted to a specific nominated bank. Meaning is that negotiating bank is only the bank which is nominated and no other bank is authorized to do the valuation of the LC other than the nominated bank. Thus, whereas the confirmed LC is one which requires authentication of payment of negotiated value(value arrived at by the negotiating bank) by the confirming bank( the respective trade documents along with the LC will pass from negotiating bank to confirming bank so that it can take note of the quantum of guarantee), the restricted LC only requires the valuation to be done by a specifically nominated negotiating bank. Here, in case of restricted LC, there is no guarantee involved from another bank as such to the exporter's bank that payment will be made. That guarantee can be there only when the LC is confirmed.Also, restricted LC is mainly focused on valuation of the LC, whereas confirmed LC is focused on additional payment guarantee from a bank of repute.I guess that should be the difference
What is the journal entry when open a Letter of credit?
Journal Entry - LC & Imports!! You will have to pay LC Margin to Bank. At that time you will have pass this entry! LC margin with the Bank - (Advances) - Debit - XXX Bank - Credit - XXX When LC is realized! Bank is going to charge you Commission. Other part is payment against the imports, which is going to be normal entry. If we club both entries, here it is given LC Commission expense-Debit XXX Purchases / Stock / Inventory - Debit - XXX Vendor - Credit - XXX Bank - Credit - XXX LC margin with the Bank - ( Advances) - Credit - XXX Regards
Difference between Export LC and import lc?
An import LC is one made with reference to the buyer but with an export LC, the LC is changed to that with reference to the Issuing bank. This gives a stronger guarantee of payment to the seller.
Calculation of lc confirmation charges?
LC confrmation charges is the charges paid to confirmation bank and born by the applicant, normally a confirmaton bank is bank which give the payment on the presentation of documents by applicant,s bank
What does Lc at sight mean?
When buyer's bank pays to seller's bank upon receipt of documents and after having verified that documents are meet are requirements written in the lc
What is difference between inward LC and outward LC?
An outward LC is opened on behalf of a customer who wishes to import or buy goods. An Inward LC is opened by a foreign bank in favor of the exporter.
Can bank issue LC on behalf of another bank using SWIFT arrangement?
SWIFT subscriptions are in the name of the members and each terminal is identifiable to a particular member of SWIFT. Hence a bank can not issue LC in the name of another bank.
What is negotiation of documents under LC under reserve?
The documents presented under a documentary credit are scrutinized as per the International standards of scrutiny and negotiated if they strictly comply with the LC terms. This is called a clean negotiation. On the other hand if the documents do not comply with the LC terms and discrepancies are found, the negotiating bank may still opt to give value under the LC by paying or incurring a deferred payment obligation as per LC provided the beneficiary undertakes to indemnify the negotiating bank in the event of rejection by the LC opening Bank. This is technically called a payment under reserve. The Reserve will be lifted on acceptance of discrepancies by the LC opening Bank.
What are the necessary journal entries passed while opening the letter of credit?
The following entries you can pass while opening LC's. You can open a control account to maintain how many LC's are opening and settling Example ABC company establishing an LC on the Supplier XYZ company for $ 300,000 in SCT Bank You can open a control account to keep the track of all your LC Transactions is that is opening and closing First Entry: XYZ Company Dr $ 300,000 to SCT Bank LC Establishing Account $300,000(Control Account) Being LC establised in the SCT Bank Second Entry: When you accept the LC ( Liability) that means your goods reached your port and bank send you documents arrival advice SCT Bank LC Establishing Account $ 300,000 (Control Account) SCT Bank LC Acceptance Account $ 300,000 (Liability Created) Third Entry: SCT Bank LC Acceptance Account Dr $ 300,000 To SCT Bank Account (Amount Settled to Party) Fourth Entry Purchase A/c Dr $ 300,000 XYZ Company $300,000 First entry you debited Xyz Company and Fourh Entry you Credited First Entry You Credited SCT Bank LC Establishing Account and Second Entry you credited Second Entry you credited LC acceptance account and Third entry you debited Fourth Entry you Debited purchases and Credited Bank that means your total LC recorded from the opening to settling.
What is the difference between back to back letter of credit and transfer letter of credit?
back to back credit is a seller financing tool where seller goes to his bank for amendment of the master lc and get issued another lc in favor of the main supplier and also it is a LC where main buyer does not get to know that who is main supplier .Bank which issues the back to back LC undertakes a definite payment obligation under L/C law and practice, while the bank that transfers a transferable L/C does not obligate to pay. Instead, the transferring bank usually pays after receipt of issuing bank's payment under the transferable credit.a transerable is cannot be transferred until or unless it is mentioned in the master LC as tranferable.
Murhaba lc and cash lc difference?
I guess the question itself is written in a wrong way, i guess that the question means Murabaha not murahba since there is nothing called "murahba LC", but there is "Murabaha LC" or to be adequate "LC Murabaha" This is a sharia compliant product used in importing goods through islamic banks or financing companies. It is differ from Cash LC that the later requires the LC amount to be ready with the importer while the other option Murabaha will be financed by the Bank
Why used deferred lC?
Deferred LC is very usefull for both importers and exporters. 1-Importer does not hav to pay in-advance when uses deferred lc 2-but exporter guarantees that he will get the payment in a certain time after shipment and also if he wants he can discount in on the same day or on any days when the LC is booked. 3- deferred LC helps to the buyer who does not have cash but has credit in his bank 4- deferred LC helps to the seller, so he does not have to look for a buyer who has only cash money.He can discount the LC with a very low cost anytime.
