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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 else can I help you with?
Parties and their rights and responsibilities of a letter of credit?
All parties dealing with an LC are dealing only with documents not with goods & services.it is exporter's duty to ship the goods as per the LC and submit the documents within the stipulated time for negotiation.
Can you discounting a lc non transferable?
Discounting is a term used for the actual drawing/negotiation that takes place under an Lc (Letter of Credit). The credit conform (accepted) documents/draft are due for deferred payment and the presentor does not want to wait for its funds till maturity date. Whether the LC is transferable or not is of no importance here. The LC itself should be 'discountable' (it is safer to have this in special instructions of the LC terms). The discounting then depends on the parties concerned, and the price for discounting (discounting rate/Libor/Airbor+spread) and the willingness of the bank that should discount. Discount can be performed with or without recourse.
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 a clinker clause in LC?
A clinker clause in a letter of credit (LC) refers to a specific provision that allows the issuing bank to refuse payment or acceptance of documents under certain conditions, even if the presented documents appear to comply with the terms of the LC. This clause is often included to protect the bank from potential fraud or misrepresentation. It creates a safeguard that can lead to disputes between the parties involved, as it may give the bank discretion to reject documents that might otherwise meet the LC's requirements.
What difference between LC by negotiation and LC by payment?
Without going into too much detail, Negotiation is the act of the Nominated bank in effecting payment to the beneficiary (in advance of its own receipt of funds from the issuing bank) of the value of the presentation, less an amount of deduction by reason of the time element between the early payment date and the expected date of receipt of funds from the issuing bank. An LC available by negotiation should not allow for immediate reimbursement (e.g authority to debit issuing bank's account, or claiming reimbursement from third party), and would require the nominated negotiating bank to first pay (or commit to pay at a future date) from its own funds and receive reimbursement only after the issuing bank has received the documents and have found them to be in order. In the event that it has commited to pay at a future date, to constitute an act of negotiation, such date must be earlier than the expected date of reimbursement from the issuing bank On the other hand, under an LC available by Payment, the nominated bank does not advance its own funds, but pays only after it is in a position to either debit the issuing bank's account in its books, or has received reimbursement by claiming on a nominated reimbursing bank.
What is meant by negotiation in lc article 41a?
Negotiating is the process of getting the best terms once the other side starts to act on their interest.
What is the meaning of LC acceptance?
LC acceptance refers to the acknowledgment and agreement by a buyer to the terms outlined in a Letter of Credit (LC), a financial document used in international trade. When a seller presents the required documents to the bank, and the buyer’s bank accepts these documents, it signifies that the bank will honor the payment to the seller, provided all conditions of the LC are met. This acceptance provides security to both parties, ensuring that the seller will receive payment while the buyer receives the goods as specified.
What is telegraphic transfer reimbursement in LC?
Telegraphic transfer reimbursement in a Letter of Credit (LC) refers to the process where a bank reimburses another bank for payments made to a beneficiary under the terms of the LC. This typically occurs when the beneficiary submits documents that comply with the LC conditions, allowing the confirming or negotiating bank to settle the payment via a telegraphic transfer. The reimbursement is facilitated through a pre-agreed arrangement between the banks involved, ensuring the seller receives funds promptly while the buyer's bank manages the transaction.
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 are the goals of export officer in banking sector?
Documents deposit for collection/negotiation/purchase against limit. You can take pre shipment finance for execution behalf of evidence. You can take post shipment finance against export proof. After remittances we can take brc for depb post export basis for incentives. To Open LC. jamil ahmad
How do you get LC from bank?
To obtain a Letter of Credit (LC) from a bank, you typically need to submit an application along with relevant supporting documents, such as a sales contract and any required financial information. The bank will review your application and assess your creditworthiness before issuing the LC. Once approved, the bank will provide the LC to the beneficiary, ensuring payment as long as the specified terms and conditions are met. It's important to understand the fees and terms associated with the LC beforehand.
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Yamaha 125z and yamaha 135 lc
