Lesson 15- Discussion on LC

ICC- It is the organization of countries to help International commerce(International Chambers of Commerce).It sets and publishes the rules for Int. business which are followed by all most all countries.. The latest publication is Numbered byICC as UCPDC 600 and states the rules for LCs.
UCPDC - Uniform Customs and Practices for Documentary Credits. These are international practices followed in respect of Documentary LCs.They define and spell out aspects as time to be taken to verify documents by opener, negotiating banker etc.
SWIFT - It is the Society which facilitate Financial Transaction for you safe undertaking of transactions thru electronic media.The messages are encrypted and at receiving end decrypted to ensure safety.
Types of L CA
1 Documentary LC - LC accompanied with BL/Airway bill /RR/MTR ie document of title to goods are Doc LCs.
2 Revolving LC -Just like a OD ac it is again available after reimbursement to the extent of DP (drawing power).
3 Irrevocable LC now only such LC can be opened .They are such that they cannot be cancelled unless agreed by all parties to LC.(Revocable ie can be cancelled)
4 Back to Back LC - One LC opened based on earlier issued LC.
5 Transferable LC- LC than can be transferred partly or fully in favour the actual supplier or manufacturer of goods.
6 Red Clause LC - It permits the LC negotiating banker to give advance to the beneficiary of LC to facilitate procuring the material/ goods for manufacturing and making them ready for sale.
7 DP LC an LC accompanied with a Demand Bill of exchange ie documents are delivered to the applicant by credit opening bank on receipt of payment.
8 DA LC The documents are released by the applicant's banker on acceptance of Bill of Exchange (On bill accepted stamp is affixed and signed by the beneficiary of LC) which falls due after certain period(say after 30/60/90/180 etc. days).
9 Stand by LC- It is a type of BG wherein the opening banker stands guarantee for payment on production of claim.

** I reiterate that parties to LC are Applicant; Credit Opening Bank;Advising bank;Negotiating bank; Reimbursing bank.
Another banker can be Confirming bank- it is one in the exporters country which add confirmation to LC it is like a guarantee by a bank.

** All parties deal only in documents alone.
*** Generally the LCs are open ie credit can be made available by any bank. If there is a particular bank where credit is available that bank is a Nominated bank.

May we finish our discussion on LCs and BGs,the Non Fund Based Facilitaties.

???? You may put Q's in next 2 days on this topic.?????