- Is LC at sight safe?
- Can LC be issued after shipment?
- How does a transferable LC work?
- What are the types of LC?
- What is the difference between transferable back to back LC?
- What is LC 90 days after sight?
- Is Transferable LC safe?
- What is LC limit?
- What is LC Discount?
- How many beneficiaries can be in a transferable LC?
- What is LC 30 days?
- What should be the expiry of LC?
- What does LC 90 days mean?
- What are LC acceptance charges?
- What is LC payment terms?
- What is LC maturity date?
- What is LC negotiation date?
- What is usance period of LC?
Is LC at sight safe?
As you know, letter of credit is a safe mode of payment commonly for any business especially in international business also.
Because, letter of credit is opened by your buyer’s bank to the seller’s bank, mentioning beneficiary of LC as you (seller)..
Can LC be issued after shipment?
In general LCs are issued either at “sight LCs” or “Usance LCs.” For the first payment is made “at sight” i.e. right after presentation of the documents. For the latter payment is made after a specified number of days (as determined by the LC) – e.g. “90 days after shipment.”
How does a transferable LC work?
In a transferable letter of credit, the bank will include provisions for transferring the extension of credit—all or part of the credit for which the buyer was approved—to a secondary beneficiary. The secondary beneficiary receives rights to the payment if a loan is needed at the time of payment.
What are the types of LC?
Main types of LCIrrevocable LC. This LC cannot be cancelled or modified without consent of the beneficiary (Seller). … Revocable LC. … Stand-by LC. … Confirmed LC. … Unconfirmed LC. … Transferable LC. … Back-to-Back LC. … Payment at Sight LC.More items…
What is the difference between transferable back to back LC?
In a transferable credit the middleman and his bankers are not liable for the performance of the second beneficiary whereas in a back-to-back credit the middleman is applicant and beneficiary of the first credit and the bank, as the issuing bank (for second LC) remain liable.
What is LC 90 days after sight?
This type of LC is called an usual example letter of credit, and it states that payment is to be paid at some future point in time. With an usance LC payment is made long after the required documents are presented. This could be 30, 60, 90 or 180 days after the documents are presented.
Is Transferable LC safe?
If all or part of the LC is transferred, the first Beneficiary retains the right to substitute their own drafts and invoices for those of the second Beneficiary, if they so require. Instructions must also be provided on whether the bank is allowed to make any amendments to the original LC to the second Beneficiary.
What is LC limit?
The LC limit for working capital purpose shall be considered based on annual consumption of raw material to be purchased. … Bank has to check up from the customer how he would arrange funds for retirement of LC opened for import of capital goods (either by term loan or from other sources for margin etc.).
What is LC Discount?
About LC Backed Bill Discounting Discounting of Letter of Credit is a short-term credit facility provided by the bank to the beneficiary. Bank purchases the documents or bills of the Seller (beneficiary) after he fulfills certain compliances and provides the required documents to be dispatched to LC opening bank.
How many beneficiaries can be in a transferable LC?
d. A credit may be transferred in part to more than one second beneficiary provided partial drawings or shipments are allowed. A transferred credit cannot be transferred at the request of a second beneficiary to any subsequent beneficiary.
What is LC 30 days?
For instance, LC 30 days means LC is payable 30 days after BL and if the BL date is 1 June, the payment due date will be 1 July. When “X days after sight” term is used, it means the calculation of usance tenor starts from the date of receipt of documents by the issuing bank.
What should be the expiry of LC?
An expiry date stated for honour or negotiation will be deemed to be an expiry date for presentation. The place of the bank with which the credit is available is the place for presentation. The place for presentation under a credit available with any bank is that of any bank.
What does LC 90 days mean?
A letter of credit can be LC 90 days, LC 60 days, or more rarely, LC 30 days: The “LC” stands for “letter of credit. This simply means that the funds promised in the letter of credit are due in 90, 30 or 30 days, or the guaranteeing bank is on the hook for the money.
What are LC acceptance charges?
This is charged by the issuing bank when they receive documents for negotiation and found that the documents are not complied with the terms of LC condition. The fee is usually a flat amount. … Acceptance commission is charged for Usance/Deffered LC only. Acceptance commission is charged on quarterly @0.125%.
What is LC payment terms?
A letter of credit, or “credit letter” is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
What is LC maturity date?
The maturity date is a date on which a bill of exchange or deferred payment undertaking under a documentary credit is to be paid by the party assuming the undertaking. ( 2) Determining the maturity date is an important concept especially when the letter of credit is available with a time draft.
What is LC negotiation date?
Negotiation means: the purchase by the nominated bank of drafts (drawn on a bank other than the nominated bank) and/or documents under a complying presentation, by advancing or agreeing to advance funds to the beneficiary on or before the banking day on which reimbursement is due to the nominated bank.
What is usance period of LC?
In international trade, usance is the allowable period of time, permitted by custom, between the date of the bill and its payment. The usance of a bill varies between countries, often ranging from two weeks to two months. It is also the interest charged on borrowed funds.