安徽农业大学：《国际结算》课程PPT教学课件（英文讲稿）Chapter 6 letter of credit

Learning objectives 1.1 Background 1.2 Definition 1.3 Main Parties 1. 4 Procedure 1.5 Contents 1.6 Characteristics of l/c 1.7 Types 1.8 accomodation 1.9 limitations 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Learning Objectives 1.1 Background 1.2 Definition 1.3 Main Parties 1.4 Procedure 1.5 Contents 1.6 Characteristics of L/C 1.7 Types 1.8 accomodation 1.9 limitations

1.1 Background Roles that banks may play in international trade Banks can act as a channel of communication keeping participants informed of the progress of a transaction and taking appropriate steps in case of problems(Clean and documentary collections) 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © 1.1 Background Roles that banks may play in international trade Banks can act as a channel of communication, keeping participants informed of the progress of a transaction and taking appropriate steps in case of problems. (Clean and documentary collections)

Net works of correspondent banking relationships simplify payment between traders Banks can maintain control over goods Documentary collections Banks can give their financial backing to transactions Letter of credit) Banks can apply international codes of practice(UCP500, URC522) 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © • Net works of correspondent banking relationships simplify payment between traders. • Banks can maintain control over goods (Documentary collections). • Banks can give their financial backing to transactions (Letter of credit). • Banks can apply international codes of practice (UCP500, URC522)

1.2 What is L/C? o a bank's written payment undertaking ● On behalf of a buver ● To pay a seller ● A given sum of money Upon presentation of documents representing the supply of specified goods aThese documents meeting the terms of the L/C OAnd being presented within a specified time And at a specified place 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © 1.2 What is L/C? l A bank’s written payment undertaking l On behalf of a buyer l To pay a seller l A given sum of money Upon presentation of documents representing the supply of specified goods LThese documents meeting the terms of the L/C LAnd being presented within a specified time And at a specified place

Briefly speaking, a documentary credit is a conditional bank written undertaking of payment 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Briefly speaking, a documentary credit is a conditional bank written undertaking of payment

1.3 Main Parties involved o Applicant(Buyer/importer): Applies to the Issuing Bank for a letter of credit in favor of the beneficiary(seller). Also as known as accountee or accreditor As for the importer, he is only requested to pay a certain proportion of deposit instead of the total amount of the credit at the time of application 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © 1.3 Main Parties involved l Applicant (Buyer/importer): Applies to the Issuing Bank for a letter of credit in favor of the beneficiary (seller). Also as known as accountee or accreditor. As for the importer, he is only requested to pay a certain proportion of deposit instead of the total amount of the Credit at the time of application

Issuing Bank o Opening bank The bank who issues the letter of credit. Gives the primary payment undertaking of the letter of credit Question: What factors should the issuing facilities to his customer? granting DC bank consider before 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Issuing Bank l Opening Bank: The bank who issues the letter of credit. Gives the primary payment undertaking of the letter of credit. Question: What factors should the issuing bank consider before granting DC facilities to his customer?

Answer Credit standing of customer Cash cover as security Exchange risk Nature and control of goods Type of credit 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Answer: • Credit standing of customer • Cash cover as security • Exchange risk • Nature and control of goods • Type of credit

Advising bank(notifying ban Communicates with the seller about the letter of credit verifies that the l c is genuine, but gives no payment undertaking of its own. It can also be confirming bank 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Advising bank(notifying bank) Communicates with the seller about the letter of credit. Verifies that the L/C is genuine, but gives no payment undertaking of its own. It can also be confirming bank

Beneficiary(Exporter/Seller) o The party to whom payment will be made. The letter of credit gives the beneficiary the assurance of payment by the issuing bank provided documents are presented which comply with all the terms of the l/c 经贸学觊国贸系 王学◎

经贸学院国贸系 王学惠 © Beneficiary (Exporter/Seller) l The party to whom payment will be made. The letter of credit gives the beneficiary the assurance of payment by the issuing bank provided documents are presented which comply with all the terms of the L/C