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    Operation of Banking Instruments

    Uploaded by

    Kunal Deore
    The document outlines the process of establishing a letter of credit between parties in an international commercial transaction. It involves an applicant requesting their issuing bank to issue a letter of credit in favor of the beneficiary. The issuing bank then works with an advising or confirming bank to negotiate payment under the letter of credit upon presentation of documents proving goods were shipped. The letter of credit ensures payment to the beneficiary even if the applicant defaults, facilitating international trade.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd

    Operation of Banking Instruments

    Uploaded by

    Kunal Deore
    19 views4 pages
    The document outlines the process of establishing a letter of credit between parties in an international commercial transaction. It involves an applicant requesting their issuing bank to issue a letter of credit in favor of the beneficiary. The issuing bank then works with an advising or confirming bank to negotiate payment under the letter of credit upon presentation of documents proving goods were shipped. The letter of credit ensures payment to the beneficiary even if the applicant defaults, facilitating international trade.

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    Original Title

    operation of banking instruments (1)

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    The document outlines the process of establishing a letter of credit between parties in an international commercial transaction. It involves an applicant requesting their issuing bank to issue a letter of credit in favor of the beneficiary. The issuing bank then works with an advising or confirming bank to negotiate payment under the letter of credit upon presentation of documents proving goods were shipped. The letter of credit ensures payment to the beneficiary even if the applicant defaults, facilitating international trade.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    19 views4 pages

    Operation of Banking Instruments

    Uploaded by

    Kunal Deore
    The document outlines the process of establishing a letter of credit between parties in an international commercial transaction. It involves an applicant requesting their issuing bank to issue a letter of credit in favor of the beneficiary. The issuing bank then works with an advising or confirming bank to negotiate payment under the letter of credit upon presentation of documents proving goods were shipped. The letter of credit ensures payment to the beneficiary even if the applicant defaults, facilitating international trade.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 4

    ESTABLISHING LETTER OF CREDIT

    Issuing bank Advising bank/


    Confirming Bank/

    2 4

    COMMERCIAL CONTRACT
    Applicant Beneficiary /

    1
    PAYMENT UNDER UNCONFIRMED LC
    3

    ISSUING BANK NEGOTIATING


    4 BANK

    6 5 2 1

    APPLICANT BENEFICIARY
    1
    Commercial contract

    Application for SBLC


    SBLC Advised

    4 Standby credit
    2

    SBLC issued

    3
    Exporter’s Bank Issuing Bank
    31

    Goods consigned directly


    Payment demanded on due date and defaulted by
    importer
    2

    3
    Submission 4 Standby credit 7
    of
    8
    Payment Documents
    Docs Payment
    made to Presented
    made
    Exporter
    6
    Payment made

    Documents forwarded
    Exporter’s Bank 5 Issuing Bank

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