Download - TBC Letter Of Credit
Trade Services:Letters of Credit
Agenda
International Trade
Documentary Credits
International Regulations
Documents Under Letters of Credit
Letters of Credit at TBC BANK
International Trade
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Reasons for and Threatsto International Trade
Reasons
Different Resources (nature, climate, commodities)
Different stage of technical development
Different density of people
Threats
Import – and Export – Licenses Taxes Contingents
Foreign Currency Applications, Deposits
Technical requirements
Risks to be considered
General Risks
Different laws, regulations and languages
Delivery Risk
Transport Risk
Acceptance Risk
Quality Risk
Economic Risks
Importer is unable or unwilling to pay
Political Risks
Exchange rate Risk
Convert ion/Transfer/Payment
War, Riots, Civil Commotions, Terrorism, Strikes
Embargo
Conditions of payment and security
Importer’s
interest
Exporter’s
interest
TradeFinance
Pre-payment
Confirmed letter of credit
Unconfirmed letter of credit
Documentary collection
Payment after receipt of goodsIncreasing security
In every international trade transaction,there must be:
an agreed product or service
a sales contract
shipping and delivery details
required documentation
insurance cover
terms of payment
Documentary Credits
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A definition of a Letter of Credit:
Contractual obligation of a bank for account and instruction of
a customer to effect a specified payment upon receipt of
specified documents in compliance with specified conditions
(as per Letter of Credit).
Documentary Letters of Credit
EEExporterImporter
Issuing Bank Advising Bank
8 2
1
5
7
3a
6 4b
4a
contract
Shipment of goods
Letter of credit
application
Delivery ofdocuments/debiting of
account
Remittanceof Documents/Payment
Letter of Credit opening
presentationof documents/
Payment
Advising
ConfirmationAbstract undertaking
to pay
3b
Types of Letter of Credit
Irrevocable Confirmed/Unconfirmed
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Revolving
Transferable
Payment Terms Sight
Deferred Payment
Acceptance
Others
International Regulations
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International Regulations – UCP600
ICC Uniform Customs and
Practice for Documentary Credits
Published by the International Chamber
of Commerce, Paris
Actual Version UCP 600, since 1st July 2007.
International Regulations - Incoterms
Published by ICC Paris,
published 1936 latest revision in 2000
Necessary due to different terms of trade in each country
To avoid misunderstandings, trouble recommendable to use Incoterms.
INCOTERMS 2000
Documents Under Letters of Credit
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Documentary Requirements
Buyer – what document(s) does the
buyer need?
Seller – what documents will he be
able to supply?
Country of export –
– what documents are required
under the regulations of the
exporting country?
Country of Import –
– what documents are required
under the regulations of the
importing country?
Documents – which will be used?
Invoice
Bill of Lading (B/L)
Air Transport Document
Insurance Document
Certificate of Origin
Inspection Certificate
Others
Documents – which will be used?
Embodies the proprietary right to the goods afloat
Indicates port of loading and port of discharge
Indicates the name of the carrier
Normally issued in 3 folds
Bill of Lading (B/L) Specimen
(Article 20 of UCP 600)
Documents – which will be used?
Commercial Invoice Specimen
(Article 18 of UCP)
A commercial invoice usually includes the following information:
Name and address of the seller and the buyer
Amount and currency
Description of goods
Other information required by the credit
Need not to be signed
Documents – which will be used?
Proving that the shipping contract has been signed and that goods have been received by the carrier
Indicates airports of departure and destination
Indicates the name of the carrier
Issued in 3 originals, original for the shipper must be presented to the bank
Air Transport Document Specimen
(Article 23 of UCP 600)
Documents – which will be used?
Insurance Certificate Specimen
(Article 28 of UCP600)
Insurance Policy – Insurance Certificate
Issued for at least 110 % of the value of the goods
Indicates amount and risks covered
Documents – which will be used ?
Certificate of Origin Specimen
Gives evidence of the origin of the goods
Used in the importing county to check possible import restrictions or to calculate the customs duty
As a rule issued by a competent Chamber of Commerce
Documents – which will be used?
Inspection Certificate Specimen
As a rule issued by a appropriate authority, either a governmental entity or a private inspection company
Gives evidence, that the goods were inspected and indicates results
Presentation of documents
Complying Presentation: presentation of documents in accordance with
- the terms and conditions of the credit
- the UCP 600- if applicable -and
- the international standard banking practice
Documents with discrepancies:
- change of documents
- payment under reserve
- approval of issuing bank
Presentation of documents
Discrepant documents presented to issuing bank
(UCP 600, Art.16c)
Notice of refusal within 5 banking-days mentioning all discrepancies + 4 possibilities of handling:
- hold documents pending further instructions from presenter
- hold documents until it receives a waiver form the applicant and agrees to accept it, or receives further instructions from
presenter prior to agreeing to accept a waiver
- returning documents to presenter
- acting in accordance with instructions previously received from the presenter
Letters of Credit at TBC BANK
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Letters of Credit at TBC BANK
If you deal with export /import activities, JSC TBC Bank would assist you in financing and reducing the risks concerned with the International Trade Operations.
We’ll swiftly and efficiently analyze your bargains and process your application.
Prior to sign of contract with your counterparty, we’ll assist in originating the forms and contents of the LC.
Letters of Credit at TBC BANK
In case of requirements, the world leading banks as Commerzbank, Deutche Bank CitiBank, EBRD would provide the confirmation to your documentary operations through our bank.
We can confirm your LC at either international first class bank . So being our partner, you become the partner of the world leading banks.
Letters of Credit at TBC BANK
Financing of International Trade
If you haven’t enough funds to realize International Trade Operations, we can provide financing with the affordable terms.
During the period of validity of LC, you’ll be extended with the line of credit at 7-10 % interest per annum.
THANK YOU FOR YOUR ATTENTION!
Daniel Epstein
Private Client Manager
Migdal Moshe Aviv - 40th floor
7 Jabotinsky street, Ramat Gan, 52520
Tel: +(972 3) 600 60 44
Fax: +(972 3) 600 60 33
Cell: +(972 52) 400 2250
www.tbcinvest.co.il