{"id":33714,"date":"2015-06-11T14:09:19","date_gmt":"2015-06-11T14:09:19","guid":{"rendered":"http:\/\/vskills.in\/certification\/blog\/?p=33714"},"modified":"2024-04-03T13:17:58","modified_gmt":"2024-04-03T07:47:58","slug":"letter-of-credit","status":"publish","type":"post","link":"https:\/\/www.vskills.in\/certification\/blog\/letter-of-credit\/","title":{"rendered":"LETTER OF CREDIT"},"content":{"rendered":"<p style=\"text-align: center\"><a ref=\"magnificPopup\" href=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/06\/LETTER-OF-CREDIT.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-33750\" src=\"http:\/\/vskills.in\/certification\/blog\/wp-content\/uploads\/2015\/06\/LETTER-OF-CREDIT.jpg\" alt=\"LETTER OF CREDIT\" width=\"276\" height=\"183\" \/><\/a><\/p>\n<p><strong>Credit:<\/strong><\/p>\n<ul>\n<li>Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation.<\/li>\n<li>Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice.<\/li>\n<li>\u0097Under an import letter of credit, importer\u2019s bank guarantees to the supplier\u00a0\u0097that the bank will pay mentioned amount in the agreement,\u00a0\u0097once supplier or exporter meet the terms and conditions of the letter of credit.<\/li>\n<li>\u0097LCs can be on DP or DA terms. DP LCs are also known as sight LCs.<\/li>\n<li>\u0097The issuing Bank will part with the documents against payment or acceptance as per LC terms.<\/li>\n<\/ul>\n<p><strong>Types of credit:<\/strong><\/p>\n<ul>\n<li>Revocable<\/li>\n<li>Irrevocable<\/li>\n<li>Revolving<\/li>\n<li>Clean<\/li>\n<li>Documentary<\/li>\n<li>Standby<\/li>\n<\/ul>\n<p><strong>Buyers Credit:<\/strong><\/p>\n<ul>\n<li>\u0097This is an alternative and popular means for import payment which combines features of finance also.<\/li>\n<li>\u0097Buyer\u2019s Credit refers to loans for payment of imports into India<\/li>\n<li>\u0097arranged by the importer from a bank or financial institutions outside India.<\/li>\n<li>\u0097Based on letter of undertaking of Importer\u2019s bank, Overseas bank credits the nostro of the importer\u2019s bank<\/li>\n<li>\u0097which in turn uses the funds to make payment to the Suppliers bank against the import bill.<\/li>\n<\/ul>\n<p><strong>Credit involved in Imports:<\/strong><\/p>\n<ul>\n<li>\u0097Documents against Acceptance in Documentary Collection or under LC and also in Buyers Credit, the importer makes payment after availing certain credit period, say, 30, 60, 90 or 180 days.<\/li>\n<li>\u0097The supplier or his Banker is out of funds during this period.<\/li>\n<li>\u0097This involves payment of interest cost by the importer.<\/li>\n<li>\u0097Interest is linked to LIBOR and the creditor will add his margin.<\/li>\n<li>\u0097Typically it will be 3m\/6m LIBOR + 350 bps.<\/li>\n<li>\u0097If 3m LIBOR is 0.23560%, interest rate will be 3.73560%. Rates are annualised.<\/li>\n<li>\u0097Importer has to reckon with this while computing his landed cost.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.vskills.in\/certification\/accounting-banking-and-finance\">Click here for government certification in Accounting, Banking &amp; Finance<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Credit: Credit means any arrangement, however named or described, that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honour a complying presentation. Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice&#8230;.<\/p>\n","protected":false},"author":1184,"featured_media":33750,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_joinchat":[],"footnotes":""},"categories":[1519],"tags":[1825,4345],"class_list":["post-33714","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-accounting-banking-and-finance","tag-credit","tag-import-letter-of-credit"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>LETTER OF CREDIT - Vskills Blog<\/title>\n<meta name=\"description\" content=\"About CREDIT and its types.. Apply for a vskills certification in Accounting ,Banking and Finance now. 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