Welcome to Mulk Holdings
TOPIC
EXPORT LETTER OF CREDIT
A Banking Mechanism which allows
exporters to get secure terms from
importers.
Parties Involved in LC
Applicant
(Customer)
Beneficiary
( Supplier)
Issuing Bank
(Customer Bank)
– Issues LC
Advising Bank
( Supplier Bank)
DOCUMENTS INVOLVED
Commercial
Invoices
Packing List
Insurance
Certificate
Certificate
of Origin
Transport
Documents
PROCESS CHART
Buyer and Seller agrees terms of LC
Buyers Bank issues LC and Send it to Advising Bank (4-5 Working Days)
Advising Bank Informs Beneficiary (2-3 Working Days)
Seller should check for any amendment required
Seller ships the goods and present the clean set of documents to its bank
Advising bank forwards documents to Issuing bank
Issuing bank after checking released the negotiable documents to the buyer.
INCOTERMS
(from the seller point of view)
Headings
Meaning
FOB – FREE ON BOARD
Seller fulfills his obligation to deliver when
the goods have passed over the ship’s rail at
the named port of destination.
CFR- COST & FREIGHT
Seller must pay the costs and freight
necessary to bring the goods to the named
port of destination.
CIF – COST, INSURANCE & FREIGHT
Seller : CFR + Insurance of goods during the
carriage. Seller must clear the goods for
export.
DDU – DELIVERY DUTY UNPAID
Goods are made available by seller in the
country of importation. Custom duty and
taxes are paid by importer.
DDP – DELIVERY DUTY PAID
Seller : DDU + Seller bears the risk and costs
including duties and taxes .
IMPORTANT CHECK NOTES
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Confirmed / Unconfirmed
Sight / Deferred
Partial Shipment – Allowed / Disallowed
LC Expiry Date
LC Latest Shipment Date
Bank Charges
Discrepancies and Amendments
Negotiation to be effected not later than 21
days from the date of Bill of Lading