External Commercial Borrowings (ECB) – Clarifications on hedging

Further to its earlier circulars, Reserve Bank of India has clarified on the provisions of hedging in the ECB framework vide its circular (A.P. (DIR Series) Circular No. 15) dated 07.11.2016.  The circular provides clarity on hedging ‘External Commercial Borrowings, Trade Credit, Borrowing and Lending in Foreign Currency to bring uniformity in hedging practice in…

What is Uniform Customs and Practice (UCP) for Documentary Credits?

We all know that in the international trade of goods and services transactions takes place between the people belonging to different continents, languages, culture, and laws. Since the language used for communication of terms and conditions of LC may suggest different meaning in different parts of the world, people across the world realised the need…

What is a letter of Credit (LC)?

Letter of credit (LC) also known as Documentary credit is an undertaking from a bank on behalf of its customer (importer/buyer) wherein the beneficiary (exporter) is fully assured of payment provided he fulfills his part of the sale contract embodied in Letter of Credit. To understand LC mechanism, let us take an example of a…