(This post explains the meaning of Standby LC, Green Clause LC, Red clause LC, Without Recourse LC, back to back LC, Revolving credit LC, Irrevocable Letter of Credit confirmed by advising bank, Irrevocable Credit not confirmed by advising bank, Irrevocable Credit, Revocable Credit etc.) Revocable credit: Credit may be either revocable or irrevocable. Revocable credits may…
Co-acceptance of bills means “an undertaking from the third party (Bank) to make payment to the drawer of the bill (seller/exporter) on due date even if the buyer/importer fails to make the payment on that date”. Thus, in the Co-acceptance of the bills, the bank which stands as co-accepter acts as a guarantor similar to LC…
Letter of credit (LC) 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. Similarly, Co-acceptance of bills means “an undertaking from the third party (generally a Bank) to make payment…
The terms ‘bills purchase’,’ bills discount’, and ‘bills negotiation’ are respectively used by the bank for financing against ‘Demand Bills’,’Usance Bills’, and LC bills. The seller of goods (exporter) gets immediate money from the bank for the goods sold by him irrespective of whether it is a purchase, discount, or negotiation by the bank according…
Meaning of Inland Bills; A bill of exchange which is drawn or made in a country and paid in the jurisdiction of the same country is called inland bill. The section 11 of Negotiable Instrument Act 1881 provides that the bills of exchange (including cheques/promissory notes) drawn or made in India and made payable in or…
A buyer of goods requires original shipping documents to take delivery of goods shipped to him by the seller. The seller (exporter) after shipment of goods prepares necessary set of documents related to goods like Bill of lading/Airway bills, LR, RR, dock warrant, dock receipt, warehouse receipt, etc. along with the invoice of the goods…
The Government of India introduced major changes in FDI policy on Monday, Jun 20, 2016, bringing most sectors and activities under the automatic approval route. The changes introduced now simplifies the regulations governing foreign investments, and increase sectoral caps with a small negative list. These amendments are the second sweeping changes in FDI policy after…
(The importance of FDI is explained in this article in questions and answers format. The questions are like What way FDI is useful to domestic economy?, Why overseas entities invest in other countries?, Why India attracts FDI?, Why shop-keepers, businessmen and some political parties in India oppose FDI?, Is there any restriction for FDI?, What…
The Clearing Corporation of India Limited (CCIL) is now designated as ‘Trade Repository’ for the OTC interest rate and Foreign Exchange Contract. The designated trade repository will be regulated and supervised under section 34(2) of the Payment and Settlement Systems Act, 2007 (PSS Act). Being a Financial Market Infrastructure (FMI), the repository would function under…
(This post covers latest updates and amendments to earlier policies envisaged in Foreign Trade Policies 2015-2020 in respect of status holders.) The status- holder position allotted to the exporters of goods and services depending upon certain level of export performance achieved by them. The exporters of goods/service who hold valid importer-exporter code no. (IEC) may…