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…

Difference between purchase, discount and negotiation of export bills

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…

CCIL is now Trade Repository

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…