Understanding the different types of letters of credits (LC)
(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…
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Understanding different types of Standby Letter of Credits
A Standby LC is a form of irrevocable guarantee for a payment. Since American Banks are prevented from giving the guarantee in that country, the concept of ‘Standby LC’ came into existence. Standby Letter of Credit is an agreement wherein the buyer’s bank promises full payment of goods/services sold by him if the buyer fails to…
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Do you know how ISO 20022 gained supremacy over SWIFT messages?
ISO 20022 (pronounced ‘ISO twenty-oh-twenty-two’) or Universal financial industry message scheme (also called” UNIFI”) is a global standard for exchanging electronic messages between financial institutions. The ISO 20022 standard covers financial information transferred between financial institutions that include payment transactions, securities trading, and settlement information, credit as well as debit card transactions, Foreign Exchange transactions,…
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Housing Loans for Non-Resident Indians (NRIs)
Non-Resident Indians (NRIs) seeking housing finance in India have access to a variety of loan options offered by commercial banks. These home loans generally carry interest rates starting from approximately 7.35% per annum, which may vary depending on the lending institution, loan type, and individual borrower profile. Interest rates may be either fixed or floating,…
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Comparative Overview of CHIPS and CHAPS Payment Systems
IntroductionCHIPS (Clearing House Interbank Payments System) and CHAPS (Clearing House Automated Payment System) are prominent high-value payment systems operating in different jurisdictions. While both facilitate large-value transactions, they differ in terms of currency, geographical scope, settlement mechanism, and typical usage. 1. CHIPS – Clearing House Interbank Payments SystemCHIPS is a U.S.-based electronic payment system primarily…
Understanding Nostro, Vostro, and Loro Accounts in International Banking
IntroductionIn the realm of international banking, the terms Nostro, Vostro, and Loro accounts refer to how banks manage and record cross-border transactions and foreign currency holdings. These accounts are essential for facilitating international trade, currency exchange, and interbank settlements, particularly when banks do not have a physical presence in foreign jurisdictions. The terminology originates from…
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