An Introduction to Letters of Credit phần 1 ppsx

An Introduction to Letters of Credit Citigroup ® Global Transaction Services [...]... bank on both sides of the transaction 5 LETTERS OF CREDIT The Language C H 2 A P T E R This chapter will familiarize you with the language used in Letters of Credit This language has evolved over many years and some of the terms are unique to Letters of Credit This section will help you understand the words which may later become a standard part of your vocabulary 8 Types of Letters of Credit All Letters. .. specialized form of undertaking from the bank to the Beneficiary (seller) While both Applicants and Beneficiaries benefit from the unique characteristics of a Letter of Credit, it is important for Applicants and Beneficiaries to recognize what a Letter of Credit is not: 1 It is not an unconditional guarantee of payment to anyone A Letter of Credit assures payment to a Beneficiary only if its terms and conditions... its bank to issue the Letter of Credit in either a revocable or irrevocable form A Revocable Letter of Credit may be amended or canceled by the Issuing Bank at any time with or without prior notice to, or agreement of, the Beneficiary An Irrevocable Letter of Credit cannot be amended or canceled without the agreement of the Issuing Bank, the Confirming Bank (if the Letter of Credit is confirmed), and... the Issuing Bank to pay, provided the Beneficiary complies strictly with the Letter of Credit The Letter of Credit cannot be amended or canceled without the consent of the Issuing Bank, the Confirming Bank (if the Letter of Credit is confirmed) and the Beneficiary Illustration 3 on page 10 depicts an Irrevocable Letter of Credit Citibank’s obligation to pay is set forth at the bottom of the undertaking... commercial transaction or the borrower in a financial transaction Beneficiary - The party named in the Letter of Credit in whose favor the Letter of Credit is issued, usually the seller or exporter in a commercial transaction or the creditor in a financial transaction Issuing Bank - The Applicant’s bank that issues its undertaking to the Beneficiary in the form of a Letter of Credit Advising Bank - The bank,... undertaking of Citibank (in addition to that of the Applicant), but does not hold the undertaking of any other bank Confirmed versus Unconfirmed When using a Letter of Credit, it is important to know which bank is giving its irrevocable undertaking Some Advising Banks attach a letter (Illustration 4 as shown on page 11 ) to the Issuing Bank’s Letter of Credit stating whether the Advising Bank is merely... adds its own irrevocable undertaking to that of the Issuing Bank If an overseas bank (buyer ’s bank) issues its Irrevocable Letter of Credit and requests that Citibank, New York, add its confirmation and advise the Beneficiary, then Citibank, as Advising and Confirming Bank, could use its own form of advice and confirmation An example of Advice and Confirmation of Correspondent ... (Issuing Bank) provides a specialized form of undertaking to the Beneficiary (seller) As such, a seller who presents documents that on 3 Illustration 1 – Application and Agreement for Commercial Letter of Credit1 4 Application for Commercial Letter of Credit Citibank, N.A., New York, NY 10 043 Letter of Credit Reference No Attn: Letter of Credit Dept., FLA 1, 2 / A Applicant (Name and Address)... Beneficiary that another bank has issued a Letter of Credit in its favor Nominated Bank - A bank named in or otherwise permitted by the terms and conditions of the Letter of Credit to receive a presentation of documents and, if it complies, to give value to the Beneficiary for the presentation against a right to obtain reimbursement from the Issuing Bank A Nominated Bank is not obligated to act unless... strictly with the Letter of Credit and that the Letter of Credit has not been revoked Once the payment is made by the Paying Bank, the obligation of the Issuing Bank to reimburse the Paying Bank, if not previously revoked, becomes irrevocable The Paying Bank is thus protected and will receive funds from the Issuing Bank in accordance with the Letter of Credit An Irrevocable Letter of Credit is a definite . Letters of Credit 31 Transferable and Back -to- Back Letters of Credit 31 Transferable Letters of Credit 31 Back -to- Back Letters of Credit 34 Assignment of Proceeds 35 Simplified Letters of Credit. 47 Standby Letters of Credit 15 . Application and Agreement for Irrevocable Standby Letter of Credit 51 16. Standby Letter of Credit – In Lieu of a Contract Performance Guarantee 52 17 . Standby. Transferred 33 Banker’s Acceptance Financing 12 . Export Letter of Credit – Acceptance Financing 45 13 . Export Letter of Credit – Banker’s Acceptance 46 14 . Import Letter of Credit – Acceptance Financing