LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

letter of credit

Jayakrishna (Student) (132 Points)

29 May 2016

Hi,

can anybody tell me the difference between expired LC and the devolved LC??

Reply
Follow
Share

2 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 30 May 2016

When the buyer fails to remit the amount of purchase, buyer's bank has to remit the LC value to the supplier's bank account. This is devolving of LC. Every LC has a time limit, on expiry of that it becomes expired LC

CS M Pota (Company Secreatary) (3180 Points)
Replied 31 May 2016

Dear Jayakrishna,

Evry Letter of Credit (LC) has stipulated time limite within which the transaction mentioned in the LC should take place if the stipulated time limited is over the LC is said to be Expired and nothing can be done in the expired LC.If supply has been madewhen the LC was alive and LC expired paymnet under LC will be in the wind unless the LC Expiry is extended.

On the other hand devolving of LC means LC is alive throught the transaction till the date of payment but, the Buyer ie the Applicant of the LC who is responsible to pay to the LC opening bank the amount of LC (value of purchased under the LC) fails to pay the money to the LC opening bank on due date, the LC openimg bank is in obligation to pay LC money to the bank of the Seller ie Beneficiary in suvh case the LC is said to be devolved.