letter of credit

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Querist : Anonymous

Querist : Anonymous (Querist)

11 September 2010 Being a seller what are the point to be covered under domestic LC And type of LC & if LC is discounted with bank what will be accounting entry

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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11 September 2010
LC once received you need to chekc the

1. LC validity period
2. LC Due date
3. LC Value
4. LC terms & conditions as per P.O
5. Drawee bank
6. Negotition bank
7. Interest on whose account

Type of LCs
Revocable
Irrevocable
Unconfirmed
Confirmed
Standby Letters of Credit
Revolving Letter of Credit
Transferable Letter of Credit
Back-to-Back Letter of Credit

While receive the LC note

Dr: LC receivable
Cr: Sundry Debtors a/c

Some up to making the Bill of exchage you can track the details out side the account, once BOE made and accpeted by the Party, you can make

Dr:BOE receivable a/c
Cr: Sundry Creditors a/c

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Querist : Anonymous

Querist : Anonymous (Querist)

13 September 2010 Dear Ramesh Krishnan,
thanks a ton sir, can you help by elobrating some more basic pointfor Back to Back LC, Stand by LC & transferable LC.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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13 September 2010
These are mainly used for exporters

Back-to-Back Letter of Credit

A back-to-back letter of credit can be used as an alternative to the transferable letter of credit. Rather than transferring the original letter of credit to the supplier, once the letter of credit is received by the exporter from the opening bank, that letter of credit is used as security to establish a second letter of credit drawn on the exporter in favour of his importer. Many banks are reluctant to issue back-to-back letters of credit due to the level of risk to which they are exposed, whereas a transferable credit will not expose them to higher risk than under the original credit.

Standby Letters of Credit

A standby letter of credit is used as support where an alternative, less secure, method of payment has been agreed. It is an alternative fot BG Should the exporter fail to receive payment from the importer he may claim under the standby letter of credit. Certain documents are likely to be required to obtain payment including: the standby letter of credit itself; a sight draft for the amount due; a copy of the unpaid invoice; proof of dispatch and a signed declaration from the beneficiary stating that payment has not been received by the due date and therefore reimbursement is claimed by letter of credit.

Transferable Letter of Credit

A transferable letter of credit is one in which the exporter has the right to request the paying, or negotiating bank to make either part, or all, of the credit value available to one or more third parties. This type of credit is useful for those acting as middlemen especially where there is a need to finance purchases from third party suppliers.

Querist : Anonymous

Querist : Anonymous (Querist)

14 September 2010 thank you very much Sir

Querist : Anonymous

Querist : Anonymous (Querist)

20 September 2010 Dear Ramesh krishnan ji,

can you please guide me about CMA courses, where to approach,what r the procedure , eligiblity, duration & fees structure.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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20 September 2010
visit this link

https://www.icwai.org/icwai/academic-admission.asp

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