Letter of credit

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ESWAR RAO HANUMANTHU (Querist)
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23 January 2012 DEAR SIRS

PLEASE EXPLAIN ME ABOUT LETTER OF CREDIT
HOW IT SECURED TO THE SELLER & WHAT ARE THE FORMALITIES.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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23 January 2012 https://www.caclubindia.com/experts/letter-of-credit-397255.asp

Check out the details from above link.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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24 January 2012 Letter of Credit(L/c) Documentry Collection.
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Introduction
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Parties to Letters of Credit
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Types of Letter of Credit
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Standby Letter of Credit L/c
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Import Operations Under L/c
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Export Operations Under L/c
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Fees And Reimbursements
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Regulatory Requirements
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Trade Control Requirements
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Exchange Control Requirements
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UCPDC Guidelines
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ISBP 2002
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FEDAI Guidelines
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Fixing limits for Commercial Stand by Letter of Credit L/c

Introduction

Letter of Credit L/c also known as Documentary Credit is a widely used term to make payment secure in domestic and international trade. The document is issued by a financial organization at the buyer request. Buyer also provide the necessary instructions in preparing the document.

The International Chamber of Commerce (ICC) in the Uniform Custom and Practice for Documentary Credit (UCPDC) defines L/C as:

"An arrangement, however named or described, whereby a bank (the Issuing bank) acting at the request and on the instructions of a customer (the Applicant) or on its own behalf :

1. Is to make a payment to or to the order third party ( the beneficiary ) or is to accept bills of exchange (drafts) drawn by the beneficiary.
2. Authorised another bank to effect such payments or to accept and pay such bills of exchange (draft).
3. Authorised another bank to negotiate against stipulated documents provided that the terms are complied with.

A key principle underlying letter of credit (L/C) is that banks deal only in documents and not in goods. The decision to pay under a letter of credit will be based entirely on whether the documents presented to the bank appear on their face to be in accordance with the terms and conditions of the letter of credit.
for more information:

http://www.eximguru.com/exim/guides/export-finance/ch_3_letter_of_credit_lc.aspx

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