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- Last 05 years question (2013 - 2018) with latest November 2018 questions and answers (Maximum questions are included)
- Math solution (with November 2018)
- 44+ short notes
- DAIBB syllabus
- Last years questions
Edition: 4th Edition
Format : PDF
Total page: 206
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The Institute of Bankers, Bangladesh (IBB)
Banking Diploma Examination November-December 2018
DAIBB
International Trade and Foreign Exchange (FE)
DAIBB International Trade & Foreign Exchange e-Book (pdf) Third Edition 2018
Today i like to write a review about an e-Book DAIBB International Trade & Foreign Exchange Third Edition 2018 compiled by Md Murad Hossain for DAIBB candidates under new syllabus of The Institute of Bankers Bangladesh.
Recently we received some email for update version upto latest examination July 2018 of this e-Book.
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THE INSTITUTE OF BANKERS, BANGLADESH (IBB)
Banking Diploma Examination, July 2018
DAIBB
International Trade and Foreign Exchange (FE)
Time-3 hours
Full marks-100
Pass marks-50
(N. B. --The figures in the right hand margin indicate full marks. Answer any
four questions from group A and one question from group B.]
Group A
1. Write short notes on any of the following':-(a) Brexit:
(b) Reimbursing bank;
(c) Dhaka Inter-bank Offered Rate (DIBOR);
(d) International Development Association (IDA);
(e) Export Development Fund;
(f) Cross Rate:
(g) Foreign Correspondents.
3. What are the main factors responsible for declining trend of remittances from overseas Bangladesh nationals? Please offer your suggestions to improve the trend.
4. What is standby letter of Credit? Why such credits are used? Distinguish between standby credit and ordinary documentary credit.
5. For some years now the balance of trade of Bangladesh is declining quite fast? What are the causes that can be attributed in this declining trade? How this trend can be reversed?
6. Discuss the causes for transfer of money from Bangladesh to foreign countries. What the authorities can do to steps the leakage of foreign exchange on this account?
7 What is off-shore banking? How does it helps the entrepreneurs in Bangladesh to meet their foreign exchange needs, specially to operate industrial enterprises in the export processing zones?
8. Briefly distinguish between the following terms:
(a) Letter of Credit and Back to Back LC;
(b) FDBP and LDBP;
(c) Current account and Capital account:
(d) Balance of Trade and Balance of Payments;
(e) Airway bill and Air consignment note.
Group B
9. The current market exchange rates are as follows:-
£1 = $ 1.3947-1.3957
$ 1 = Tk. 82.9020 - 82.9820
Please calculate the exchange rate of your bank for buying 120 days pound sterling usance bill assuming the following:
Transit period 10 days
Rate of interest 10% per annum
Profit margin Tk. 0.10 per pound sterling
One year = 360 days
Rough calculations to be shown.
10. You have $1,00,000 at your disposal Based on the following data where would you prefer to invest your fund to maximize your return on the investment for a period of 3 months?
(a) US $ 1= 82.9020 - 82.9820
(b) 3 months forward margin Tk. 0.0153 0.0165 (premium)
(c) Interest rate at Dhaka 10% and 5% per annum in New York. Assume 360 days as one year.
Third edition is published.
Today i like to write a review about an e-Book DAIBB International Trade & Foreign Exchange Second Edition 2018 compiled by Md Murad Hossain for DAIBB candidates under new syllabus of The Institute of Bankers Bangladesh.
All modules are touched in this eBook (pdf). Last 05 years questions and answers (maximum questions are touched) are included in this eBook. Also Foreign exchange math solutions and 44+ short notes are included.
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THE INSTITUTE OF
BANKERS, BANGLADESH
Banking Diploma Examination, November, 2017
JAIBB/DAIBB
International Trade & Foreign Exchange (FE)
Time- 3 hours
Full marks-- -100
Pass marks-50
[N. B. The figures in the right margin indicate full marks.
Answer any four questions from group A and one question from group B
Group A
Write short notes on any five of the following:—
a) Brexit;
(b) Combined Bill of Landing;
(c) Foreign Exchange Regulations in Bangladesh;
d) Consular Invoice;
e) Bill of Entry;
f) Packing Credit;
g) Asian Development
Bank.
2. Briefly describe the types of credit facilities offered
by the banks to their clients engaged in import trade. Identify the risks
associated with import financing and the ways these risks can be minimized.
3. Describe
the mechanisms for receiving payments against exports 5x4=
20
from Bangladesh under the following arrangements:-
(a) Letter of Credit;
(b) Bills for collection; (c) Consignment Sale; (d) Advance payment.
4. How does
a transferable letter of credit operate? Describe the 10+ I0=20
obligations and rights of the negotiating hank under this
type of credit.
5. Flight of
capital from Bangladesh to Switzerland and other 10+ 10= 20
centres is a matter of serious concern liar Bangladesh. What
are the likely causes for this phenomenon? What are your suggestions to stop
the capital flight?
6. Describe
the main features of foreign exchange market in 12+ 8=20
Bangladesh. Offer your suggestions to make the market more
meaningful to meet the needs of the banks and clients for both spot and forward
transactions.
7. What kind
of exchange rate policy is being currently followed by the authorities in
Bangladesh? Do you think Bangladesh taka should be devalued to improve export
performance and the flow of remittances from our nationals working
abroad?
8. Trace the
effects of smuggling of goods across Indo Bangla 10+
10 =20
border. What measures can be taken to curb this trend?
Group B
9. Please calculate the selling exchange rate of your bank
for Euro using the following data :--
Euro 1 =USD 1.1742-1.1642
US$ 1 = Tk. 78.5030-78 7070
Your margin of profit per Euro—1/ 8 %
SWIFT charges — 1/12 % per Euro.
10. Please calculate the exchange rate for buying a 120 day
bill 20
denominated in pound sterling using the following parameters
£ 1 = $ 1.4947 - 1.4957
$ 1 = Tk. 78.9020-78.10
Transit period 10 days
Interest rate 10% p.a
Profit margin per pound sterling Tk. 0.10
Capital flight is the movement of capital from one country to another, or sometimes from one investment sector to another, to capitalize on returns or mitigate risk.
HOW IT WORKS (EXAMPLE):
Let's say the Bangladesh government is overthrown. The new government begins nationalizing many industries and even begins seizing assets from multi national companies, banks, hospital and some manufacturers.
Because the investors in these companies are essentially having their property stolen, the region becomes an undesirable place to put money. Accordingly, there is a big sell-off in Bangladeshi stocks as investors pull their money out of the country and reinvest it in other countries.
Capital flight can devastate markets that suddenly look undesirable, though this event can benefit other markets as investors look for better places to put their money. The concept weighs heavily on the minds of developing economies that are trying to attract investment yet may be experiencing political instability or financial crises.
Because the investors in these companies are essentially having their property stolen, the region becomes an undesirable place to put money. Accordingly, there is a big sell-off in Bangladeshi stocks as investors pull their money out of the country and reinvest it in other countries.
Capital flight can devastate markets that suddenly look undesirable, though this event can benefit other markets as investors look for better places to put their money. The concept weighs heavily on the minds of developing economies that are trying to attract investment yet may be experiencing political instability or financial crises.
INSTITUTE OF BANKERS, BANGLADESH (IBB)
Banking Diploma Examination, November-2016
JAIBB/DAIBB
International Trade and Foreign Exchange (FE)
Banking Diploma Examination, November-2016
JAIBB/DAIBB
International Trade and Foreign Exchange (FE)
Time—3 hours
Fulll marks—100
Pass marks—50
The figures in the right margin indicate full marks. Answer
any four questions
from Group A and one question from Group B.
Group A
Write short notes on any five of the following:
(a) Open position;
b) Inco-terms;
c) financial derivatives;
d)Cross Rate;
e) Off-Shore banking;
(f) European Common Market;
g) balance of Payments.
2. What kind of exchange rate system is followed in Bangladesh? 10+10=20
Give your opinion on the advisability of depreciating the exchange rate of taka to promote exports from Bangladesh.
3. Define a letter of credit. What are the rights and responsibilities of the following parties in a documentary letter of credit?
(a) The applicant (Importer);
(b) L/C opening bank;
(c) Negotiating bank.
4. Describe briefly the financial and non-llnancial services provided 20 to the exporters by the banking system in Bangladesh.
5.Prepare a list of different types of Marine insurance policies with a 20 brief description of the losses covered by them.
6. Describe the salient features of exchange control in Bangladesh. In view of the satisfactory level of foreign exchange reserve built up by Bangladesh Bank please identify the areas in which exchange control may be relaxed.
7. What do sou understand by the term Brexit? How Bangladeshis trade with the UK is likely to be affected by that country’s decision to quit the European Union?
8. An apparel exporter approaches your branch to open a bac to back L/C for procurement of raw materials against an export contract with the foreign buyer. How would you deal with the following issues?—
(a) The customer (exporter) requests that a back to back L/C be issued for an amount equivalent to 90% of the export contract to enable him to procure the raw materials.
(b) The customer request that the packing credit be disbursed to him before arrival of the raw materials against the back to back L/C.
(c) The customer fails to make the shipment in due time stipulated in the Export LC since received from the foreign buyer but submit the documents to your bank after the expiry date for purchase of the documents.
(d) The export contract contains a clause that one original copy of the Bill of Lading duly endorsed by the issuing/nominated bank in favour of the importer be directly dispatched to him.
Group B
9. Please calculate the exchange rate for buying a usance export bill denominated in pound sterling 65,000 on the basis of the following data:-
(a) £1=US$1·3947-1.3957
(b) US$1=Tk.78·50-78·70
(c) Transit period 10 days
(d) Profit margin 1/16%
(e) Postage 1/32%
Please calculate the exchange rates as well as the amount to be credited to the customer's account (you may assure a year as 360 days).
10. You have US$50,000 at your disposal.Where you would like to 20
invest this fund New York or Dhaka to maximize your earnings from this investment on the basis of the following data:
(a) US$1=Tk. 78·50-78·70
(b) 3 month forward margin tk. 0.0150 -0·0165 (premium).
(c) Rate of interest is 10% in Dhaka and 6% in New York.
(One year in 360 days)
1. Write short notes on any five of the following:—
a) Brexit vis-a-vis Bangladesh's trade with the UK;
b) Forced LIM;
c) Interest arbitrage;
d) 'Received for shipment' Bill of Lading:
e) Value date;
f) Back to back letter of credit;
g) Asian Clearing Union.
2. Briefly distinguish between the following:—
a. Floating exchange rate and fixed exchange rate;
(b) Documentary credit and documentary collection;
(c) Back to back letter of credit and transferable letter of credit;
(d) D/P bill and D/A bill.
3. Describe the main features of the exchange control system in 12+8=20
Bangladesh. What changes you would recommend to make it compatible with the free market policy stance of the government for economic development of the country?
4. How the exchange rate of Bangladesh taka is determined? Will 10+10=20
a devaluation of taka from its current level promote or harm the economy of Bangladesh?
5. Describe the rights and obligations of LC issuing banks and 5+5 =10
negotiating banks under a Documentary letter of credit. What do you understand by the well known principle that the banks deal in documents and not in goods” under the Documentary credits?
usance export bill denominated in pound sterling on the basis
of the fallowing data:—
(a) Pound sterling 1 = US dollar 1.4947-1.4957
(b) US $ 1 = Tk 65.7550-65.7600
(c)Transit time-15 days
(d) Rate of interest 10% pa
(e) Margin of profit Tk. 0.10 per pound sterling (Assume 360
days a year).
10. A customer of your bank asks you to remit £2500 to London 20
by cable. By using the following data please work out the exchange rate you will apply for the remittance and the amount to be debited to the customer's Account:—
(a) Exchange rate in the interbank market—
US $ 1 = Tk 78-9020-8030
£ 1 = US $ 1.6150-6180.
(b) Your profit margin Tk 0-20 per pound sterling.
(c) SWIFT charges 1/32 % per pound sterling.
(a) £1=US$1·3947-1.3957
(b) US$1=Tk.78·50-78·70
(c) Transit period 10 days
(d) Profit margin 1/16%
(e) Postage 1/32%
Please calculate the exchange rates as well as the amount to be credited to the customer's account (you may assure a year as 360 days).
10. You have US$50,000 at your disposal.Where you would like to 20
invest this fund New York or Dhaka to maximize your earnings from this investment on the basis of the following data:
(a) US$1=Tk. 78·50-78·70
(b) 3 month forward margin tk. 0.0150 -0·0165 (premium).
(c) Rate of interest is 10% in Dhaka and 6% in New York.
(One year in 360 days)
THE INSTITUTE OF BANKERS, BANGLADESH (IBB)
Banking Diploma Examination, June, 2017
DAIBB
International Trade and Foreign Exchange (FE)
Time—3 hours Full marks—100 Pass marks—50
Group A
The figures in the right margin indicate full marks. Answer any four question from group A and one question from group B.
1. Write short notes on any five of the following:—
a) Brexit vis-a-vis Bangladesh's trade with the UK;
b) Forced LIM;
c) Interest arbitrage;
d) 'Received for shipment' Bill of Lading:
e) Value date;
f) Back to back letter of credit;
g) Asian Clearing Union.
2. Briefly distinguish between the following:—
a. Floating exchange rate and fixed exchange rate;
(b) Documentary credit and documentary collection;
(c) Back to back letter of credit and transferable letter of credit;
(d) D/P bill and D/A bill.
3. Describe the main features of the exchange control system in 12+8=20
Bangladesh. What changes you would recommend to make it compatible with the free market policy stance of the government for economic development of the country?
4. How the exchange rate of Bangladesh taka is determined? Will 10+10=20
a devaluation of taka from its current level promote or harm the economy of Bangladesh?
5. Describe the rights and obligations of LC issuing banks and 5+5 =10
negotiating banks under a Documentary letter of credit. What do you understand by the well known principle that the banks deal in documents and not in goods” under the Documentary credits?
Group B
9. Please calculate the exchange rate for buying a 120 days 20usance export bill denominated in pound sterling on the basis
of the fallowing data:—
(a) Pound sterling 1 = US dollar 1.4947-1.4957
(b) US $ 1 = Tk 65.7550-65.7600
(c)Transit time-15 days
(d) Rate of interest 10% pa
(e) Margin of profit Tk. 0.10 per pound sterling (Assume 360
days a year).
10. A customer of your bank asks you to remit £2500 to London 20
by cable. By using the following data please work out the exchange rate you will apply for the remittance and the amount to be debited to the customer's Account:—
(a) Exchange rate in the interbank market—
US $ 1 = Tk 78-9020-8030
£ 1 = US $ 1.6150-6180.
(b) Your profit margin Tk 0-20 per pound sterling.
(c) SWIFT charges 1/32 % per pound sterling.
Institute of Bankers Bangladesh
DAIBB International trade and foreign exchange tutorial
Foreign exchange controls are various forms of controls imposed by a
government on the purchase/sale
of foreign currencies by residents or on the purchase/sale of local currency by
nonresidents.
Common foreign exchange controls include:
·
Banning
the use of foreign currency within the country
·
Banning
locals from possessing foreign currency
·
Restricting
currency exchange to government-approved exchangers
·
Fixed
exchange rates
·
Restrictions
on the amount of currency that may be imported or exported
Countries with foreign exchange controls are also known as "Article
14 countries," after the provision in
the international Monetary Fund agreement allowing exchange controls for transitional economies. Such controls used
to be common in most countries, particularly poorer ones, until the 1990s when free trade and
globalization started a trend towards economic liberalization. Today, countries
which still impose exchange controls are the exception rather than the rule.
see all tutorial on Foreign exchange
see all tutorial on Foreign exchange
Documentary Letter of Credit:
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
The major parties involved in a letter of credit are discussed below. We can classify mainly eight main parties involved in a Letter of Credit.
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
The major parties involved in a letter of credit are discussed below. We can classify mainly eight main parties involved in a Letter of Credit.
Applicant of Letter of Credit.
Applicant is one of the main parties involved in a Letter of Credit. Who is an applicant under Letter of credit?
Applicant is the party who opens Letter of Credit. Normally, buyer of goods is the Applicant who opens letter of credit. Letter of credit is opened as per his instruction and necessary payment is arranged to open Letter of credit with his bank. The applicant arranges to open letter of credit with his bank as per the terms and conditions of Purchase order and business contract between buyer and seller. So Applicant is one of the major parties involved in a Letter of credit.
LC Issuing Bank
Issuing Bank is one of the other main parties involved in an LC. Who is an Issuing Bank under Letter of credit?
Issuing Bank is the bank who opens letter of credit. Letter of credit is created by issuing bank who takes responsibility to pay amount on receipt of documents from supplier of goods (beneficiary under LC).
Beneficiary party
Beneficiary is one of the main parties under letter of credit. Beneficiary of Letter of credit gets the benefit under Letter of credit. Beneficiary is the party under letter of credit who receives amount under letter of credit. The LC is opened on Beneficiary party’s favor. Beneficiary party under letter of credit submits all required documents with is bank in accordance with the terms and conditions under LC.
Advising Bank
Advising bank is another party involved under LC. Advising bank, as a part of letter of credit takes responsibility to communicate with necessary parties under letter of credit and other required authorities. The advising bank is the party who sends documents under Letter of Credit to opening bank.
Confirming Bank
Confirming bank is one of the other parties involved in Letter of Credit. Confirming bank as a party of letter of credit confirms and guarantee to undertake the responsibility of payment or negotiation acceptance under the credit.
Negotiating Bank
Negotiating bank is one of the main parties involved under Letter of Credit.
Negotiating Bank, who negotiates documents delivered to bank by beneficiary of LC. Negotiating bank is the bank who verifies documents and confirms the terms and conditions under LC on behalf of beneficiary to avoid discrepancies
Reimbursing Bank
Reimbursing Bank is one of the parties involved in an LC. Reimbursing bank is the party who authorized to honor the the reimbursement claim of negotiation/ payment/ acceptance.
Second Beneficiary
Second beneficiary is one of the other parties involved in Letter of Credit.
Second beneficiary who represent the first beneficiary or original beneficiary in their absence, where in the credits belongs to original beneficiary is transferable as per terms.
Second beneficiary who represent the first beneficiary or original beneficiary in their absence, where in the credits belongs to original beneficiary is transferable as per terms.
Foreign Exchange Regulation Act, 1947
Foreign Exchange Regulation Act, 1947 (Act No. VH of 1947) enacted on 11th March, 1947 in the then British India provides the legal basis for regulating certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion. This Act was first adapted in Pakistan and then, in Bangladesh. The Act is reproduced. Bangladesh Bank is responsible for administration of regulations under the Act. Bangladesh Bank’s offices and their jurisdictions provide a list. Basic regulations under the PER Act are issued by the Government as well as by the Bangladesh Bank in the form of Notifications, which are published in the Bangladesh Gazette.
The major objectives of the act are to conserve the limited foreign exchange resources and to ensure that the available foreign exchange is utilized only for priority requirements the economic and financial interests of Bangladesh and the maintenance of the proper accounting of foreign exchange receipt and payments. Bangladesh Bank is responsible for administration of regulations under the Act. Bangladesh Bank reviews the exchange control measures from time to time and revises the instructions on policy and measures, whenever necessary through different Foreign Exchange (FE) circulars.
Total 27 section
Last amendment year 2015
This Act may be called the Foreign Exchange Regulation Act, 1947.
It extends to the whole of Bangladesh, and applies to -
(a) all citizens of Bangladesh;
(b) all persons resident in Bangladesh; and
(c) all persons in the service of the People’s Republic of Bangladesh wherever they may be.]
Foreign Exchange Regulation Act, 1947 (Act No. VH of 1947) enacted on 11th March, 1947 in the then British India provides the legal basis for regulating certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion. This Act was first adapted in Pakistan and then, in Bangladesh. The Act is reproduced. Bangladesh Bank is responsible for administration of regulations under the Act. Bangladesh Bank’s offices and their jurisdictions provide a list. Basic regulations under the PER Act are issued by the Government as well as by the Bangladesh Bank in the form of Notifications, which are published in the Bangladesh Gazette.
The major objectives of the act are to conserve the limited foreign exchange resources and to ensure that the available foreign exchange is utilized only for priority requirements the economic and financial interests of Bangladesh and the maintenance of the proper accounting of foreign exchange receipt and payments. Bangladesh Bank is responsible for administration of regulations under the Act. Bangladesh Bank reviews the exchange control measures from time to time and revises the instructions on policy and measures, whenever necessary through different Foreign Exchange (FE) circulars.
Total 27 section
Last amendment year 2015
This Act may be called the Foreign Exchange Regulation Act, 1947.
It extends to the whole of Bangladesh, and applies to -
(a) all citizens of Bangladesh;
(b) all persons resident in Bangladesh; and
(c) all persons in the service of the People’s Republic of Bangladesh wherever they may be.]
Bangladesh Bank:
Bangladesh Bank (BB) means the Bangladesh Bank established under the Bangladesh Bank Order, 1972 (President’s Order No. 127 of 1972).
Taka:
Taka means the Bangladesh Taka unless otherwise specified.
Dollar:Unless otherwise in ipublication shall mean the US dollar.
Authorized Dealers:
Wherever used in this publication, the term Authorized Dealer or AD would mean a bank Authorized -by Bangladesh Bank to deal in foreign exchange under the FER Act, 19
Foreign Exchange Regulation Act, 1994:
This Act regulates the exchange of foreign currencies, remittances and opening of foreign currency account under various classifications. According to this law, FC Accounts can be opened without initial deposits, and bears no interest and both the account holder and the nominee can operate the account. The entire remittance from adored is free from income tax. It also states the documents required for the opening of such account.
----“currency” includes –
all coins, currency notes, bank notes, postal notes, moneyorders, cheques, drafts, traveller’s cheques, letters of credit, bills of exchange and promissory notes;
all coins, currency notes, bank notes, postal notes, moneyorders, cheques, drafts, traveller’s cheques, letters of credit, bills of exchange and promissory notes;
--“current account transaction” means receipts and payments which are not for the purpose of transferring capital, and also includes
--“foreign currency” means any currency other than Bangladesh currency;
--“Bangladesh currency” means currency which is expressed or drawn in Bangladesh Taka;
| Restrictions on dealing in foreign exchange: Except with the previous general or special permission of the Bangladesh Bank, no person other than an authorised dealer shall in Bangladesh and no person resident in Bangladesh, other than an authorised dealer all outside Bangladesh, buy or borrow from, or sell or lend to, or exchange with, any person not being an authorised dealer, any foreign exchange. Restrictions on payment: Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Bangladesh Bank, no person in, or resident in, Bangladesh shall- (a) make any payment to or for the credit of any person resident outside Bangladesh; (b) draw, issue or negotiate any bill of exchange or promissory note or acknowledge any debt, so that a right (whether actual or contingent) to receive a payment is created or transferred in favour of any person resident outside Bangladesh; |
| False statements: (22)- No person shall, when complying with any order or direction under section 19 or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true, in any material particular. |
The institute of Bankers, Bangladesh
International Trade and Foreign exchange question December 2016
1. What is a 'Letter Of Credit'
A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.
2. Who are the parties involved in an LC Letter of Credit?
The major parties involved in a letter of credit are discussed below. We can classify mainly eight main parties involved in a Letter of Credit.
Applicant of Letter of Credit.
Applicant is one of the main parties involved in a Letter of Credit. Who is an applicant under Letter of credit?
Applicant is the party who opens Letter of Credit. Normally, buyer of goods is the Applicant who opens letter of credit. Letter of credit is opened as per his instruction and necessary payment is arranged to open Letter of credit with his bank. The applicant arranges to open letter of credit with his bank as per the terms and conditions of Purchase order and business contract between buyer and seller. So Applicant is one of the major parties involved in a Letter of credit.
LC Issuing Bank
Issuing Bank is one of the other main parties involved in an LC. Who is an Issuing Bank under Letter of credit?
Issuing Bank is the bank who opens letter of credit. Letter of credit is created by issuing bank who takes responsibility to pay amount on receipt of documents from supplier of goods (beneficiary under LC).
Beneficiary party
Beneficiary is one of the main parties under letter of credit. Beneficiary of Letter of credit gets the benefit under Letter of credit. Beneficiary is the party under letter of credit who receives amount under letter of credit. The LC is opened on Beneficiary party’s favor. Beneficiary party under letter of credit submits all required documents with is bank in accordance with the terms and conditions under LC.
Advising Bank
Advising bank is another party involved under LC. Advising bank, as a part of letter of credit takes responsibility to communicate with necessary parties under letter of credit and other required authorities. The advising bank is the party who sends documents under Letter of Credit to opening bank.
Confirming Bank
Confirming bank is one of the other parties involved in Letter of Credit. Confirming bank as a party of letter of credit confirms and guarantee to undertake the responsibility of payment or negotiation acceptance under the credit.
Negotiating Bank
Negotiating bank is one of the main parties involved under Letter of Credit.
Negotiating Bank, who negotiates documents delivered to bank by beneficiary of LC. Negotiating bank is the bank who verifies documents and confirms the terms and conditions under LC on behalf of beneficiary to avoid discrepancies
Reimbursing Bank
Reimbursing Bank is one of the parties involved in an LC. Reimbursing bank is the party who authorized to honor the the reimbursement claim of negotiation/ payment/ acceptance.
Second Beneficiary
Second beneficiary is one of the other parties involved in Letter of Credit.
Second beneficiary who represent the first beneficiary or original beneficiary in their absence, where in the credits belongs to original beneficiary is transferable as per terms.
Second beneficiary who represent the first beneficiary or original beneficiary in their absence, where in the credits belongs to original beneficiary is transferable as per terms.
