Assignment, International Banking System, BBA-BI 7th semester, Ace Institute of Management

1. B Y :
• A A Y U S H R A J
A R J Y A L
• C H H I T I Z
S H R E S T H A
• D I G A J A M A T Y A
• S A M Y E K S H A K Y A
• S A P A N D U L A L
• S A T I S H K H A D K A

2. DOCUMENTS REQUIRED FOR L/C
• Draft
• Commercial Invoice
• Consular or Customs
Invoice
• Bill of Lading
• Airway bill
• Insurance Policy or
Certificate
• Certificate of Origin
• Inspection Certificate
• Packing List

3. DRAFT
• Bill of exchange and a legally enforceable instrument
• Drawn by a Bank Branch, drawn to other branches
• Cover is provided by the drawing bank
• Usually in foreign currency
• Drafts are never subject to be dishonored
• Use of draft is for the settlement of transactions

4. COMMERCIAL INVOICE
• Itemized account issued by the
beneficiary and addressed to the
applicant
• Must be supplied in the number of copies
specified in the letter of credit
• Invoice description of the goods must be
identical to that stipulated in the letter of
credit
• Unit prices and shipping terms, i.e., CIF,
FOB, etc., must be as stipulated in the
letter of credit

5. CONSULAR OR CUSTOMS INVOICE
• Prepared by the beneficiary on forms either supplied by the
buyer or local consulate offices
• Consular invoices must be visa (officially stamped) and signed by
a consular officer
• Supplied in the official form and number of copies as stipulated
in the letter of credit
• value of goods required must agree with that shown on the
commercial invoice

6. BILL OF LADING
• A receipt issued by a carrier for goods to be transported to a named
destination
• Details the terms and conditions of transit.
• Incase of shipment by sea it is called Document of Title.
• Two different types of bill of lading:
STRAIGHT BILL OF LADING
One that names a specific consignee to whom goods are to be
delivered. Non-negotiable document.
ORDER BILL OF LADING
ORDER BILL OF LADING: Is written “to order” or to order of a
named party making the instrument negotiable by endorsement.

8. COMMON TYPES OF BILL OF LADING
• OCEAN BILL OF LADING
• SHORT FORM BILL OF LADING
• CHARTER PARTY BILL OF LADING
• MULTIMODAL TRANSPORT DOCUMENT

9. AIRWAY BILL
• Receipt issued by an air carrier
indicating receipt of goods to
be transported by air
• Showing goods consigned to a
named party
• Non-negotiable receipt
• Not a document of title.
• Airport of departure and airport
of destination must be as
stipulated in L/C

11. INSURANCE POLICY OR CERTIFICATE
• Beneficiary is obliged to arrange insurance
• Extent of coverage and risks should be agreed upon between the
buyer and seller.
• Insurance policy or certificate indicates that it is issued in
duplicate, both copies must be presented
• Description of the goods insured must be consistent with that in
the other documents
• Name of the carrying vessel, port of loading and port of
discharge must agree with those shown on the bill of lading

12. CERTIFICATE OF ORIGIN
• Certifies as to the country of origin of the goods described and
should comply with any stipulations in the letter of credit.
• Certificate should be consistent with and identified with the
other shipping documents.

13. INSPECTION CERTIFICATE
• Such indicates that the goods have been examined and found to
be as ordered.
• Should be specify by whom the certificate is to be issued;
otherwise, the same general comments as in the case of the
certificate of origin apply.

14. PACKING LIST
• Requested by the buyer
• To assist in identifying the contents of each package or
container.
• Must show the shipping marks and number of each package.
• Is not usually required to be signed.

15. DEFINITIONS OF TERMS IN L/C
• Date of Issuance: Actual date at which the LC document has been
issued by the issuing bank for the applicant
• Date and place of expiry of DC: Date and place at which the LC
document expires. It is usually at the place of the exporter. After this
date the LC
• Applicants name and address:
The buyer party who has opened the LC.
The party that reaches to the issuing bank for opening or
issuing a new LC.
Applicants name is usually a company’s name who is buying
the product form the exporter.

16. DEFINITIONS OF TERMS IN L/C
• Beneficiary’s Name and Address:
Name and the address of the exporter party
It is the exporting company who exports the goods and
receives the proceeds from the applicant party.
• Currency and amount in figures:
Currency of the country in which the trade is taking place.
Usually the exporter country’s currency in case of imports in
Nepal.
Exporters in Nepal the invoicing is done in foreign currency.

17. DEFINITIONS OF TERMS IN L/C
• Percentage credit amount tolerance:
The +- variation amount in the quantity or at the total value
amount of LC that is allowed.
• EG: If an order of 100 pieces of umbrella @ $1= $ 100 LC is
opened and a % credit amount tolerance of 10% is given then
you are allowed to ship a total value of $900 to $1100. A
variation of $100 or 10 units up or down is allowed.

18. DEFINITIONS OF TERMS IN L/C
• Maximum credit Amount:
maximum amount of the sum in FX that is provided by the
issuing bank for the purchasing of the goods under LC
• Drafts at:
A sight or a time draft can be issued for payment
For (DAP) Sight Draft is used and for (DAA) time draft is used

19. DEFINITIONS OF TERMS IN L/C
• Drawee: Bank who is given the instruction to pay the beneficiary
or the Payee.
• Deferred/ Mixed Payment Details: Arrangement in which debt
does not have to be repaid until sometime in the future.
• Partial Shipments: Refers to Delivery of an order in two or
more consignments.

20. DEFINITIONS OF TERMS IN L/C
• Transshipment:
Indicate whether or not transshipment is allowed.
Choice depends on the method of shipment/transport
document used.
During the course of voyage, merchandise is unloaded and
reloaded from one vessel to another vessel.

21. DEFINITIONS OF TERMS IN L/C
• Description of Goods &/or Services: Brief description of the
merchandise. common practice is to use a Purchase Order or
Performa Invoice number banks deal in documents and not in
goods.
• 46 A: Documents Required
Commercial Invoice
Transport Documents

22. DEFINITIONS OF TERMS IN L/C
• Shipment to be made from
Name of the place/port from which the goods will be shipped
• For transportation to
Name of the place/port to which the goods will be shipped
• Latest Shipment Date
It is the latest mutually acceptable date for the shipment to
be made. Commonly known as the “Not Later Than”

23. DEFINITIONS OF TERMS IN L/C
• Multimodal Transport Document.
• On Board Marine/Ocean Bill of Lading
• Air Transport Document.
• Trucking/Rail Bill of Lading
• Insurance Documents
• Packing List
• Inspection Certificate
• Weight List

24. DEFINITIONS OF TERMS IN L/C
• 47 B: Additional Conditions
Transport Documents issued by Freight Forwarders
Acceptable
the services of a freight forwarder to transport goods and
prepare documents relating to the shipment are often used
by the exporters
Advice Beneficiary by Phone or Fax
include instructions as to who the Advising Bank must call
or fax upon its receipt.

25. DEFINITIONS OF TERMS IN L/C
71 B: Charges
Indicate who will pay the Exporter’s banking charges along with
the charges of any other bank The Issuing Bank charges are
always the responsibility of a party, the Applicant