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International Trade Course 3

The letter of credit is for $60,000 AUD, issued by ABC Bank in Melbourne, Australia to benefit Aachi Masala Pty Ltd in Chennai, India for the shipment of various Indian spices by May 25th, requiring a commercial invoice, clean on board bill of lading, and certificate of origin to be sent to ABC Bank for negotiation.

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Sudershan Thaiba
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192 views34 pages

International Trade Course 3

The letter of credit is for $60,000 AUD, issued by ABC Bank in Melbourne, Australia to benefit Aachi Masala Pty Ltd in Chennai, India for the shipment of various Indian spices by May 25th, requiring a commercial invoice, clean on board bill of lading, and certificate of origin to be sent to ABC Bank for negotiation.

Uploaded by

Sudershan Thaiba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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INTERNATIONAL TRADE

Course 3 Yudy Yunardy S.E., M.M.


WHO AM I ?

Fifteen years of Banking experience, six


years’ experience in Trade Finance
Operations background with Unsecured
Loan experience, equipped with another
seven years’ experience in Management
Information Analyst and Dashboard
Reporting. Vastly experienced in Bank
Indonesia reporting (LBU, SID, LBBU, BMPK
etc.)
EMPLOYMENT SUMMARY

2014 Present Indonesia Banking School


2013 2014 Deutschebank AG
2011 2012 Misys Plc
2010 2011 DBS Indonesia
2010 2010 ANZ Bank
2005 2010 RBS Bank
2004 2005 Vendor at Bank Mandiri, BCA and Circle K
1999 2004 HSBC Bank
1998 1999 MetLife Insurance
1997 1998 Demographic Institution FEUI
1996 1997 Private Investment Manager
RULES

1.Disable your comm. device


2.Presence 80% minimum
3.Time alloc. 08.00 – 10.30
TEXTBOOK

Koch, Timothy
(2015), Bank
Management,
The Dryden Press
GRADING EVALUATION

1. Participation 5%
2. Quiz / exercise 10%
3. Assignment 15%
4. Midterm 35%
5. Final 35%
LAST WEEK’S QUESTION

Answer
LAST WEEK’S ASSIGNMENT

Answer
• E-commerce will be booming in 2015, because
of bigger mobile device trends, always
connected to internet, the battle to win
customer loyalty will force us to engage in B2B
as well as B2C
• Social media makes it easy to become a seller in
facebook, wordpress, tumblr or site that will
focus solely on shopping
• Analytical engine will become more intrusive but
also more accurate in predicting our needs and
wants
LAST WEEK’S ASSIGNMENT
V a lue

in billio n do llars 2 0 12 2 0 13

A gric ult ura l pro duc t s 1,647.65 1,744.83


F ue ls a nd m ining pro duc t s 4,128.61 3,996.98
M a nuf a c t ure s 11,467.50 11,848.00
A gric ult ura l pro duc t s ( A o A ) a 1,371.37 1,450.26
N o n- a gric ult ura l go o ds ( N A M A ) 16,585.50 16,850.38
T o t a l Wo rld M e rc ha ndis e E xpo rt 18 ,6 15 .13 19 ,0 4 0 .0 7
B 2 C S a le s wo rldwide 1,0 5 8 .0 0 1,2 3 3 .0 0
P ercentage to to tal wo rld merchandise expo rt 5.68% 6.48%
P ercentage to NA M A wo rld expo rt 6.38% 7.32%
P ercentage to fuel and mining wo rld expo rt 25.63% 30.85%
P ercentage to clo thing wo rld expo rt 252.38% 267.89%
PREVIOUSLY…
LC CONCEPTS
TERMINOLOGY
ADVISING BANK
The bank in the seller’s country which is requested by issuing
bank to notify the LC to beneficiary

APPLICANT
Issuer, a party whose request a bank is to issue an LC
(importer/ buyer)

BENEFICIARY
The party in whose favour the LC is to be issued and the
party who must comply with the T&C of the LC in order to be
entitled to receive its proceeds (seller/exporter)

ISSUING BANK
Bank that issues LC at the request of applicant
NEGOTIATING BANK
TERMINOLOGY
Bank that negotiates or discounts the beneficiary’s BoE

PAYING BANK
Bank that makes payment to beneficiary against presentation of
stipulated documents

REIMBURSING BANK
Bank nominated by the issuing bank to pay claims under the LC
to the negotiating or paying bank

BILL OF EXCHANGE
A written, unconditional order by one party (the drawer) to
another (the drawee) to pay a certain sum, either immediately (a
sight bill) or on a fixed date (a term bill), for payment of goods
and/or services received
TRADE CYCLE - SIGHT
7. Uang

2. Issued LC
ISS.BANK ADV.BANK
6. Docs 5. Doc’s

3. Advise LC
9. Uang
1. Apply LC

4. Goods
10. Docs 8. Uang

IMPORTER EXPORTER
SC
TRADE CYCLE - USANCE
11. Uang

7. Acceptance
ISS.BANK ADV.BANK
2. Issued LC

3. Advise LC
9. Docs

6. Docs
8. Acceptance
1. Apply LC

10. Uang

5. Doc’s
4. Goods
12. Uang

IMPORTER EXPORTER
SC
TYPES OF LC
TYPES OF LC

1. Revocable vs Irrevocable LC
2. Sight vs Usance LC
3. Confirm vs unconfirm LC
4. Resticted vs unrestricted LC
5. Transferable LC
TYPES OF LC

6. Back to Back LC
7. Revolving LC
8. Standby LC
9. Red Clause & Green Clause
LC
DOCUMENTS IN LC
DOCUMENTS IN LC
Transport Document
• Marine Bill of Lading
• Airway Bill
• Freight Forwarders Official Documents
• Delivery Order  Certificate of Origin
 Health Certificate
 Consular Invoice
Commercial Documents  Legalised Invoice
• Invoice
• Packing List
Financial Documents
• Insurance
 Bills of Exchange
• Certificate of Origin
 Promissory Note
• Certificate of Analysis
Bills of Lading DOCUMENTS - TITLE
• A receipt for goods, a contract for carriage and a document of title

• Issued by Carrier or his agent and bears evidence that goods have
actually been loaded on board a named vessel

• Issued in several originals (as a set), but only one is sufficient to take
possession of goods

• BL can be consigned to issuing bank, applicant, or to order


• The consignor can then transfer it by endorsement
• If it is to order, it becomes a bearer instrument.

• Clean BL = It does not bear any clause/endorsement indicating


defective condition of the cargo or its packaging
DOCUMENTS – ‘NOT’ TITLE
Delivery Order

Airway Bills

Non-negotiable B/L

Original B/L sent directly to buyer :


- consigned to order
- consigned to buyer

Freight Forwarders Receipt


DOCUMENTS – DRAFT
DOCUMENTS – INVOICE
DOCUMENTS – PACKING LIST
LET’S TAKE A LOOK AT LC
SAMPLE OF LC

MT 700
SENDER: ABC BANK, MELBOURNE, AUSTRALIA
RECEIVER: IOB, MUMBAI, INDIA
:27: SEQUENCE OF TOTAL 1/1
:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE
:20: DOCUMENTARY CREDIT NUMBER EL20088033319
:31C: DATE OF ISSUE 150105
:40E: APPLICABLE RULES UCP LATEST VERSION
:31D: DATE AND PLACE OF EXPIRY 150609 OPENING BANKS COUNTERS
:50: APPLICANT HOT AND SPICY PTE LTD
240 YARROWEE STREET
SEBASTOPOL
VICTORIA, AUSTRALIA 3356
SAMPLE OF LC

:59: BENEFICIARY AACHI MASALA PTY LTD


41, NORTH CAR STREET,
CHENNAI, INDIA-600007
:32B: CURRENCY CODE, AMOUNT AUD 60,000.00
:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION
:42C: DRAFT AT SIGHT
:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA
:43P: PARTIAL SHIPMENTS NOT ALLOWED
:43T: TRANSHIPMENTS ALLOWED
:44E: PORT OF LOADING ANY INDIAN PORT
:44F: PORT OF DISCHARGE ANY AUSTRALIAN PORT
:44C: LATEST SHIPMENT DATE 150525
SAMPLE OF LC

:45A: DESCRIPTION OF GOODS MANGO PICKLE, GARLIC PICKLE,


SAMBAR POWDER, RASAM POWDER,
DHAL POWDER AS PER PERFORMA
INVOICE NO 123456.
CFR AUSTRALIA
:46A: DOCUMENTS REQUIRED
1. SIGNED COMMERCIAL INVOICE
2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED
FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.
3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE
SAMPLE OF LC
:47A: ADDITIONAL CONDITIONS
1. A COPY OF ALL DOCUMENTS TO BE SENT TO APPLICANT WITHIN 5 DAYS AFTER
SHIPMENT DATE
2. THIRD PARTY DOCUMENTS ACCEPTABLE
3. ALL DOCUMENTS TO BE FORWARDED TO ABC BANK, MELBOURNE, AUSTRALIA IN
TWO LOTS BY BLUE DART COURIERS.
4. CHARGES ADDITIONAL TO FREIGHT NOT ACCEPTABLE
5. THIS LC IS TRANSFERRABLE BY INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA
:71B: CHARGES ALL BANK COMMISSIONS AND CHARGES OUTSIDE AUSTRALIA, PLUS
ADVISING AND REIMBURSING COMMISSIONS, ARE FOR THE ACCOUNT OF THE
BENEFICIARY.
:48: PERIOD FOR PRESENTATION DOCUMENTS TO BE PRESENTED WITHIN 15 DAYS
AFTER THE DATE OF SHIPMENT BUT WITHIN THE CREDIT VALIDITY.
:49: CONFIRMATION INSTRUCTIONS WITHOUT
:57A: ADVISE THROUGH BANK INDIAN OVERSEAS BANK, TIRUNELVELI, INDIA
EXERCISE

MT 700
SENDER: ABC BANK, MELBOURNE, AUSTRALIA
RECEIVER: IOB, MUMBAI, INDIA
:27: SEQUENCE OF TOTAL 1/1
:40A: FORM OF DOCUMENTARY CREDIT IRREVOCABLE TRANSFERABLE
:20: DOCUMENTARY CREDIT NUMBER EL20088033319
:31C: DATE OF ISSUE 150609
:40E: APPLICABLE RULES UCP LATEST VERSION
:31D: DATE AND PLACE OF EXPIRY 150105 OPENING BANKS COUNTERS
:50: APPLICANT HOT AND SPICY PTE LTD
240 YARROWEE STREET
SEBASTOPOL
VICTORIA, AUSTRALIA 3356
EXERCISE

:59: BENEFICIARY AACHI MASALA PTY LTD


41, NORTH CAR STREET,
CHENNAI, INDIA-600007
:32B: CURRENCY CODE, AMOUNT AUD 60,000.00
:41D: AVAILABLE WITH ANY BANK BY NEGOTIATION
:42C: DRAFT AT SIGHT
:42A: DRAWEE ABC BANK, MELBOURNE, AUSTRALIA
:43P: PARTIAL SHIPMENTS NOT ALLOWED
:43T: TRANSHIPMENTS NOT ALLOWED
:44E: PORT OF LOADING ANY INDIAN PORT
:44F: PORT OF DISCHARGE ANY INDONESIAN PORT
:44C: LATEST SHIPMENT DATE 150525
EXERCISE

:45A: DESCRIPTION OF GOODS CUTE 15 YEARS OLD GIRLS, RPG,


FLAMETHROWER, M-16, AR-15,
KALASHNIKOV AK-47,
INVOICE NO 123456.
CIF AUSTRALIA
:46A: DOCUMENTS REQUIRED
1. SIGNED COMMERCIAL INVOICE
2. 3/3 CLEAN ON BOARD BL MADE OUT TO ORDER OF ABC BANK AND MARKED
FREIGHT PREPAID EVIDENCEING NOTIFY PARTY AS APPLICANT.
3. CERTIFICATE OF ORIGIN ISSUED BY LOCAL CHAMBER OF COMMERCE

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