Import LC Working Procedure

Import LC Working Procedure

The Import L/C service guarantees an exporter payment for goods or services, provided the terms of the letter of credit have been met.A bank issue an import letter of credit on the behalf of an importer or buyer when a importer is importing goods within its own country.

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Import L/C working procedure

Oolian company’s L/C service can help customers to handle the letter of credit, which can help the them goods earlier in international trading. The following is the import L/C working procedure so that the customer can understand more about its operation method.

The Import L/C service guarantees an exporter payment for goods or services, provided the terms of the letter of credit have been met.

A bank issue an import letter of credit on the behalf of an importer or buyer when a importer is importing goods within its own country.

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The different charges payable under import L/C working procedure is briefly as follows

The issuing bank charges the applicant fees for opening the letter of credit. The fee charged depends on the credit of the applicant, and primarily comprises of :

(a) Opening Charges This would comprise commitment charges and usance charged to be charged upfront for the period of the L/C.

The fee charged by the L/C opening bank during the commitment period is referred to as commitment fees. The fee charged by bank for the usance period is referred to as usance charges

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(b)Retirement Charges

1. This would be payable at the time of retirement of L/C. Import L/C opening bank will levies charges based on value of goods.

2. The advising bank charges an advising fee to the beneficiary.

3. The applicant is bounded to indemnify banks against all obligations and responsibilities.

4. The confirming bank's fee would be borne by the beneficiary or the issuing bank depending on the terms of contract.

5. The reimbursing bank charges are to the account of the issuing bank.

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The basic risk associated with an issuing bank while opening an import L/C are :

1.The financial standing of the importer: the bank should make sure that it has the proper funds to pay.

2.The goods: Bankers need to do a detail analysis against the risks associated with perishability of the goods, possible obsolescence, import regulations packing and storage, etc.

3.Exporter Risk:There is always the risk of exporting inferior quality goods.

4.Country Risk:Mainly associated with the political and economic scenario of a country. Foreign 5.exchange risk

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