Financial Statement Analysis

2680 words - 11 pages

PROJECT REPORTONHOW TO OPEN A LETTER OF CREDIT(From Importer & Exporter Perspective)Submitted By:Tanveer AhmadRoll No.1205161MCOM (Finance) 3rd SemesterSubmitted To:Prof: MumtazDate: 05/05/2013EXECTIVE SUMMARYI have an opportunity to make an assignment on letter of credit under the guide line of our teacher Sir Mumtaz.The objective and scope of the study was to gain exposure in the field of international business,to study verious methods of payments,to analyze the issues during documentary credit procedure and to come across how letter of credit is opened.For this i have personaly interviews with Sonari Bank main branch karachi Assistant Manager Salman Lalani of the Trade department.He has provide me all the necessary information but he have not provide me the docoments which i required.TABLE OF CONTEXTSLETTER OF CREDIT INTRODUCTION 04PARTIES INVOLVED IN LETTER OF CREDIT 05-06TYPES OF LETTER OF CREDIT 06-07STEPS BY STEPS PROCESS 07INFORMATION THAT AN L/C MUST HAVE 08CONFIRMATION OF L/C 08DOCUMENTS THAT MAY BE STIPULATED IN AN L/C 09COMMON DEFECTS IN DOCUMENTATION 10TIPS TO MINIMIZE RISKS 11SUMMARY 12Letter Of Credit (L/C)A letter of credit (L/C) is a bank's promise to pay the exporter all the agreed value of theconsignment on behalf of the foreign importer, provided that the exporter has compliedwith all the terms and conditions of the L/C.L/C is the most used payment term in International trading and equally a perfectprocedure to protect the interests of an exporter as well as importer. Using L/C as a termof payment, the risk of the parties comes almost to nothing and at the same time itensures the buyer that goods are shipped before the payment is actually made and theseller that the payment shall be made in time without any undue delay.PARTIES INVOLVED IN LETTER OF CREDITApplicant (Opener): Applicant which is also referred to as account party is normally a buyer or customer of the goods, who has to make payment to beneficiary. LC is initiated and issued at his request and on the basis of his instructions.Issuing Bank (Opening Bank) : The issuing bank is the one which create a letter of credit and takes the responsibility to make the payments on receipt of the documents from the beneficiary or through their banker. The payments has to be made to the beneficiary within seven working days from the date of receipt of documents at their end, provided the documents are in accordance with the terms and conditions of the letter of credit. If the documents are discrepant one, the rejection thereof to be communicated within seven working days from the date of of receipt of documents at their end.Beneficiary : Beneficiary is normally stands for a seller of the goods, who has to receive payment from the applicant. A credit is issued in his favour to enable him or his agent to obtain payment on surrender of stipulated document and comply with the term and conditions of the L/c. If L/c is a transferable one and he transfers the credit to another party,...

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