It is Stated before that the letter
of Credit is an undertaking by the importer's Bank that if the exporter exports
the goods and produces documents as stipulated in the Credit, the bank would
make payment to the exporter.
It is undeniable that a letter of
credit offers advantages both to the exporter and the importer. the advantages
accruing to either of the parties differ depending upon the nature of the
Credit opened. However , those who deal in international trade and transactions
should be well acquainted with the different types of Letter of Credit.
A Letter of Credit may be Clean
Credit or Documentary Credit. A Documentary Credit requires the documents of
little to goods and other documents to accompany the bill drawn under the
Credit. But in case of Clean Letter of Credit no such documents are necessary.
Under a Clean Letter of Credit, the
documents of little to goods, for instance, bill of lading, are sent by the
exporter to the importer directly. Only the bill exchange drawn on the importer
is offered to the bank for purchase. neither the exporter nor the bank retains
control over the goods covered by the transaction. For the bank it remains an
in secured advance. For this reason, Clean Letter of Credit is normally not
found in commercial transaction.
All Most all commercial Letters of
Credit are Documentary Credits. Documentary Credits may be classified under the
following types depending upon the particular provisions contains:
1. Payment, Acceptance and Negotiation
Credits.
2. Revocable and Irrevocavle
Credits.
3. Confirmed and Unconfirmed
Credits.
4. With Recourse and without
recourse Credits.
5. Fixed and Revolving Credits.
6. Transferable Credits.
7. Back to Back Credits.
8. Red Clause and Green Clause
Credits.
9. Standby Credits.
10. Anticipatory Credit.
No comments:
Post a Comment