Trade finance-Banking/Implementation

 Procedure of providing LC ‘s by banks   For LC Issuing Banks will be taking Insolvency risk(Default) of Customer i.e If LC has been issued by a bank on request of Applicant Issuing bank bound to pay to Beneficiary even though applicant gets defaulted So next question Comes how banks handle default risk of Applicant And same way how confirming bank handle default risk of Issuing bank Here comes concept of Facility id and limit id So when Applicant approaches bank for LC issuance he has to go through KYC check and compliance due diligence checks to get LC issued Post all checks Applicant should provide some collateral which may be in Fixed or cash to bank as per requirement of business basically banks will be requesting for more collateral which customer and his business risk is more So when bank issues LCs They will block customer collateral for certain and in some cases when customer deals products where risk is more banks might block cash collateral additional ...

 1. Bill of exchange or Draft :Its an unconditional order in writing, addressed by one person to another, signed by the person giving it requiring the person to whom it is addressed to pay on demand And these documents or non-negotiable instruments where we use in court of law if any dispute arises 2. Commercial invoice : It’s a document here seller address to buyer and represents the purchase details like PO no ,name and address of seller and buyer, order numbers, value of goods, incoterms, shipping marks, weight and quality of goods as per requirement Example: Its an document given by seller when we purchase some grocery in grocery store 3. Consular invoice : This type of invoice is prepared by seller and certified in country of origin by consultant of importing country. Some countries requires this type of invoice for customs purpose 4. Tax invoice : There will be additional tax details for this type of invoice and its used to clear customs in importing or exporter c...