AAOIFI- Documentary Credit - Documentary Credit By Zubair...

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Documentary Credit By  Zubair Usmani
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Documentary Credit (AAOIFI Shari’a Standard # 14)  
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Presen Documentary Credit A documentary credit is:  written  undertaking  by  a  bank  (the  issuer)  given to the seller (the beneficiary)  as  per  the  buyer's  (applicant's)  instruction  or  is  issued by the bank for its own use,  undertaking  to  pay  up  to  a  specified  amount,  within a certain period of time,  on condition that the seller present documents for  the goods conforming to the instructions.
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Presen International Trade Process Importer’s Premises (Pakistan )  Port Port Exporter’s Premises (UK) Meezan (issuing) HSBC (Beneficiary) ABC negotiate the term for purchase of XYZ chemical from ICI ICI want ABC to give a confirmation of payment after it ships the goods ABC ask MBL to issue a LC in favor of ICI  Upon receipt of LC, ICI ships the good to Pakistan  HSBC send the shipping documents to Meezan for payment  After checking of shipping doc Meezan make payment to HSBC for ICI Goods arrives in Pakistan and Meezan handed the shipping docs to ABC ICI ABC
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Presen Documentary Credit Procedural Stages   Execution of a Credit Contract (such as sale) Request for opening of Credit (LC) Issuance of Credit (LC) and notification to seller remittance of funds   Coverage by Correspondents
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This note was uploaded on 04/21/2011 for the course ISLAMIC BA 10010 taught by Professor Shamim during the Spring '11 term at Karachi Institute of Economics & Technology.

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AAOIFI- Documentary Credit - Documentary Credit By Zubair...

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