ITA 403-081-Special Credits2003

ITA 403-081-Special Credits2003 - Special Credits Special...

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Special Credits Special Credits Standby Letters of Credit Revolving Letters of Credit Transferable Letters of Credit Back to Back Letters of Credit Assignment of Proceeds Variations- Red Clause Letter of Credit. Green Clause Letter of Credit. Authority to Purchase and Authority to Pay.
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Special Credits Special Credits Standby Letters of Credit A Standby credit is “issued to support payment, when due or after default, of obligations based on money loaned or advanced, or upon the occurrence or non- occurrence of another contingency. Rules for the handling of standby letters of credit by issuers, beneficiaries and others was developed in 1998 called The International Standby Practices( ISP 98)
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Standby Letters of Credit Standby Letters of Credit Features Banks may issue standbys based on UCP 600 or ISP98. Concept of payment for non performance. Regular settlement is non L/C. Standby acts as a guarantee for payment, used only if the regular arrangement fails.
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Standby Letters of Credit Standby Letters of Credit Documents required to be produced for payment. Beneficiary’s signed statement that applicant did not pay its obligations when due. A copy of unpaid commercial invoice marked unpaid. A sight draft in the amount of the unpaid invoice.
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Standby Letters of Credit Standby Letters of Credit . . Evergreen Clause : An evergreen clause is wording in a letter of credit, usually in a standby letter of credit, that provides for the automatic extension of the maturity date for another period unless the issuing bank takes some action at a particular point in time. Example. “It is a condition of this Letter of Credit that it will be automatically renewed for an additional(usually one year) the time of expiry unless we have notified you in writing at least(time period in days) prior to such expiry date that we elect not to renew, in which case you may draw the full amount of this Letter of Credit
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Standby Letters of Credit Standby Letters of Credit Types Advance Payment standby - Supports an obligation to account for an advance payment made by the beneficiary to the applicant. Bid Bond/ Tender Bond Standby - Supports an obligation of the applicant to execute a contract if the applicant is awarded a bid. Commercial Standby - Supports the obligations of an applicant to pay for goods or services in the event of payment by other methods. Financial Standby - Supports an obligation to pay money, including any instrument evidencing an obligation to repay borrowed money.
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Transferable Letters of Credit Transferable Letters of Credit A transferable L/C is one in which some or all of the value of the credit is made available to another party by a transfer.
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ITA 403-081-Special Credits2003 - Special Credits Special...

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