:GB-A1:

UNIT III: INTERNATIONAL BANKING

1. L C transactions are globally governed by UCPDC 500.
2. uniform rules for reimbursement are governed by URR 525.
3. Uniform rules for collection are governed by URC 522.
4. LC is Documentary Credit used for trade settlements across the globe.
5. Usance period may be certain number of days from the date of shipment / BE.
6. As per Article 5 of UCPDC the LC should not include excessive details or
reference of credit previously issued.
7. As per Article 18 of UCPDC the applicant should indemnify the bank against
any obligations imposed by Foreign Law.
8. As per Article 2 & 9 the LC issuing bank will honor LC commitments provided
the stipulated documents are presented.
9. As per Article 13 the issuing bank should examine the documents within
seven banking days following the date of receipt of documents.
10. The issuing bank solely at its discretion can approach the applicant for
waiver of discrepancy if any.
11. Article 19 deals with bank to bank reimbursement clause.
12. As per Article 3 of UCPDC banks are not concerned with the contractual
relationship between exporter and importer.
13. As per Article 15 banks assume no liability for form sufficiency, accuracy,
genuine and falsification of legal effects of any document.
14. As per Article 16 banks assume no responsibility for loss, delay, mutilation,
translation, interpretation of technical terms of any message.
15. As per Article 17 banks do not take responsibility for any loss arising due to
close of business by the acts of God, commotions, civil riots, floods or any
causes beyond their control.
16. As per Article 44, if the bank remains closed due to the reasons other than
mentioned under Article 17, negotiating bank can accept documents on next day.
17. Bill of Exchange is drawn by the beneficiary of the LC on LC issuing bank.
18. The Bill of Exchange drawn should indicate the LC number & issuing bank.
19. The BE should be drawn in the currency of LC & should not exceed LC amt.
20. An invoice is a commercial document.
21. Invoice along with other particulars should mention the LC number & name
of issuing bank.
22. Bill of Lading is a transport Document bears LC number & issuing bank.
23. BL should not be claused unless it is permitted under the LC.

:GB-A2:
24. Insurance policy should not be issued by the broker and it should be issued
in the currency of LC..
25. Claim of the policy should be made payable in the country of the applicant.
26. Certificate of origin must be issued and signed by an independent authority
such as Chamber of Commerce.
27. It must be ensured that origin of goods is not from any War Fighting country.
28. In case the demand bill is not retired by the importer within 10 days after the
receipt of documents, the issuing bank would Crystallize the liability into Indian
rupees on the 10th day at Bill Selling Rate or rate at which forward contract was
booked.
29. In case of Usance Bills the foreign currency liability would be Crystallized on
due date.
30. The Importer has to submit the Bill of Entry duly approved by the Customs
within six months from the date of Payment.
31. The AD on non-receipt of Bill of Entry within six months will follow up with
exporter if not submitted within another three months then shall report to RBI in
the Bill of Entry Format Statement.
32. The risk involved in LC transactions are 1) Rejection of documents 2) Law of
Land Prevails over UCPDC 3) Currency restrictions etc.
33. LC should not be opened for import of restricted items, if licenced then an
Exchange Control copy of license of importer should be obtained before issue of
LC.
34. All precautions of Fund based limit should be applied while opening a LC.
35. Standby LC has often been used in situations where there is nonperformance
i.e. in lieu of Bank Guarantee.
36. Standby LC is a substitute for Guarantee and it is issued in countries where
there is restriction on issue of Guarantee.
37. Standby LCs are governed under International Standby Practices (ISP 98)
38. Commercial Standby LC for import of goods can be issued for 1) those who
are independent power producers 2) Special category of imports and public
sector undertaking or public ltd companies with good track record.
39. Reimbursement authorization is totally a separate transaction from the credit.
40. The issuing bank is responsible for providing information required to the
reimbursing bank.
41. The issuing bank must not request a certificate of compliance to be
submitted by claiming bank to reimbursing bank.
42. The reimbursement authority must not have an expiry date, reimbursement
bank shall have reasonable time not to exceed 3 banking days to process claim.
43. The reimbursement claims should not be presented more than 10days prior
to due date, if any for claiming reimbursement.

:GB-A3:
UNIT IV FACILITIES FOR EXPORTERS AND IMPORTERS
1. RBI Regulates Exchange Control and receipts and payments of FE through
various guidelines and FEMA 1999 amendments.
2. Office of the DGFT regulates Trade Control part through EXIM Policy
3. Every person / Firm / Company engaged in Export / Import trade has to obtain
Import Export Code Number ( IEC Number ) form DGFT.
4. IEC number is registration number and it is to be quoted in all documents.
5. GR Form, PP Form , SOFTEX Form and SDF Form are declaration forms for
exports to be submitted by exporter.
6. The Exporter is required to submit the documents to AD along with GR / PP /
SDF Forms with in 21 days for collection or Purchase or Discount or negotiation.
7. The maximum time for realization of export proceeds is six months from the
date of shipment. But status holders are permitted up to 12 months.
8. If bill is not realized in stipulated period the exporter has to apply to his AD for
extension of time in EXT Form and AD will submit a statement to RBI called XOS
statement .
9. Payment settlement among ACU counties through a separate account
maintained by AD for settlement purpose denominated in ACU Dollar but for all
practical purposes it will be treated identical to USD account.
10.Agency commission on exports can be paid by AD by remittance or deducting
from proceeds of Bill if mentioned in Declaration Form & accepted by Customs.
11. Reduction in invoice value upto 10% of invoice can be approved by AD.
12. Refund of export proceeds can be allowed by AD provided the exporter
submits the proof of re-import of goods into India.
13. RBI permits Exporters to open Foreign Currency accounts in Foreign
Countries or in India.
14. Exporters or Importers dealing in Diamond Jewellery with a track record of 3
years and above turn over of 5 Crores can open Diamond Dollar account with an
AD for transacting business in Foreign Exchange. An Exporter can maintain upto
5 Diamond Dollar accounts.
15. Balance in EEFC account can be used for any Current Account transactions.
16. The finance to exporters can be Rupee finance or it can be Foreign
Currency.
17. Finance against export Bills after shipment is called Post Shipment Finance.
18. Pre-shipment loans are two types 1) Packing Credit 2) Loan and Advance
against Government receivable or Duty draw back.
19. Post Shipment Finance can be of various types 1) Export Bills Purchase 2)
Against Bills sent for collection 3) Advance against Export on consignment 4)
Advance against un drawn balance 5) Advance against duty draw back.
20. The pre-requisite for Packing Credit Loan is that the borrower should have
an export order or L C.

:GB-A4:
21. Normally the quantum of Packing Credit Loan will be fixed on the FOB / LC /
the domestic value of the goods which ever less after deducting the profit margin.
22. If the contract or LC is on CIF basis to arrive at FOB value deduct 13% or
14% from CIF value if dispatch is by Sea and 25% if dispatch is by Air.
23. The concession rate upto first 180 days for PCL is PLR 2.5%.
24. Banks have to inform to ECGC with in 30 days from the date of sanction of
PCL where advance is covered under WT policies of ECGC.
25. Once goods are shipped we can not continue with PCL, we have to sanction
post shipment finance to the extent of PCL ( Even if post shipment limits are not
Sanctioned).
26. PCL can be allowed to sub-suppliers also at the first stage under rupee
credit scheme.
27. Post shipment is a finance against receivables and it is for a maximum
period of 180 days.
28. The concessional ROI is for 90 days in case of post-shipment finance.
29. Advance against bills sent on collection basis is rupee finance and not a
foreign currency limit.
30. Concessional ROI can be charged for transit period in case of DP Bills and
transit period plus Usance period plus grace period if any in case of Usance Bills.
31. For computing NTP the period will commence from the date of acceptance of
the export document at the branch for collection.
32. Usance export proceeds should be received within six months from the date
of shipment but RBI permitted Certain categories of exporters to realize with in
360 days.
33. In case of Demand Bills concessional rate will be for first 25 days i.e. NTP
and then normal rate will have to be charged.
I. The under noted 12 types of Exports from India are exempted from Export
Declaration Forms. 1) Trade samples & Publicity material supplied for free 2)
Gifts whose value not over Rs.100000/- 3) Goods & Software not over Rs25000/4) Goods exported to Myanmar not exceeding USD 1000 per transaction.
5) Defective goods sent for repairs subject to re-import 6) Goods sent for testing
subject to re-import 7) Aircraft / Aircraft engines / Aircraft spare parts for over
oiling or repairs abroad, subject to conditions 8) Goods imported free of cost on
re-import basis 9) Personal effects of travelers whether accompanied or
unaccompanied 10) Ships store, Trans-shipment Cargo, goods supplied under
orders of Central Government 11) Goods permitted by development commissions
of EPZ, SEZ and Technological parks etc, 12) Other Exports permitted by RBI
subject to conditions specified.
II. In case export Bill is not retired with in six months from the due date of
shipment for the reasons beyond his control the exporter has to make an
application to AD in EXT form seeking extension of time. The AD is permitted to
grant the extension provided invoice does not exceed USD 100000. Any
extension beyond12 months from the date of export can be granted for 3 months
by AD provided the total export outstanding of the exporter should not be more
than 10% of Average exports during preceding 3 years