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Banking Book

Banking Book

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Publicado por9290010274
Banking Book
Banking Book

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Published by: 9290010274 on Nov 08, 2011
Direitos Autorais:Attribution Non-commercial


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(a) Guarantee of Payment: In case of foreign trade there is a greater risk as the exporter
and importer do not know each other. Moreover, there are other risks as well. With
the opening of the letter of credit the exporter is assured of the payment.
(b) No Risk of Dishonour of Bill: Under the letter of credit the bill drawn on the
importer is accepted by the negotiating banker. Therefore, there is no risk of its
being dishonoured.
(c) No Risk of Exchange Restrictions: The issuing banker examines carefully the
restrictions imposed by the importing country before opening letter of credit. The
exporter is saved of the botheration and risks of foreign exchange restrictions.
(d) Availability of Advance Under Packing Credit Facility: An exporter can
get advance financial assistance under packing credit to finance purchase of raw
materials and its conversion into finished products and other expenses.
(e) No Risk of Loss Due to Fluctuation in Exchange Rates: Under letter of credit
the exporter is assured payment in the local currency. Therefore, he does not run the
risk of fluctuation in foreign rates.

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