Update on International Banking - Module A of Bank Financial Management ( As of October 2012

S. No 1 Reference Current provision Revised version Under e#tant regulations% the facilit" of cancellation and reboo!ing is not permitted for forward contracts% involving Rupee as one of the currencies% boo!ed b" residents to hedge current and capital account transactions. Now e#porters are allowed to cancel and rebook for!ard contracts to t"e e#tent of 2$ percent of t"e contracts booked in a financial %ear for hedging their contracted e#port e#posures. *+R, .*nstitute for +evelopment and Research in ,an!ing echnolog"% -"derabad /or customer remittances% the minimum amount for R 0S transfer is Rs. &.11 lac.

& 3

Under guidelines he guidelines third para from permit boo!ing of below-page 39 forward contracts b" customers on the strength of underl"ing e#posure$transaction or merel" on the basis of past turnover. 'age (9 item ) *+,R % -"derabad third line in the para 'age (9 item ) /or customer second para remittances% the minimum amount for R 0S transfer is Rs. 1.11 lac. 3.2 NR3 4ccounts 'ermitted credits 'age 2&

Permitted Credits: a. Proceeds remittances India in of to any

permitted currency. b. Proceeds of i) personal account cheques drawn by the holder on his foreign

currency Account ii) travelers cheques, bank drafts payable currency in any permitted instruments including

e pressed in Indian rupees which reimbursement will be received in

foreign currency, deposited by the account holder in person during his temporary visit to India, provided the A! "ategory I bank# Authorised bank is satisfied that the account holder is still resident outside India iii) the travelers$ cheques#drafts are standing#endorsed in the of the account holder and in the case of travelers$ cheques, they were issued outside India. c. Proceeds of foreign currency#bank notes tendered by account on his temporary visit to India, provided %i) the amount was declared on a "urrency !eclaration &orm where applicable. aggregate Presently value of where the the foreign

e change in the form of currency notes, bank notes or travelers cheques brought in by such person at any one time e ceeds '(! )****+ or its equivalent and#or the aggregate value of foreign currency notes brought in by such person at any one time e ceeds '(! ,***+ or its equivalent, and %ii) the notes are tendered to the A! bank in person by the account holder himself and the A! bank is satisfied that account holders a

person resident outside India. d. -ransfers from ./0#&"./ accounts. other

e. Interest accruing on the funds held in the account. d. interest on 1overnment securities the and dividend on units of mutual funds, provided securities#units were holder2s purchased by debit to the account ./0#&"./ account or out of inward remittance through normal banking channels. e. 3aturity 1overnment including well as proceeds of securities .ational proceeds securities of and

Plan#(avings "ertificates as 1overnment

units of mutual funds sold on a recogni4ed stock e change in India and sale proceeds of units received from were holder2s from mutual funds, provided the securities#units to the account originally purchased by debit ./0#&"./ account or out of remittances e change. f. /efund of share#debenture subscriptions to new issues of received outside India in free foreign

Indian companies or portion thereof, if the amount of subscription was paid from the same account or from other ./0#&"./ from account of the India through account holder or by remittance outside banking channels. g. /efund of application#earnest money # purchase consideration made by the house building agencies#seller on account of non allotment of flat#plot, of cancellation of bookings#dealers for purchase residential#commercial payable property, together with if any %net of income ta thereon), provided the original payment was made out of ./0#&"./ account of the holder or remittance from outside India through normal channels and the A! "ategory I +bank+is satisfied about genuineness of the transaction.

5*)

h.

-ransfer of balances from 00&" # /&" # /&" %!)

Accounts

consequent

to

change in status from resident to non+resident. i. "urrent income like rent, dividend, pension, interest etc. of ./Is, A!s are satisfied that the credit represents current income of non+resident account holders and income ta thereon I deducted # paid # provided for as the case may be. Income -a declaration#"hartered Accountant certificate stating income ta thereon has been deducted#paid# provided for is to be obtained. 6. Any other credit if covered under general or special by permission /eserve 7ank. k. Proceeds drafts#bankers2 account payee of demand cheques, cheques granted

issued against encashment of foreign currency to the ./0 account of the ./I account holder where the instruments issued to the ./0 account holder are supported by encashment certificate issued by A! "ategory#I "ategory II. l. /epayment of loans availed by resident individuals in India

as per e tant guidelines of /7I credit from to her#his ./0 # close by &oreign relatives "urrency outside India

.on+/esident

%7ank) 8&"./%7)9 account of the lender concerned sub6ect to the condition that the loan to the resident individual was e tended by way of inward remittance e change to the in through ./0 # foreign normal &"./%7)

banking channels or by debit account of the lender and the lender is eligible to open ./0 # &"./%7) account within meaning of the &oreign 0 change 3anagement %!eposit) /egulations, :*** notified vide .otification .o. &03A ,#:***+/7 dated 3ay ;, :***, as amended from time to time. (uch credit shall be treated as an eligible credit to the ./0 # &"./%7) account in terms of Para ;%6) of (chedule+) read with Para , of (cheule+: of .otification .o. &03A ,#:***+/7, ibid. o. &unds from ./< account to ./0 account within the overall ceiling of '(! one million per financial year

subject to payment of tax, as applicable if %i.e. funds as were applicable

remitted abroad). (uch credit of funds to ./0 account shall be treated as eligible credit in terms of paragraph ;%6) of (chedule+) of .otification .o. &03A.,#:***+/7 dated ;rd 3ay :***. p. the proceeds of erstwhile ././ deposit %discontinued with effect from April ), :**:) paid on maturity q. =itherto, in terms of (chedule ;, 'ermitted debits 5 and , of the &03A .otification .o. :*#:***+/7

dated 3ay ;, :***, sale proceeds of &oreign Investments in India were treated as eligible credit to ./0#&"./ %7) accounts, where the purchase consideration was paid by the .on+resident Indians # Persons of Indian <rigin out of inward remittance or funds held in their ./0#&"./ %7) accounts and sub6ect to applicable ta es, if any. It is now clarified that the same facility would be available to ./Is# PI<s under /egulation )) of the said .otification. 2.1.7 Permitted

Debits: a. b. c. >ocal !isbursements /emittances outside India -ransfer ./0#&"./ accounts of the account holder or any other person eligible to maintain such account. a. Investment shares#securities #commercial paper of an Indian or for of provided company purchase in India in to

immovable property such investment#purchas e is covered by the regulations or general#special permission granted by the /eserve /ank. b. Any transaction covered other if under made, the

general or special permission granted

by

the

/eserve

7ank. 2.1.8 allowed !eposits by ./ls with persons other than A! banks# Authorised 7anks out of inward remittances from overseas or by debit to ./0#&"./ %7) Accounts shall permissible. 2 Non-resident 'ermissible credits 5rdinar" Rupee 4ccounts 'age 23 item & Permissible Credits %i) Proceeds of remittances from outside India through normal banking channels received in foreign currency which is freely convertible. %ii) Any foreign currency, which is freely convertible, tendered by the account holder during his temporary visit to India. :&oreign currency e ceeding '(! ,*** or its equivalent in the form of cash should be supported by currency declaration form. /upee funds should be supported by encashment certificate, if they represent funds brought from outside India. %iii) -ransfers from rupee accounts of non+ resident banks. %iv) >egitimate dues in India of the account holder. -his includes current income like rent, dividend, pension, interest, etc. %v) (ale proceeds of assets including immovable property acquired out of rupee#foreign currency funds or by way of legacy#inheritance. %vi) ; /esident individual may make a rupee gift to a ./I#PI< who is a close relative of the resident individual 8close relative as defined in (ection ? of the "ompanies Act, )@,?9 by way of crossed cheque #electronic transfer. -he amount shall be credited to the .on+ not be Debits not

/esident %<rdinary) /upee Account %./<) a#c of the ./I # PI< and credit of such gift amount may be treated as an eligible credit to ./< a#c. -he gift amount would be within the overall limit of '(! :**,*** per financial year as permitted under the >iberali4ed /emittance (cheme %>/() for a resident individual. %viii) 5 /esident individual may lend to a ./I# PI< close relative 8means relative as defined in (ection ? of the "ompanies Act, )@,?9 by way of crossed cheque #electronic transfer, sub6ect to conditions within the overall limit under the >iberali4ed /emittance (cheme of '(! :***** per financial year available for a resident individual. -he loan amount should be credited to the ./< a#c of the ./I #PI<. "redit of such loan amount may be treated as an eligible credit to ./< a#c. i ) the proceeds prematurely of of erstwhile ././ the

deposits%discontinued with effect from April ), :**:) 'age 23 item & 'ermissible debits withdrawn ./(/ and proceeds erstwhile accounts

%discontinued with effect from April ), :**:) paid on or before maturity Permissible Debits %i) All local payments in rupees including payments for investments in India sub6ect to compliance with the relevant regulations made by the /eserve 7ank. %ii) /emittance outside India of current income like rent, dividend, pension, interest, etc. in India of the account holder. %iii) /emittance up to '(! one million, per financial year %April+ 3arch), for all bonafide purposes, to the satisfaction of the Authorised !ealer bank. %iv) -ransfer to ./0 account of ./I within the overall ceiling of '(! one million per financial

year sub6ect to payment of ta , as applicable. %v) !eposits by ./ls with persons other than A! banks#Authorised 7anks by debit to ./< Accounts may continue provided that the amount deposited with such entities does not represent inward remittances or transfer from ./0#&"./%7) Accounts into the ./< account Any other transaction if covered under general or special permission granted by /7I. 6 'age 2( item 3 /CNR accounts can be opened and maintained b" nonresident *ndians in designated currencies onl"

A! banks in India are now permitted to accept &"./ %7) deposits in any permitted currency. It may be noted that 2Permitted currency2 for this purpose would mean a foreign currency which is freely convertible as defined in terms of /egulation :%v) of &03A )5#:***+/7 dated 3ay ;, :***, as amended from time to time. .

'age 22 /irst para

*nterest on /CNR.,7 -he rate of interest on funds held in these accounts 88..prevailing deposit accounts will be in accordance with 9*,5R plus 111 the directives issued by the /eserve 7ank bps88.. from time to time which presently are as under: %a) "urrently with effect from the close of business in India as on 3ay 5, :*):, the interest rates on &"./%7) !eposits will be as under:

3aturity Period ) year to less than ; years

/ate of interest >I7</#(AAP plus :** basis points

;+, years

>I7</#(AAP plus ;** basis points

'age 2:

4mount of loan; 'resentl" loans against NR3$/CNR deposits can be allowed onl" up to Rs. 111 lacs% in Rupee$/oreign currenc" loans to be allowed terms of R,* to depositor$third part" !it"out an% ceiling guidelines sub<ect to usual margin re=uirements

5n floating rate deposits% interest shall be paid within the ceiling of swap rates for the respective currenc"$maturit" plus &11 bps$311 bps as the case ma" be. /or floating rate deposits% the interest reset period shall be si# months.

11 11

'age 2: /oreign currenc" /oreign currenc" loans8888888 loans ..to the account holder onl" 'age :3 *ncoterms &111 *ncoterms .(.117 'age 9& 3#emption from 3#port +eclaration forms

Rupee$/oreign currenc" loans to be allowed to depositor$third part" !it"out an% ceiling sub<ect to usual margin re=uirements -o be replaced by Incoterms :*)* given below

Exemptions :Notwithstanding anything contained in Regulation 3, export of goods or services may be made without furnishing the declaration in the following cases, namely: a) trade samples of goods and publicity material supplied free of payment; b) personal effects of travellers, whether accompanied or unaccompanied;

c)

ships stores, trans shipment cargo and goods supplied under the orders of !entral "overnment or of such officers as may be appointed by the !entral "overnment in this behalf or of the military, naval or air force authorities in #ndia for military, naval or air force re$uirements; d) goods or software accompanied by a declaration by the exporter that they are not more than twenty five thousand %&' in value; e) by way of gift of goods accompanied by a declaration by the exporter that they are not more than five la(hs rupees in value; f) aircrafts or aircraft engines and spare parts for overhauling and)or repairs abroad sub*ect to their re import into #ndia after overhauling )repairs, within a period of six months from the date of their export; g) goods imported free of cost on re export basis; h) goods not exceeding %&' +,,, or its e$uivalent in value per transaction exported to -yanmar under the .arter /rade 0greement between the !entral "overnment and the "overnment of -yanmar; i) /he following goods which are permitted by the 'evelopment !ommissioner of the 1xport 2rocessing 3ones, Electronic Hardware Technology Parks, Electronic Software Technology Parks or 4ree /rade 3ones to be re exported, namely: +) imported goods found defective, for the purpose of their replacement by the foreign suppliers)collaborators; 5) goods imported from foreign

suppliers)collaborators on loan basis; 3) goods imported from foreign suppliers)collaborators free of cost, found surplus after production operations6 7ia) goods listed at items (1), (2) and (3) of clause (i) to e re! e"#orted y units in S#ecial Economic $ones, under intimation to the %e&elo#ment 'ommissioner of S#ecial Economic $ones(concerned )ssistant 'ommissioner or %e#uty 'ommissioner of 'ustoms* *) replacement goods exported free of charge in accordance with the provisions of 18#2olicy in force, for the time being6 k) goods sent outside +ndia for testing su ,ect to re!im#ort into +ndia* l) defecti&e goods sent outside +ndia for re#air and re!im#ort #ro&ided the goods are accom#anied y a certificate from an )uthorised %ealer in +ndia that the e"#ort is for re#air and re!im#ort and that the e"#ort does not in&ol&e any transaction in foreign e"change* m) exports permitted by the Reserve .an(, on application made to it, sub*ect to the terms and conditions, if any, as stipulated in the permission6
1& 'age 9: 1. 'reshipment /inance *tem 11- he rate of interest is lin!ed to /he .ase Rate &ystem is applicable with the ,enchmar! effect from 9uly +, 5,+,6 0ccordingly, interest 'rime 9ending rates applicable for all tenors of rupee export Rate.,'9R788. *nterest on 'C/C

13

'age 11(

credit advances sanctioned on or after 9uly ,+, 5,+, are at or above .ase Rate6 .an(s are free to determine the interest rates

9ast para 1( 'age 111 4dvance Remittances

on export credit in foreign currency with effect from -ay :, 5,+56

Conditions for 0dvance Remittance for import of goods advance remittances8888 7i) 0' !ategory ; # ban( may allow advance 8.. remittance for import of goods without any

ceiling sub*ect to the following conditions: 7a) #f the amount of advance remittance exceeds %&' 5,,,,,, or its e$uivalent, an unconditional, irrevocable standby <etter of !redit or a guarantee from an international ban( of repute situated outside #ndia or a guarantee of an 0' !ategory ; # ban( in #ndia, if such a guarantee is issued against the counter guarantee of an international ban( of repute situated outside #ndia, is obtained6 7b) #n cases where the importer 7other than a 2ublic &ector !ompany or a 'epartment)%nderta(ing of the "overnment of #ndia)&tate "overnment)s) is unable to obtain ban( guarantee from overseas suppliers and the 0' !ategory ; # ban( is satisfied about the trac( record and bonafides of the importer, the re$uirement of the ban( guarantee ) standby <etter of !redit may not be insisted upon for advance remittances up to %&' :,,,,,,,, 7%& 'ollar five million)6 0' !ategory ; # ban(s may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the ban(=s .oard of 'irectors6 7c) 0 2ublic &ector !ompany or a 'epartment)%nderta(ing of the "overnment of #ndia ) &tate "overnment)s which is not in a position to obtain a guarantee from an international ban( of repute against an advance payment, is re$uired to obtain a specific waiver for the ban( guarantee from the -inistry of 4inance, "overnment of #ndia before ma(ing advance remittance exceeding %&' +,,, ,,,6 7ii) 0ll payments towards advance remittance

for imports shall be sub*ect to the specified conditions6

12 'age 11( *nterest rate ceilings on ,u"ers> credit and Suppliers> credit 'age 121 & .47 33/C account Up to 362 da"s 9*,5R plus &11 bps 4bove 1 "ear up to 3 "ears 9*,5R plus &11 bps 3ver" recipient of foreign e#change is allowed to retain 111? of the amount in a foreign currenc" account% with an" 4+.

%p to + year -ore than + year up to 3 years 3:, bps

16

credit of 100% foreign exchange earnings to the 114! account allowed sub*ect to the condition that the sum total of the accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after ad*usting for utili>ation of the balances for approved purposes or forward commitments6

1)

1:

'age 126 1. 3#ternal Commercia l ,orrowings . i 7 4utomatic route 'age 126 3#ternal Commercial ,orrowings . i 7 4utomatic route 'age 12)

US+ &1 million with a minimum average 1!. up to %&' 5, million or its e$uivalent in maturit" of 3 "ears a financial year with minimum average

maturity of three years

4bove US+ &1 million and up to US+ 211 million with average maturit" of 2 "ears

19

includes interest and other e#penses% e#cept commitment fees% prepa"ment fees or other fees pa"able in *ndian Rupees should be 311 basis points above si# months 9*,5R for average maturit" period of three to five "ears% and 211 bps above si# months 9*,5R for average maturit" of over five "ears..

1!. above %&' 5, million or e$uivalent and up to %&' ?:, million or its e$uivalent with a minimum average maturity of five years6 he all-in cost% which 0verage 0ll in cost -aturity 2eriod /hree years and up to five years -ore than 3:, basis points !eilings over @ month <#.ARB

five years

:,, basis points

B for the respective currency of borrowing or applicable benchmar( Incoterms 2010

-he Incoterms rules are an internationally recogni4ed standard and are used worldwide in international and domestic contracts for the sale of goods. &irst published in )@;?, Incoterms rules provide internationally accepted definitions and rules of interpretation for most common commercial terms. Incoterms :*)* were launched in mid+(eptember :*)* and came into effect on ) Banuary :*)). -he rules have been developed and maintained by e perts and practitioners brought together by I"" and have become the standard in international business rules setting. -hey help traders avoid costly misunderstandings by clarifying the tasks, costs and risks involved in the delivery of goods from sellers to buyers. Incoterms rules are recogni4ed by '."I-/A> as the global standard for the interpretation of the most common terms in foreign trade.

*t ma" be noted that all contracts made under *NC5 3R@S &111 remain valid even after &111. @oreover% parties to a contract for the sale of goods can agree to choose an" version of the *ncoterms rules after &111. *t is important however to clearl" specif" the chosen version *NC5 3R@S &111% *NC5 3R@SA &111 or an" earlier version. Main features of t"e Incoterms 2010 rules 1 Two new Incoterms rules DAT and DAP have replaced the Incoterms 2000 rules DAF, DES, DEQ and DDU he number of *ncoterms rules has been reduced from 13 to 11. his has been achieved b" substituting two new rules that ma" be used irrespective of the agreed mode of transport +4 % +elivered at erminal% and +4'% +elivered at 'lace for the *ncoterms &111 rules +4/% +3S% +3B and ++U. Under both new rules% deliver" occurs at a named destination; in +4 % at the bu"er>s disposal unloaded from the arriving vehicle .as under the former +3B rule7C in +4'% li!ewise at the bu"er>s disposal% but read" for unloading .as under the former +4/% +3S and ++U rules7. he new rules ma!e the *ncoterms &111 rules +3S and +3B superfluous. he named terminal in +4 ma" well be in a port% and +4 can therefore safel" be used in cases where the *ncoterms &111 rule +3B once was. 9i!ewise% the arriving DvehicleE under +4' ma" well be a ship and the named place of destination ma" well be a port; conse=uentl"% +4' can safel" be used in cases where the *ncoterms &111 rule +3S once was. hese new rules% li!e their predecessors% are DdeliveredE% with the seller

bearing all the costs .other than those related to import clearance% where applicable7 and ris!s involved in bringing the goods to the named place of destination. 2 lass!"!cat!on o" the ## Incoterms 20#0 rules he 11 *ncoterms &111 rules are presented in two distinct classes; RU93S /5R 4NF @5+3 5R @5+3S 5/ R4NS'5R &'( F)A )*+ )I* ,A+ ,A* ,,* 3G H5RIS /R33 C4RR*3R C4RR*403 '4*+ 5 C4RR*403 4N+ *NSUR4NC3 '4*+ 5 +39*J3R3+ 4 3R@*N49

+39*J3R3+ 4 '94C3 +39*J3R3+ +U F '4*+

RU93S /5R S34 4N+ *N94N+ H4 3RH4F R4NS'5R FAFOB )F. )IF /R33 495N0S*+3 S-*' /R33 5N ,54R+ C5S 4N+ /R3*0C5S *NSUR4NC3 4N+ /R3*0-

he first class includes the seven *ncoterms &111 rules that can be used irrespective of the mode of transport selected and irrespective of whether one or more than one mode of transport is emplo"ed. 3GH% /C4% C' % C*'% +4 % +4' and ++' belong to this class. he" can be used even when there is no maritime transport at all. *t is important to remember% however% that these rules can be used in cases where a ship is used for part of the carriage. *n the second class of *ncoterms &111 rules% the point of deliver" and the place to which the goods are carried to the bu"er are both ports% hence the label Dsea and inland waterwa"E rules. /4S% /5,% C/R and C*/ belong to this class. Under the last three *ncoterms rules% all mention of the ship>s rail as the point of deliver" has been omitted in preference for the goods being delivered when the" are Don boardE the vessel. his

more closel" reflects modern commercial realit" and avoids the rather dated image of the ris! swinging to and fro across an imaginar" perpendicular line. he *ncoterms &111 rules clearl" state in a number of places that the obligation to compl" with e#port$import formalities e#ists onl" where applicable. Electron!c commun!cat!on 'revious versions of *ncoterms rules have specified those documents that could be replaced b" 3+* messages. 4rticles 41$,1 of the *ncoterms &111 rules% however% now give electronic means of communication the same effect as paper communication% as long as the parties so agree or where customar". his formulation facilitates the evolution of new electronic procedures throughout the lifetime of the *ncoterms &111 rules. Secur!t$%related clearances and !n"ormat!on re&u!red "or such clearances here is heightened concern nowada"s about securit" in the movement of goods% re=uiring verification that the goods do not pose a threat to life or propert" for reasons other than their inherent nature. herefore% the *ncoterms &111 rules have allocated obligations between the bu"er and seller to obtain or to render assistance in obtaining securit"-related clearances% such as chain-of-custod" information% in articles 4&$,& and 411$,11 of various *ncoterms rules. Term!nal handl!n' char'es Under *ncoterms rules C' % C*'% C/R% C*/% +4 % +4'% and ++'% the seller must ma!e arrangements for the carriage of the goods to the agreed destination. Hhile the freight is paid b" the seller% it is actuall" paid for b" the bu"er as freight costs are normall" included b" the seller in the total selling price. he carriage costs will sometimes include the costs of handling and moving the goods within port or container terminal facilities and the carrier or terminal operator ma" well charge these costs to the bu"er who receives the goods. *n these circumstances% the bu"er will want to avoid pa"ing for the same service twice; once to the seller as part of the total selling price and once independentl" to the carrier or the terminal operator. he *ncoterms &111 rules see! to avoid this happening b" clearl" allocating such costs in articles 46$,6 of the relevant *ncoterms rules. Str!n' sales *n the sale of commodities% as opposed to the sale of manufactured goods% cargo is fre=uentl" sold several times during transit Ddown a stringE. Hhen this happens% a seller in the middle of the string does not DshipE the goods because these have alread" been shipped b" the first seller in the string. he seller in the middle of the string therefore performs its obligations towards its bu"er not b" shipping the goods% but b" DprocuringE goods that have been shipped. /or clarification purposes% *ncoterms &111 rules include

the obligation to Dprocure goods shippedE as an alternative to the obligation to ship goods in the relevant *ncoterms rules. RU93S /5R 4NF @5+3 5R @5+3S 5/ R4NS'5R ,&*A.+U.& &'( &# (orks (named place *OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen the seller ma!es the goods available at the seller>s premises or another named place. .Such a named place can be wor!s% factor"% warehouse etc.7 21 .esponsibilit% of t"e seller *n theor" onl" as per .17 above% however% in practice ma" gives assistance in loading etc. if so should agree to this in the sales contract with reference to which part" is responsible for costs and ris!. 4lso render an" assistance in document procuring etc. 31 .esponsibilit% of t"e bu%er 4ll costs and ris!s involved in transporting the goods from the seller>s premises to the bu"er>s place of destination. OB-&.4A+IO/ his represents the minimum e#port responsibilit" of the e#porter and ma#imum of the importer. *f the importer cannot carr" out the e#port formalities then the F)A term is recommended. Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. MAI/ )A..IA6& U/*AI, *OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen the seller delivers the goods% cleared for e#port% to the carrier nominated b" the bu"er at the named place F)A Free )arrier (named place 1

/O+&

A1 B1 )1

*f deliver" ta!es place at the seller>s premises% the seller is responsible for unloading. *f deliver" occurs at an" other place% the seller is not responsible for unloading. *f no specific point has been agreed within the named place% and there are several points available% the seller ma" select the point at the place of deliver"% which best suits the seller>s purpose. *n the absence of precise instructions from the bu"er% the seller ma" deliver the goods for carriage in a manner to suit the transport mode and$or =uantit" and$or nature of the goods re=uired.

,1

21

.esponsibilit% of t"e seller &.1 &.& &.3 +eliver the goods at the named point into the custod" of the carrier named b" the bu"er 3#port clearance re=uirements 'rovide evidence of deliver" of the goods to the carrier

31

.esponsibilit% of t"e bu%er 3.1 3.& Nominate the carrier Contract for the carriage and pa" the freight

OB-&.4A+IO/ his term is suitable for all modes of transport including MU7+IMO,A7 +.A/-*O.+1 DCarrierE means an" person who% in a contract of carriage% underta!es to perform or to procure the performance of transport b" rail% road% air% inland waterwa" or b" a combination of such modes. *f a person is not a carrier and is nominated b" the bu"er% deliver" to that person will have fulfilled the deliver" re=uirements under F)A1 Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. MAI/ )A..IA6& *AI, )*+ *OI/+- +O .&M&MB&.0 )arriage *aid +o (name place of destination

11

,eli2er% point Hhen and where the seller delivers the goods to the carrier nominated b" the seller

21

.esponsibilit% of t"e seller &.1 &.& &.3 &.( Contract for carriage and pa" the freight to the named port of destination +39*J3R -3 055+S *N 5 -3 -4N+S 5/ -3 /*RS C4RR*3R 4rrange e#port clearance including costs 4rrange for the bu"er to receive an invoice and the usual transport document

31

.esponsibilit% of t"e bu%er 3.1 3.& 4ccept the goods when the" are delivered to the first carrier 4ccept deliver" of the goods as long as the" are in accordance with the contract at the named place of destination.

OB-&.4A+IO/ *t must be stressed that the deliver" to the first carrier is the dividing point for ris! of damage to the goods .irrespective of whether subse=uent other carrier are used7. 8)arrier9 5 means an" person who% in a contract% underta!es to perform or to procure the performance of transport b" rail% road% air% sea% inland waterwa" or b" a combination of such modes. Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. MAI/ )A..IA6& *AI, )I* *OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen and where the seller delivers the goods to the carrier nominated b" the seller. )arriage and Insurance *aid +o (named place of destination 1

21

.esponsibilit% of t"e seller &.1 &.& &.3 &.( &.2 Contract for carriage and pa" the freight to the named port of destination +39*J3R -3 055+S *N 5 -3 -4N+S 5/ -3 /*RS C4RR*3R 4rrange e#port clearance including costs Contract for the insurance of the goods during the carriage and pa" the insurance premium 4rrange for the bu"er to receive an invoice% usual transport document and a cargo insurance polic" or other evidence of insurance

31

.esponsibilit% of t"e bu%er 3.1 3.& 4ccept deliver" of the goods when the" are delivered to the first carrier and 4ccept the goods when the invoice% the cargo insurance polic" or their evidence of insurance cover and if customar" the usual transport document are tendered to the bu"er. Received the goods at the named place of destination as long as the" are in accordance with the contract at the named place of destination.

3.3

OB-&.4A+IO/ *t must be stressed that the deliver" to the first carrier is the dividing point for ris! of damage to the goods .irrespective of whether subse=uent other carrier>s are used7. 8)arrier9 5 means an" person who% in a contract% underta!es to perform or to procure the performance of transport b" rail% road% air% sea% inland waterwa" or b" a combination of such modes. Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. ,eli2er% ,ut% *aid (named place of destination *OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen and where the seller delivers the goods to the bu"er% cleared for import% and not unloaded from an" arriving means of transport at the named place of destination.

21

.esponsibilit% of t"e seller &.1 &.& &.3 +eliver the goods to the named place of destination. 4rrange documentation to allow the bu"er to ta!e deliver" at the named place e.g. deliver" order% document of transport. 4rrange import clearance b" obtaining an" import license if relevant% pa" import duties% ta#es and fees re=uired

31

.esponsibilit% of t"e bu%er 3.1 a!e deliver" of the goods at the named place of destination

he term ,,* represents the ma#imum obligation for the seller would be the opposite to &'(1 *f the parties want to e#clude some obligation from the seller e.g. 4A+ such a decision should appear in the )O/+.A)+ OF -A7&1 RU93S /5R S34 4N+ *N94N+ H4 3RH4F R4NS'5R

MAI/ )A..IA6& U/*AI, FA*OI/+- +O .&M&MB&.0 11 ,eli2er% point

Free Alongside -"ip (named port of s"ipment

Hhen and where the goods are placed alongside the vessel at the named port of shipment 21 .esponsibilit% of t"e seller &.1 &.& &.3 31 +eliver the goods alongside the ship 'rovide the usual proof of deliver" e.g. Dalongside receiptE Clear the goods for e#port

.esponsibilit% of t"e bu%er 3.1 Nominate the carrier

3.&

Contract for carriage and freight

OB-&.4A+IO/ Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. 6.OU* F MAI/ )A..IA6& U/*AI, FOB *OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen the goods have passed over the ship>s rail at the named port of shipment 21 .esponsibilit% of t"e seller &.1 &.& &.3 &.( 31 Clear the goods for e#port +eliver" the goods on board 'rovide a clean on board receipt 'a" loading costs according to the custom of the port but not costs that relate to the freight

Free on Board (named port of s"ipment 1

.esponsibilit% of t"e bu%er 3.1 3.& 3.3 3.( Nominate the carrier Contract for carriage and pa" the freight 'a" an" loading costs that relate to the actual freight 'a" unloading costs

OB-&.4A+IO/ *f goods are not intended to be delivered across the ship>s rail the F)A terms should be used. Insurance 5 the seller must provide the bu"er% upon re=uest with the necessar" information for procuring insurance.

MAI/ )A..IA6& U/*AI, )F. *OI/+- +O .&M&MB&.0 11 ,eli2er% point

)ost and Freig"t (named port of destination 1

Hhen the goods have passed over the ship>s rail in the port of shipment 21 .esponsibilit% of t"e seller &.1 &.& &.3 &.( &.2 &.6 31 Contract for carriage and pa" the freight to the named port of destination +eliver the goods on board 4rrange e#port clearance including costs 'rovide the bu"er with an invoice and a clean transport document .e.g. bill of lading% sea wa"bill7 'a" loading costs 'a" an" unloading costs that ma" be included in the freight.

.esponsibilit% of t"e bu%er 3.1 3.& 3.3 Receive the goods at the named port of destination 4ccept the goods as long as the" are in accordance with the contract 'a" an" unloading costs that are covered in the freight.

OB-&.4A+IO/ *t must be stressed that the ship>s rail is the dividing point for ris! of damage to the goods. *f it is not intended that the ships rail should not be the critical point for ris! than the C' term should be used e.g. roll on$roll or container traffic. Insurance 5 the seller must provide the bu"er% upon re=uest% with the necessar" information for procuring insurance. MAI/ )A..IA6& *AI, )IF destination )ost: Insurance and Freig"t (named port of

*OI/+- +O .&M&MB&.0 11 ,eli2er% point Hhen the goods have passed over the ship>s rail in the port of shipment 21 .esponsibilit% of t"e seller &.1 &.& &.3 &.( &.2 &.6 &.) 31 Contract for carriage and pa" the freight to the named port of destination +eliver the goods on board 4rrange e#port clearance including costs Contract for the insurance of the goods whilst in transit and pa" the insurance premium 'rovide the bu"er with an invoice and a clean transport document .e.g. bill of lading% sea wa" bill7 and a cargo insurance polic" certificate 'a" loading costs 'a" an" unloading costs that ma" be included in the freight

.esponsibilit% of t"e bu%er 3.1 3.& Receive the goods at the named port of destination 4ccept the goods as long as the" are in accordance with the contract

3.3 'a" an" unloading costs that are covered in the freight. OB-&.4A+IO/ *t must be stressed that the ship>s rail is the dividing point for ris! of damage to the goods% however the ris! of loss or damage to the goods% as well as an" costs occurring after deliver" are transferred from the seller to the bu"er. *f it is not intended that the ships rail should not be the critical point for ris! than the C' term should be used e.g. roll on$roll off or container traffic. Insurance 5 the bu"er procures the insurance% however minimum cover onl" is re=uired under *ncoterms. *f the bu"er wants to increase the insurance protection than% an arrangement must be made with the seller or alternativel" ma!e his or her own e#tra insurance arrangements.