Escolar Documentos
Profissional Documentos
Cultura Documentos
FRANCHISING:
It is a very popular form of SME these days like
KFC, Pizza Hut etc.
It is defined as a continuing arrangement between
the parent company i.e. franchisor and an
entrepreneur i.e. franchisee. The agreement is for
a certain period which can be extended as decided
mutually.
ADVANTAGES:
To the franchisor
To the franchisee
Expand distribution
without increased capital
investment.
Community acceptance of
the product
Marketing & distribution
expanses are shared.
Some operating cost may
be transferred to the
franchisee.
Flat fee can be collected
from franchisee
Through agreement,
quality control can be
maintained.
Percentage on sale can be
earned.
Sound management,
training and decision
making may be available.
Market tested product so
less risk will be there.
Advertising & promotion
is already there.
Acceptance in large
system of retailers.
Credit may be available.
Advisory available.
Credit may be available.
DISADVANTAGES:
Franchisor
Long distance control
over franchisee.
Expanses on training
sometimes very high.
Loss of some ownership
Product can be stolen
Franchisee
Gives up much freedom in
management decision.
Profits are always
shared.
Franchises may be very
expensive.
Undue interference.
Financial picture
Why for sale, is it TITANIC?
What are business trends?
Books should be checked.
All concerned should be interviewed.
we
by
assisting
us
documentation?
with
all
the
necessary
by
the
possibility
of
Expert assistance
Expert assistance and facilities in dealing with
often complex transactions, particularly with the
specific procedures to be followed.
DOCUMENTARY CREDITS
Definition
In simple terms, a documentary credit/letter
credit is a conditional bank undertaking
payment.
of
of
Issuing bank
If the second bank is simply advising the credit,
it will mention this fact when it forwards the
credit to the seller. Such a bank is under no
commitment to make payment to the seller, even
though it may be nominated in the credit as the
bank authorized to pay, to accept drafts, or to
negotiate.
If the advising bank is also confirming the
credit, it will so state. This means that the
confirming
bank,
regardless
of
any
other
consideration, must pay, accept, or negotiate
without recourse to the seller, provided all the
documents are in order and the credit requirements
are met.
SOME IMPORTANT RELEVANT SCHEDULE OF BANK CHARGES
IMPORTS:
Sr.#
2
3
4
Annual
Quarterly
Minimum
amoun
payme
payme
t
nt
nt
for
one
LC
Upto Rs.25M 0.40% per
Rs.1,400
quart
or
er
negot
iable
Upto Rs.50M 0.35% per
quart
er
Upto
0.29% per
Rs.10
quart
0M
er
Above
Negotiable
LC
Negotiable
LC advising
Rs.1,400
per
quar
ter
Rs.1,200
LC advising
amend
ment
LC
Minimum
confi
Rs.1
rmati
,400
on
amend
ment
& handling
charg
es
One off
Normal mark
trans
up
actio
rate
n
Documents
No
retir
commi
ed
ssion
with
10
days
If retired
From 0.29%
durin
to
g 15
0.46%
days
i.e.
or
negot
more
iable
EXPORTS:
JULY-SEPT,11
JULY-SEPT 10
GDP GROWTH
FISCAL DEFICIT
RS.VS $
IMPORTS
EXPORTS
TRADE GAP
CURRENT A/c
DEFICIT
2.5%-2.8%
1.5% OF GDP
Rs.86.12
$9B
$5B
$3.85B
$545M
4.1%
1.6% OF GDP
Rs.83.12
$7.6B
$4.3B
$3.15B
587M
HOME REMITTANCE
FOREIGN
INVESTMEN
T
FOREX RESERVES
EXTERNAL DEBT
EXTERNAL DEBT
SERVICING
$2.6B
$455M
$2.3B
$636M
$17B
$55.6B
$5.7B
$14.4B
$52.3B
$5.3B
Global recession.
Flight of capital due to judicial crisis.
Law and order situation after Benazirs
Assassination.
IMF condition to make oil/POL payments
through open market in stead of SBP.
High oil & food import prices.
$11.7B loan of IMF.
Freezing of forex exchange companies.
$ =Rs.19.32 in 1989.
IMF Support Arrangements to Pakistan
(1980-2004)
Date of Amou
Disbursem
Arrangem nt
Signed
Arrangem
ent
ent
(SDR
during
ent
(SDR
(expiration millio
rule of
million)
)
n)
EFF
24-11-80 1268.0
(23-11-83) 0
SBA
28-12-88 273.15
(7-3-90)
SAF
28-12-88 382.41
(27-12-91)
SBA
16-9-93 265.40
EFF/
(15-9-94) 379.10
ESAF
22-2-94 606.60
(21-2-97)
22-2-94
(21-2-97)
SBA
13-12-95 562.59
(31-3-97)
EFF/ESA 20-10-97 454.92
F
(19-10- 682.38
2000)
SBA
29-11- 465.00
2000
(30-92001)
PRGF
7-12-2001 1033.7
(5-120
2004)
1079.00 Ziaul
Haq
194.48 Benazir
Bhutto
382.41 Benazir
Bhutto
88.00 Nawaz
123.20 Sharif
172.20
294.69 Benazir
Bhutto
113.75 Nawaz
265.37 Sharif
465.00 Pervez
Musharr
af
861.42 Pervez
Musharr
af
LATEST LOAN:
Stand-By Arrangement (SBA) 2008-10
Main Features
a) Pakistan submitted to the IMF a Request for
Stand-By Arrangement on 20
November, 2008 amounting SDR 5.17 billion
($ 7.6 billion) equal to 500%
of Pakistan's quota in the Fund. It has
increased to $11.7B. Pakistan has
requested to extend it upto 31-12-10 as it was
expired on 30-09-10.
b) The Arrangement is for a period of 23
months.
c) It is on interest rate of 3.51-4.51%. The
amount will be disbursed in seven
tranches - the first tranche of SDR 2.067
billion has been received on 29
November, 2008 and the balance amount will
be disbursed in six quarterly
Gross
12.9
national
savings (%
GDP)
Gross
21.3
capital
formation
(% GDP)
External
8.4
resources(%
GDP)
Fiscal
7.4
deficit (%
GDP)
Debt (%
57.9
GDP)
Current
8.4
Account
deficit (%
GDP)
External
26.5
debt (%
GDP)
Reserves ($ 8.591
13.5
15.7
20.0
21.3
6.5
5.6
4.2
3.3
54.6
52.4
6.5
5.7
31.4
33.2
8.591
11,291
million)
CREDIT APPLICATION
The instructions to be given by the applicant to
the issuing bank will cover such items as.
1. The full (and correct) name and address of the
beneficiary (seller).
2. The amount of the credit.
3. The type of credit, whether
*
revocable
*
irrevocable
*
irrevocable,
with
the
added
confirmation of the advising bank.
4.How the credit is to be
available, e.g. by
payment,
deferred
payment,
acceptance
or
negotiation. In most cases it will be the issuing
bank which will determine the bank authorized to
pay, or to accept drafts, or to negotiate, i.e.
the nominated bank Article 11(b), UCP).
4. The party on whom drafts, if any, are to be
drawn and the tenor of such drafts.
5. A brief description of the goods, including
details of quantity and unit price, if any.
6. Whether freight is to be prepaid or not.
7. Details of the documents required. The place of
dispatch or taking in charge of the goods,
or loading on board, as the case may be, and
the place of final destination.
8. Whether transshipment is prohibited.
9. Whether partial shipments are prohibited.
10.
The
latest
date
for
shipment
(if
applicable). The period of time after the
date
of
issuance
of
the
transport
documents(s) within which the documents must
be presented for payment, acceptance or
negotiation.
11. The date and place of expiry of the credit.
12. Whether the c
redit is to be a transferable one. (This would
have to be stated specifically by the
applicant). The specimen application form is
for a non-transferable credit.
13. How the credit is to be advised, i.e., by
mail, or by teletransmission i.e. SWIFT
TYPES OF CREDIT
There are various types of documentary credits. A
revocable credit can be amended or cancelled at any
time without prior warning or notification to the
seller.
An irrevocable credit can be amended or cancelled
only with the agreement of the issuing bank, the
confirming bank (if the credit has been confirmed)
and the seller (as beneficiary). As there are often
two banks involved, the issuing bank and the
advising bank, the buyer can ask for an irrevocable
credit to be confirmed by the advising bank. If the
advising bank agrees, the irrevocable credit
becomes a confirmed irrevocable credit.
Revocable Credit
Involves risk, as the credit may be amended or
cancelled while the goods are in transit and before
the
documents
are
presented,
or,
although
presented, before payment has been made, or in the
case of deferred payment credit, before the
documents have been taken up. The seller would then
face the problem of obtaining payment directly from
the buyer.
Irrevocable Credit
Gives the seller greater assurance of payment: but
he remains dependent on an undertaking of a foreign
bank.
Confirmed irrevocable Credit
Gives the seller a double assurance of payment,
since a bank in the sellers country has added its
own undertaking to that of the issuing bank.
Revocable Credit:
Gives the buyer maximum flexibility, as it can be
amended or cancelled without prior notice to the
seller up to the moment of payment by the bank at
which the issuing bank has made the credit
available.
Irrevocable Credit
Gives less flexibility, as the credit can only be
amended or cancelled if all the parties named above
agree. (It must be noted, however, that the credit
is issued in this form because the commercial
parties have so agreed in the sales contract).
Confirmed irrevocable Credit
Represents an additional requirement and is more
costly.
PRESENTATION
1.As soon as the seller receives the credit and is
satisfied
that
he
can
meet
its
terms
and
conditions, he is in a position to load the goods
and dispatch them.
2.The seller then sends the documents evidencing
the shipment to the bank where the credit is
available (the nominated bank).
3.The bank checks the documents against the credit.
If the documents meet the requirements of the
credit, the bank will pay, accept, or negotiate,
according to the terms of the credit. In the case
of a credit available by negotiation, the issuing
bank or the confirming bank will negotiate without
recourse. Any other bank, including the advising
which
b)
TRANSPORT DOCUMENTS
The most important thing is the relevant transport
document!
The revision of UCP aims at a less troubled future
by recognizing and legislating for
a)
b)
the
case
where
the
credit
envisages
carriage by sea, with the traditional
marine bill of lading stipulated as the
required transport document.
all other cases where the credit calls for a
transport documents, e.g. where the mode of
carriage may be a combination of more than
one mode (combined transport), or may be air,
road, rail or inland waterway, with the
appropriate transport document a combined
transport bill of lading, an air waybill, a
road or rail consignment note, an inland
waterway bill of lading, or even, if so
stipulated in the credit.
c)
BILL OF LADING
This is the type of transport document normally
applicable to a carriage of goods solely by sea. It
is the transport document which must be presented
if the credit stipulates a marine bill of lading.
Unless otherwise stipulated in the credit this
document MUST indicate that the goods have been
loaded on board or shipped on a named vessel.
normally
includes
the
date.
name and address of buyer and seller.
order or contract number, quantity and
description of the goods, unit price (and
details of any other agreed charges not
included in the unit price), and the total
price.
*
weight of the goods, number of packages,
and shipping marks and numbers.
*
terms of delivery and payment.
*
shipment details.
*
*
*
CERTIFICATE OF ORIGIN
A certificate of origin is a signed statement
providing evidence of the origin of the goods.
In many countries a certificate of origin,
although prepared by the exporter or his
agent, has to be issued in a mandatory form
and
manner,
with
certification
by
an
independent official organization, e.g., a
chamber of commerce.
*
Such a document contains details of the
shipment to which it relates, states the
origin of the goods, and bears the signature
and the seal or stamp of the certifying body.
*
INSURANCE CERTIFICATE
The insurance document must:
1. be for the purpose that specified in the
credit.
2. be consistent with the other documents in its
identification of the voyage and description of
the goods.
3. unless otherwise stipulated in the credit,
a. be a document issued and/ or signed by
insurance companies or underwriters, or
their agents.
b. be dated on or before the date of shipment
as evidenced by the transport documents,
or appear to show that cover is effective
at the latest from such date of shipment
be for an amount at least equal to the CIF
value of the goods plus 10% and in the
currency of the credit.
SETTLEMENT
The seller may sometimes present documents that do
not meet the credit requirements. In such a case,
the bank can only act in one of the following ways:
1. Return the documents to the beneficiary
(seller) to have them amended for resubmission
within the validity of the credit and within
the period of time after date of issuance
specified in the credit, or applicable under
(UCP).
2. Send the documents for collection.
3. Return the documents to the beneficiary for
sending through his own bankers.
4. If so authorized by the beneficiary, cable or
write to the issuing bank for authority to pay,
accept or negotiate.
5. Call for an indemnity from the beneficiary or
from a bank, as appropriate i.e., pay, accept
or negotiate on the understanding that any
payment made will be refunded by the party
giving the indemnity, together with interest
and all charges, if the issuing bank refuses to
provide reimbursement against documents, that
do not meet the credit requirements.
6. Based on practical experience, and with the
agreement of the beneficiary, pay, accept or
negotiate under reserve, i.e. retain the
right of recourse against the beneficiary if
the
issuing
bank
refuses
to
provide
reimbursement against documents that do not
meet the credit requirements. In view of a
court ruling it would be advisable to make sure
that the beneficiary fully understands this
position.
BY PAYMENT
1. The seller sends the documents evidencing the
shipment to the bank where the credit is
available (the paying bank).
2. After checking that the documents meet the
credit requirements, the bank makes payment.
3. This bank, if other than the issuing bank, then
sends the documents to the issuing bank.
Reimbursement is obtained in the pre-agreed
manner.
BY ACCEPTANCE
1. The seller sends the documents evidencing the
shipment to the bank where the credit is
available (the accepting bank), accompanied by
a draft drawn on the bank at the specified
tenor.
2. After checking that the documents meet the
credit requirements, the bank accepts the draft
and returns it to the seller.
3. This bank, if other than the issuing bank, then
sends the documents to the issuing bank,
stating that it has accepted the draft and that
at maturity reimbursement will be obtained in
the pre-agreed manner.
Advising / Confirming bank
By accepting the draft, the bank signifies its
commitment to pay the face value at maturity. The
seller can, therefore, usually convert the accepted
draft into cash by discounting it with his own
bank, or on the local money market.
Issuing Bank
and
3. TRANSFERABLE CREDIT
A
transferable
credit
is
one
that
can
be
transferred by the original (First) beneficiary to
one or more other parties (second beneficiaries).It
is normally used when the first beneficiary does
not supply the merchandise himself, but is a
middleman and thus wishes to transfer part, or all,
of his rights and obligations to the actual
supplier(s) as second beneficiary(ies).
This type of credit can only be transferred once,
i.e., the second beneficiary(ies) cannot transfer
to a third beneficiary, The transfer must be
Pre-shipment
Post-shipment
PART-II:
It takes place on the basis of their previous year
performance with the help of export realization.
Repayment should be made within 180 days of the
bank borrowing unless and otherwise extended by the
Bank.
Part-II is allowed at 6/12 of previous years
export performance from any Bank.SBP has allocated
Rs.10B for refinancing. The mark-up rate will be 8%
maximum & 5% will be of SBP.
Current Transactions:
a) Goods and services during one financial
year i.e. visible items & it is called
balance of trade also. It includes non
visible items like services also & factor
income i.e. dividend payment & interest
payments across the borders.
b) Receipt and payments which do not
create
new
capital
items
or
cancel
previous
such
items
(visible
or
invisible).
ii)
Capital Transactions:
a) Receipts
iv)
management of available
currency. It refers to
ii) UNDER
VALUATION:
Less
than
determined by market forces.
the
value
vi)
vii)
To
control
x)
earning
and
xi)
RETALIATION:
Monopoly
bargaining terms.
power
and
better
rate
for
different
b)BLOCKED ACCOUNTS:
It refers to the following:
i)
ii)
iii)
iv)
v)
c)PAYMENT AGREEMENTS:
It refers to the following points:
i)
ii)
Can
be
made
through
agreement between two countries, which
want rationing.
Can be made through agreement
between debtor and creditor countries.
iii)
Sometimes forced to be
creditor
for
encouragement
exports.
formed by
of
their
CLEARING AGREEMENTS:
i)
ii)
iv)
v)
Trade
control
may
be
exercised
to
ensure
early
repatriation
of
export
proceeds while free imports
may
be
controlled
for
a
favourable BOP.
INDIRECT METHODS:
a)QUANTITATIVE RESTRICTIONS:
There is import embargoes, import
quota and other restrictions to
control disequilibrium in BOP.
b)EXPORT
BOUNTIES:
exports,
provided
available with SBP.
To
encourage
funds
are
d)
Foreshadowing future:
Forecasting of future for
financial management.
e)
Allocating resources:
Considering growth, safety and
yield.
CLASSIFICATION OF FINANCIAL MARKET:
a)
b)
c)
d)
Primary market.
Secondary market
Money market
Capital market
b)
c)
IN
FOREIGN
Economic
Conditions:
The
investors can invest in a
currency
where
economy
is
stable
so
return
can
be
higher.
Exchange rate expectataions:
The securities in a currency
may
be
bought
where
appreciation is higher than
the domestic currency.
International Diversification:
Risk & fluctuations can be
managed by investing in other
currencies.
IN
IN
FOREIGN
a) Low
interest
rates:
Many
countries have bulk supply of
foreign reserves so rate of
interest are relatively low.
b) Exchange rate expectations: The
risk & return can be managed.
FUNCTIONS:
i)
iii)
No
physical
delivery
of
currency takes place usually.
iv)
It provides credit also to
the business community.
v)
HEDGING: Hedging means
avoidance of foreign exchange
risk
or
covering
of
an
position without buying or
tying up funds. This process
is carried out in forward
Market. This promotes foreign
trade.
vi)
SPECULATION:
DESTABILIZING EFFECT.
VII)SWAP TRANSACTIONS:
It refers to following:
i)
Simultaneous
buying
and
selling of foreign currency
for different delivery dates
in opposite direction.
ii)
May
cover
spot
against
forward.
iii)
May
take
place
between
commercial parties or Bank
etc.
iv) May be for a limited period
of time.
v)
May be lesser risky.
vi)
Very
popular
with
speculators, as well.
FOREIGN
EXCHANGE
MANAGEMENT:
POSITION
i)
ii)
iii)
iv)
v)
vi)
In
order
to
facilitate
foreign exchange transaction
the Banks buy/sell currency in
spot or forward.
The difference between buy
and sell shows the commitment
position of the Bank.
If purchase side is more than
sale
side
it
is
called
overbought and the opposite
one is called oversold.
If both positions are equal
it is called SQUARE.
If both positions are nearly
equal, it is called near
square.
Sometimes
delay
in
transmitting
takes
place,
which may disturb position.
FIXED
RATE:
Remains fixed in
terms of foreign unit of currency
with
the
home
currency.
This
system has a demerit that when
there is adverse BOP, substantial
foreign exchange reserves will be
needed to maintain the rate at
fixed level.
FLOATING(FREE)RATE:
It
moves
in a following direction:
i)
Demand and supply of the
currency.
ii)
Places a currency at the
mercy of worlds judgment.
iii) May give rise to speculation.
INDIRECT QUOTATION:
It values the currencies in terms
of the other currencies than in
national currencies.
US$ 0.5=Rs.1
CROSS RATES:
i)
ii)
iii)
iv)
v)
vi)
SPOT RATE:
The spot rate of the currency is the
value
quoted
for
the
nearest
settlement date for the purchase and
sale of the currency against another
one. The transaction may be settled
in two to three working days.
FORWARD RATE:
It covers following concepts:
i)
iv)
help
can
FORWARD
Size
of Tailored
contract
to
individual
needs
Delivery
Tailored
date
to
individual
needs
Participant Bankers,
s
brokers,
MNC,
speculator
FUTURE
Standardize
d
Standardize
d
Bankers,
brokers,
MNC,
qualified
s
not speculators
encouraged
Security
Not
Needed
deposit
essential
Transaction Set
by Negotiable
cost
spread
CURRENCY CALL OPTIONS:
It grants right to buy specific
currency at a designated price
within a specific period of time.
The currency options are desirable
when one wishes to lock in a maximum
price to be paid for the currency in
the future. The price at which the
person is allowed to buy that
currency is known as exercise/strike
price.
Call options are desirable when.
a) One wishes to lock maximum
price to be paid for a currency
in the future.
b) If the spot rate of currency
rises above strike price owners
of call options can exercise
option by purchasing it at
strike price.
c) Future contract is obligatory
but currency option is not.
d) Owners of call option loses
premium paid by them initially
but that is maximum.
A currency call option is said to be
in the money when present exchange
rate exceeds strike price, at the
money when both are equal & out of
money present exchange rate is less
that strike price. Higher premium is
there in the money option.
FACTORS
AFFECTING
OPTION PREMIUM:
CURRENCY
CALL
price
0.70
Selling
price of C$
Purchase
-0.74
price of C$
Premium
.01
received
for option
Net Profit -0.03
contract
35,000
-37,000
+500
-1,500
OFFSHORE BANKING:
i)
with
from