Lecture 32: What is Letter of credit (LC) for importers? Does it used for domestic buying as well?

[@spritiual_explorer]

You made it seem so easy. I am glad i found you on youtube. Thankyou for teaching it so simply and efficiently.

[@AnkushJain]

Thank you

[@anishjadhav4701]

This is the best understanding I have got. Thank you sir. Hope more people find this. This is gold

[@AnkushJain]

Thank you Anish.

[@prakashsharki17]

Wow sir can't describe most knowledgeable videos very needful for new joining in the bank as well as clients who take working capital facilities.

[@AnkushJain]

Thank you

[@VIVAAN-XD]

Love your way of explanation. Thanks sir, keep it up.

[@AnkushJain]

Thank you Amit.

[@yjgratitude5]

Best Lecture for understanding Letter of Credit topic

[@AnkushJain]

Thank you

[@rahulmakwana3690]

Ok sorry sir abhi vo video dekhna baki he

[@AnkushJain]

Ok

[@positiveinvestor]

Your lectures are amazing👍😍... Sir Thank you so much for sharing knowledge... 🙏🙏

[@AnkushJain]

Thank you

[@nishantsalve6517]

Thank You sir now I got Clear information of lc.

[@AnkushJain]

Your welcome 👍

[@yogeshsaluja488]

Dear sir you upload amazing content and that too so deeply for every topic it's amazing. Requesting you to please upload videos on ECB, ODI & FDI too.

[@AnkushJain]

Thank you

[@HadotiClassesKota]

Really superb lecture sir👏👏👏 Thank you!

[@AnkushJain]

👍

[@ShaistaSam]

Very very good effort and easy understandable language.

[@AnkushJain]

Thank you 👍

[@ShaistaSam]

Sir...carry on. May Allah bless u with huge heights of success ❤️

[@AnkushJain]

Thank you, wish the same for you as well 👍

[@MDVaashir]

Extremely Thankyou to you for this video.

[@AnkushJain]

👍

[@rollingroles]

excellent work, kindly tell what is the app or program in which u are doing these drawings and text writings..

[@AnkushJain]

Thank you. One note app

[@surbhisharma7237]

Superb content sir

[@AnkushJain]

Thank you

[@mohitvaidya4691]

Nice Explanation sir 👏😌

[@AnkushJain]

Thank you

[@OmparkashRai-wv2zd]

SIR I HAVE SOME QUESTIONES REGARDING LC WHICH ARE AS FOLLOWS: 1) DOES BANK TAKE CHARGES ON LC OPENING FROM LC ISSUE DATE TO LC EXPIRY DATE OR FROM LC ISSUE DATE TO LC PAYMENT DUE DATE ? 2) DOES BANK TAKE CHARGES ON LC OPENING ON DAYS BASIS OR MONTHLY BASIS OR QUARTERLY BASIS ? 3) IF THE USANCE PERIOD OF LC IS 60 DAYS FROM INVOICE DATE AND INVOICE DATE IS BEFORE LC OPENING DATE THEN WHETHER BANK WILL TAKE CHARGES FOR 60 DAYS OR FOR ONE QUARTER FOR LC OPENING ? MY QUESTION ARE ONLY RELATING TO BANK CHARGES ON LC OPNING WHICH I WANT CLARITY ON THE SAME.

[@AnkushJain]

I am not much clear about charges point since it is operational matter

[@OmparkashRai-wv2zd]

@@AnkushJain, ok

[@AnkushJain]

👍

[@rohitbhatia1537]

Sir A party is availing CC and LC. Following are my queries. 1. How to calculate DP of CC? Is it Stock + Debtors - Creditors Please note all the creditors arose due to Issuance of LC. 2. We have sanctioned LC with usance period of 180 days and 0.50 months lead time. What is the Lead time? Further, party is requesting to allow DP against Debtors of 120 days since he is selling goods at 120 days credit. Further he is requesting to square off the Debtors of more than 120 days with creditors. Is it justified? Please guide

[@AnkushJain]

Pl find reverts: Question 1: Yes DP shall be calculated that way only Question 2: lead time is time taken for ship to reach destination port Question 3: 120 days debtors are ok but squaring off debtors more than 120 with creditors is not ok. Since his payment cycle is 120 days only

[@rohitbhatia1537]

@CA Ankush Jain Thanks sir We normally give permission for opening of LC with 180 days from the date of shipment. Then lead period is included in usance? Or can we exclude lead period while assessment of LC limit

[@kiranjeetkaur8700]

Well Explained

[@AnkushJain]

Thank you

[@karansarwal4207]

Well explained

[@AnkushJain]

Thank you

[@subhajitdutta1610]

sir, "Revolving lc on value" m irrevocable at sight at per shipment terms ho sakta ha? please help me

[@AnkushJain]

Can you elaborate the term, could not get it properly

[@subhajitdutta1610]

@@AnkushJain Because of the High quantity buyer wants to open revolving Lc instead of open a normal lc so many tines, so in lc term I have to export a certain amount in a month(for example- 500 Tonne), so my question is if i shipped 100 Tonne in a week, can i get the first 100 tonne payment at sight?

[@mihirzatakiya124]

Sir, What is used more , DA/DP OR LC practically?

[@AnkushJain]

LC is less frequent than DA/DP however still many cases come of both

[@mihirzatakiya124]

@@AnkushJain okay thanks Sir.

[@AnkushJain]

Your welcome

[@jyotikiran6403]

Sir what is the difference between LC AT SIGHT and DP, if in both case we are making payment on spot and getting the documents after payment.

[@AnkushJain]

Pl watch this series to understand kzbin.info/aero/PLjlclsu02a_x_dPoEXCXjwFEZ5J23T0c2

[@PristineAnimation]

Sir, I m working in ICICI Bank as in BLG, Your video is very useful. But I want to know about your organisation??

[@AnkushJain]

I am also in icici

[@PristineAnimation]

@@AnkushJain Nice sir, I checked. And I m Ayush Raj.

[@AnkushJain]

😊😊👍👍

[@Lelomotivation_hub]

Dear sir may you please add the assessment also with example for all the products you revealed like CC OD WCDL

[@AnkushJain]

kzbin.info/www/bejne/o2PKi6GOpJmFnLc LC assessment video

[@MONUKUMAR-xu7xg]

@@AnkushJain Thanks, Please add one short vedio for How to do Assessment of Capex LC and how to set it in CMA

[@sauravkumar7594]

Nice one

[@AnkushJain]

Thank you

[@chintansoni2028]

Request if you can also share your views on below facilities. Channel Finance/TReDS/Purchase/Sales bill discounting/Recourse-Non recourse structure in LCBD

[@AnkushJain]

Ok chintan. I will make videos on them

[@MONUKUMAR-xu7xg]

@@AnkushJain What is TReDS Facility, never heard this name

[@caaman93]

Sir Any video available for LC and BG assessment.

[@AnkushJain]

I have not made it yet for BG. But for LC please find below link kzbin.info/www/bejne/o2PKi6GOpJmFnLc

[@yogeshmaheshwari5992]

Quality certificate hai na sir goods ki guarantee ke liye aapne hi bataya

[@AnkushJain]

Question kya hai? Main samjha nahi

[@yogeshmaheshwari5992]

Aapne lecture ke last me bola ki importer ne lc open karwa di to uska kaam, pura par exporter quality goods bhejega ye Guarantee nahi. To maine yeh comment likha

[@nsd1001]

Thank you sir v informative. 1 doubt - on the LC due date the importer makes payment to the exporter or exporters bank? thank you.

[@AnkushJain]

On due date, importers bank makes payment to exporters bank account by deducting from importers account.

[@nsd1001]

@@AnkushJain thank you!

[@AnkushJain]

Your welcome

[@MONUKUMAR-xu7xg]

@@AnkushJain Is it not possible, that on due date, Importer pays to exporter like normal purchase transaction. Banks to come in picture only when importer fails to make payment

[@nsd1001]

Hi sir, in recourse LC, what will beneficiary bank recover from exporter? The loss is already borne by exporter (since importer has not paid) right? Thanks

[@AnkushJain]

No, exporter has taken payment vide discounting of LC from his bank. His bank discounted the LC on confidence that importer bank will pay. Now if money does not come, exporter bank can recover back its money from exporter

[@nsd1001]

@@AnkushJain got it sir thank you.. so as i understand this recourse/non recourse issue will arise only if exporter has discounted the LC.

[@AnkushJain]

Yeah

[@MONUKUMAR-xu7xg]

@@AnkushJain Hii, How would we come to know whether it's recourse LC or Non recourse LC while doing an LCBD proposal. Further Bank would always like to do discounting of Recourse LC only in such situation !

[@shivjha2010]

Sir I am also a cost account and feel that your lacture is superb. Ratio analysis relating to credit manager not get uploaded.can you plz share the same

[@AnkushJain]

I have only covered current ratio as of now. Lectures relating to other ratios shall come soon. Pl go to playlist section where I have made separate playlist for ratio analysis

[@shivjha2010]

@@AnkushJain ok sir thanks

[@mohitchandrajoshi4454]

What is SLC fund based working capital?

[@AnkushJain]

Standby letter of credit?

[@mohitchandrajoshi4454]

@@AnkushJain yes is standby letter of credit & line of credit same?

[@AnkushJain]

Standby letter of credit and normal letter of credit is more or less same. Pl watch next 2-3 videos as well on this topic, many points will get clear

[@mohitchandrajoshi4454]

@@AnkushJain Line of credit is different from letter of credit??

[@rahulmakwana3690]

Kya LC Limit aur Bank Guarantee Limit pe haypothication charge aata he?

[@AnkushJain]

Yes

[@rahulmakwana3690]

To usame current asset as a security lete isake liye

[@AnkushJain]

Yes 👍

[@rajanshah2507]

Sir, can LC be open for creditor for services??

[@AnkushJain]

For purchase of services, there is usually bank guarantees issued than LC. I have not seen any case wherein LC is issued for purchase of services

[@hannymittal7910]

In case of inland lc how bank confirm that all goods delivered with right quantity and right product as purchaser purchased for lc payments. Further is there any other source which is used by small traders to secure themself other than lc and bg as it takes time and high cost

[@AnkushJain]

Bank cross checks from invoice, transporters receipts etc w.r.t goods details and terms as per LC. There is not any secure method involving banking sector other than LC or BG.

[@hannymittal7910]

@@AnkushJain In case of road lorry transport usually description of goods not mentioned practically we also have shop and only they mentioned General goods with weight and qty like 1 cartoon. In that case what is checks followed by banks. Further share your contact no pls so i can connect uf i have doubt

[@AnkushJain]

@@hannymittal7910 along with th transporter receipt there is invoice of goods, e way bill also. Description of goods can be easily checked from them

[@hannymittal7910]

@@AnkushJain ok sir

[@rahulmakwana3690]

LC limit me jo beneficiary hota he use koi limit leni hoti he

[@AnkushJain]

Agar LC discount karvani hai tb Leni pdegi

[@caaditkumar7450]

Sir lecture 27 to 31 is missing??

[@AnkushJain]

No, I can see them, pl recheck

[@art_soul_words]

Waiting for your new video

[@AnkushJain]

Thnx. I am preparing it. Will release in 2 hours

[@caarchanachoudhary]

How the tenor of LC is decided?

[@AnkushJain]

Usually it is comfort between buyer and seller. It is upto the foreign supplier as to how much tenor he wants to give to importer. Although ideally tenor should not exceed stock plus debtor cycle of the client

[@MONUKUMAR-xu7xg]

@@AnkushJain Thanks

[@AnkushJain]

👍

[@art_soul_words]

Who makes payment on due date? Issuing Bank or importer?

[@AnkushJain]

Primarily importer. But if the importer does not have the money then issuing bank.

[@nsd1001]

@@AnkushJain sir 1 follow up question. if the issuing bank makes payment, is there a date by which importer has to pay the bank? is it termed as default if issuing bank pays? wont there be penalty etc. Could u pl explain what happens and steps taken by bank to recover etc. thank you

[@AnkushJain]

It is default. It is called devolvement of LC wherein importer does not pay and bank has to meet its obligation. Default and overdue starts from day 1 after payment. Banks follows up till 90 days for payment, if not received then account becomes NPA and then court proceedings starts

[@nsd1001]

@@AnkushJain thank you sir!

[@AnkushJain]

Your welcome

[@rahulwagh6070]

Superb video sir. 1 doubt. How is accounting under usance LC after using lc and releasing goods? Dr. Inventory and Cr. Creditors under LC ?? Or we show LC o/s in loan section??. Also impact on DP?

[@AnkushJain]

LC limit does not appear separately. Only creditors backed by LC appears in books of accounts and they get reduced from DP as well

[@rahulwagh6070]

@@AnkushJain Thanks sirji

[@AnkushJain]

👍

[@MONUKUMAR-xu7xg]

@@AnkushJain We will show equivalent amount of Stock as well in Projections in CMA, so will this not increase our DP for CC Limits ?

[@AnkushJain]

No it will not. Stock will be backed by limit and by applying in projections, 25% margin point on current assets would come as per MPBF 2 and it will create diff

[@ca_ayush_mittal]

Sir aap clean shave mai jyaada achche lagte hai

[@AnkushJain]

😀😀