International Payments

Methods and documentation

Collection of payments for exports

• Registration of Exporters: Import-Exporters Code (IEC No.) from Regional licensing authority

• Registration cum Membership Certificate (RCMC) of Export Promotion Councils/ Commodity boards eg APEDA,FIEO ( Unless exempted under Govt)

• Obtaining Permanent Account NO. PAN/BIN• Registration with VAT/Sales Tax authorities (Essential to get

exemption for exports)

• Registration under Central Sales Tax Act ( Use of form H and related record of exports)

• Registration with Excise Authorities (mfg only)

• Authorized Foreign Exchange Dealers• Exemptions to legal requirements

– Personal Remittances– FCNR/NRE Accounts– SEZ/EOU Units….and others

Methods of Payment

1- Advance payment

2-Direct remittance

3-Open trade account4-Documentary collection(Presentation;30,60,90 DA)

5-Letter of credit

Letter of credit

1-What is a letter of credit; Contract terms?

2- Parties to letter of credit -Applicant, Beneficiary, Issuing Bank, advising Bank, negotiating

Bank)

3-Uniform customs & practices -ICC (Adopted by 165 countries)

4- Types of letter of credit -Revocable or irrevocable

-Payable at sight/deferred L/c -Transferable L/C -Revolving L/C -Transit L/C

Letter of credit (contd.)

-Back to back L/C -Acceptance L/C

-Anticipatory credits -Installment credits -Restricted and unrestricted - Standby L/C-Confirmed v/s unconfirmed L/C

5-Acceptance of L/C by exporter- Check List

Issuance of L/C Summary

Amendment to L/C

Utilization of L/C

L/C Detailed Check List (P-1)

L/C Detailed Check List (P-2)

Documents required to claim credits from bank

1-Draft ( Bill of exchange)2- Invoice3- Bill of lading/ AWB/ACN4-Insurance policy /certificate5- Certificate of origin6- Packing list7-Other documents as specified in L/C (CTD)

8-Discrepencies and consequences

X EXPORT CREDIT & GAURANTEE CORPORATION

1- What is ECGC2-Risks covered by ECGC

-Insolvency of buyer-Failure of payment –specific conditions-Political risks

3- Risks not covered by ECGC-Commercial disputes, product defects, Exchange fluctuations, failure to get import permissions-Loss of goods covered by marine insurance-Exporter’s failure to comply with contract terms

Reading References

• Nabhi’s Export Manual and documentation- Chapters 6,39 and 40