فارسی | Tuesday22 August 2017
 

Issuing documentary credits
Documentary credit is one of the payment methods in international trade, having been used frequently all over the world.
Documentary credit is a provisional commitment, through which the issuing bank is obliged to effect payment for a certain amount within the certain period of time against presenting the required documents under the terms and conditions of the credit.
Three kinds of documentary credits are issued:
1. Internal Letters of Credit in I.R.Rials
2. Import Letters of Credit
3. Export Letters of Credit

The parties of documentary credits
Applicant/ Buyer/ Orderer/ Importer/
Beneficiary/ Seller/ Exporter
Opening Bank/ Issuing Bank
Advising Bank
Reimbursing Bank
Negotiating Bank

Sight Documentary Credits versus Deferred Payment Documentary Credits (Usance)
Documentary Credits can be divided into two groups, based on the time of payment:
• Sight L/C
• Usance L/C
In sight L/Cs, when the beneficiary has shipped the goods and then presented the compliant documents to the nominated bank (issuing bank), the bank should effect payment in accordance with the terms and conditions, mentioned in text of the credit, after investigating the shipping documents.
In usance L/Cs, when the beneficiary has shipped the goods and then presented the compliant documents to the nominated bank (issuing bank), he/she will receive the value of documents since the date of presentation of documents and after the usance period.

The summary of operational procedure in issuing L/C
• Presenting the original of the Proforma invoice
• Registering orders in the Ministry of Commerce
• Presenting the original of insurance policy, indicating the goods being insured in any Iranian insurance company as well as the insurance premium payment receipt
• Presenting the necessary mortgages and guarantees (as per the related approval)
• Filling-in L/C application form and L/C issuance Joaleh contract
• Signing the related written undertakings (undertake payment for difference in exchange rate, undertake presentation of custom release, undertake presentation of required import authorization
• Specifying the L/C in the system
• Receiving the related advance payment and commissions and charges from the customer