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Bill of Lading
Posted by on January 31, 2012 · 2 Comments
In international trade shipping occupies an important place as a mode of transport. The document evidencing the carriage of goods by sea is the ‘bill of lading’.
A bill of is a document issued by the shipping company or its agent, acknowledging the receipt of goods for carriage, which are deliverable to the consignee or his assignee in the same condition as they were received.
A [...]
Filed in: Documentary
Transport Documents
Posted by on January 31, 2012 · 0 Comment
The carriage of goods in international trade involves more than one mode of transport. Goods are carried up to seaport or airport by land and from there they are transported to the buyer’s country. The goods may again be transported by land/rail to reach the buyer’s place. Carriage by each mode of transport is covered by a separate contract of carriage. But the modern trend is the move [...]
Filed in: Documentary
World Bank Group
Posted by on January 30, 2012 · 0 Comment
The World Bank Group consists of five closely associated institutions, each institution having a distinct role to play in the mission to fight poverty and improve the living standards for people in the developing world. The institutions are:
1 International Bank for Reconstruction and Development (IBRD)
This aims to reduce poverty in middle-income and credit [...]
Filed in: Basics
International Monetary Fund
Posted by on January 30, 2012 · 0 Comment
Even before the Second World War ended, the Allied countries began to devote serious thought and efforts in developing a system that would end the chaotic conditions prevailing and pave the way for an orderly conduct of international trade and promote good monetary relations among the countries. They worked with the objectives of finding a system, which would
1 help in removing the restrictions [...]
Filed in: Basics
Letter of Credit
Posted by on January 30, 2012 · 0 Comment
Letter of Credit is one of the important methods of payment in international trade. Letter of credit operations are governed by the provisions of the Uniform Customers and Practice for Documentary Credits (UCP).
Meaning
A documentary letter of credit is an arrangement whereby a bank, at the request and in accordance with the instructions of a customer (importer), is to make payment [...]
Filed in: Documentary
Interbanks Dealings
Posted by on January 29, 2012 · 0 Comment
INTERBANK Deals refer to purchase and sale of foreign exchange between the banks. In other words, it refers to the foreign exchange dealings of a bank in the interbank market.
Cover Deals
Purchase and Sale of foreign currency in the market undertaken to acquire or dispose of foreign exchange required or acquired as a consequence of its dealings with its customers is known as the ‘cover [...]
Filed in: Rates
Balance of Payments
Posted by on January 29, 2012 · 0 Comment
Foreign Exchange is required to settle to economic transaction the country has with other countries. These economic transaction are captured n its balance of payment statement.
A business entity communicates to the outsiders periodically the results of its operations in the form of financial statements such as profits and loss account and balance sheet. These statements summarize the effect [...]
Filed in: Basics
Execution of Forward Contracts
Posted by on January 29, 2012 · 0 Comment
By definition, the time and amount of foreign exchange to be delivered are predetermined under a forward contract and the customer is bound by this agreement. So, theoretically, there should not be any variation and on the due date of the forward contract the customer will either deliver or take delivery of the fixed sum of foreign exchange agreed upon. But, in practice, quite often the delivery [...]
Filed in: Rates
Exchange Exposure and Exchange Risk
Posted by on January 29, 2012 · 0 Comment
The terms exchange exposure and exchange risk is often used interchangeably, but they have their independent meanings. It is through the exchange exposure that a firm faces exchange risk.
Exchange Exposure and Exchange Risk
Exchange Exposure is defined as the extent to which transactions, assets and liabilities of an enterprise are denominated in currencies other than the reporting [...]
Filed in: Risk
Exchange Risk Transaction Exposure
Posted by on January 29, 2012 · 1 Comment
An enterprise engaged in export/import trade will be affected by the change in the rate of exchange between the domestic currency and the currency in which the transaction is designated. For instance, an Indian company which exported to France readymade garments when the Euro was quoted at Rs. 56.00 per euro will suffer a loss if the euro depreciates to Rs. 54.50 per euro by the time the Export [...]
Filed in: Risk
Asian Clearing Union
Posted by on January 27, 2012 · 0 Comment
The approved method of payment both in respect of exports and imports to/from the members of the Asia Clearing Union is Asian Currency Unit. This annexure provides the regulations relating to dealing with Asian Clearing Union by the authorized dealers.
The Asian Clearing Union (ACU) is an effort towards securing regional co-operation amongst the members of the United Nations, Economic and [...]
Filed in: Finance
Role of Commercial Banks
Posted by on January 27, 2012 · 0 Comment
All the financial requirements of an exporter, from the time he enters into a sale contract and starts working on it and till he receives final payment from the importer, are met by commercial banks. The facilities available from banks are generally divided into two broad heads: 1 Pre-Shipment Finance and 2 Post-Shipment Finance
1 Pre-shipment Finance or packing credit is the advance granted [...]
Filed in: Finance
Financing Exports
Posted by on January 27, 2012 · 1 Comment
The statutory basis for regulation of exports from India is the Foreign Trade (Development and Regulation) Act, 1992, which has replaced the Imports and Exports (Control) Act, 1947. The Government is empowered to ban the export of certain goods from India and/or restrict export in quantity, value, etc., by subjecting them to licensing procedures.
In exercise of the powers conferred under [...]
Filed in: Finance
Methods of Payments in International Trade
Posted by on January 26, 2012 · 1 Comment
At the time of entering into the contract for export, the importer and exporter agree as to when and how the payment will be made by the importer to the exporter. Depending upon the relative bargaining power of the importer and exporter, and having in view the requirements of the exchange control in the countries concerned, payment for the international trade may take place in any one of the following [...]
Filed in: Documentary
International Trade Regulatory Framework
Posted by on January 21, 2012 · 1 Comment
Both import and exports are subject to regulatory requirements prescribed by the government. Any importer or exporter is expected to know the regulations relating to foreign trade and abide by them. Of the numerous statues that have a bearing on export transaction, those having direct relevance for any export or import are the following:
1 Foreign trade (Development and Regulation) [...]
Filed in: Documentary
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