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Article -1 Application of UCP   The Uniform Customs and Practice for Documentary Credits, 2007 Revision, ICC Publication no. 600 ("UCP")  are rules that apply to any documentary credit ("credit") (including, to the extent to which they may be  applicable, any standby letter of credit) when the text of the credit expressly indicates that it is subject to  these rules. They are binding on all parties thereto unless expressly modified or excluded by the credit. Explanation : UCP 600 is a set of rules issued by ICC for documentary credit practitioner implemented from dated July 01, 2007, Above UCP article number one says that these rules to be only applicable to the particular letter of credit or Standby Letter of Credit, if the field (M) 40E expressly states subject to UCP 600 or similar words. These rules are binding all the parties (issuing bank, beneficiary and confirming bank if any) unless field 47a of LC states to exclude or modify accordingly. Notes :

Money laundering is the process to covert illegal money to make it look like it was generated from legitimate sources. Money normally comes from activities like drug, terrorist activities, and other illicit means. It is considered dirty and is laundered to make it legitimate money laundering is a serious crime that carries heavy penalties, including jail. There are three steps to launder money:  Placement: The money is introduced into the financial system, usually by breaking it into many different deposits. Layering: The money is shuffled around to hide the source of origin. Integration: The money is then brought back to the financial system as legitimate income or clean money. Now we will touch upon channels thru which money laundering can be done: a. Tax Evasion b. Multiple Tier of Accounts c. Funnel Accounts d. Contra Transactions e. Bank Drafts and Similar Instruments f. Cash Deposits followed by Transfers g. Connected Accounts h. Smurfing/Structuring i. Money Mu

Forex market is a complex subject, here we will touch upon some of the important aspects of that effect the risk profile of an international transaction. 1.       Spot Rate : An arrangement to buy or sell currency at the current exchange rate is known as spot transaction. The exchange rate quoted for the transaction is called spot rate. Generally, spot transactions are undertaken for an actual exchange of currencies two business days following the transaction date (T+2) 2.       Forward Rate : This is future rate, possibally as far as a year ahead. Traders agree to buy and sell currencies for settlement beyond two business days, at predetermined exchange rates. These type of transactions are often used by businesses to reduce their exchange rate risks. Calculating the forward Rate : For an example, if when the client sells USD 100,000.00 transaction, the spot rate was 67 and the interest rate differential was 5%, the 30 day forward contact rate would be calculated as below :

Letters of credit are irrevocable undertaking issued by issuing bank on behalf of applicant to pay upon complied presentation in documentary form.  There are different types of letter of credit, let's have a look on few which are being used in our day to day business. Types of Letter of Credit Revocable Letter of Credit: Revocable letter of credit is a credit, which can be revoked, cancelled or amended by the issuing bank, without the notice of other parties which may be issuing bank,beneficiary or a confirming bank if any. Revocable LC’s are rarely used, from an exporter’s point of view, this type of LC is not a satisfactory one, In terms of UCP 600. All terms are credit are deemed to be irrevocable even if there is no indication to that effect, article 10 of UCP makes it clear that “ a credit can neither be amended nor cancelled without the agreement of the issuing bank, the confirming bank if any and the beneficiary. This types of credit are very risky and not used now a days

Defination of Pre-shipment Finance Pre-shipment finance is the financial service provided to the exporter from the date of receiving the order till the date of actual shipment of goods. It can be fund-based or non-fund based finance. The main purpose of extending pre-shipment finance is to fulfil the working capital needs of the seller of the goods such as preparation of raw material, labour, packaging material etc., processing or conversion into final goods, packaging, warehousing, transportation or shipping and other pre-shipment expenses, on the products which are to be exported. A purchase order from a buyer/documentary evidence such as a letter of credit or guarantee is issued on the buyer’s behalf and in favour of the exporter. Types of Pre-Shipment Finance Pre-Shipment Finance can be of three types: Packing Credit Advance against receivables from the Central Government, which is covered by ECGC guarantee. Advance against cheques received as advance payment. Post Shipment Finance

Factoring: Is  a process when a company/entity buy a invoices from another company. Factoring is also seen as a form of   invoice discounting. In this purchase, accounts receivable are discounted in order to allow the buyer to make a profit upon the settlement of the debt. Essentially factoring transfers the ownership of accounts to another party that then being paid up. Factoring therefore relieves the first party of a debt for less than the total amount providing them with working capital to continue preparing goods or buy raw material, while the buyer, or factor, chases up the debt for the full amount and profits when it is paid. The factor is required to pay additional fees, typically a small percentage, once the debt has been settled. The factor may also offer a discount to the indebted party. Factoring is a very common method used by exporters to help accelerate their cash flow. The process enables the exporter to draw up to 80% of the sales invoice’s value at the point of delive

Article 30 C UCP  states that a tolerance of 5% less then the amount of the drawing is permissible, Provided that the credit prohibits partial shipments and that the entire quantity covered by the credit has been shipped. The purpose of this provision is to ensure that a reduction in, for instance, the cost of freight or the insurance premium does not prevent the honouring of documents under the credit. ICC Official Opinion R367 says: Sub-article 30 (c) covers the situation where the terms are CFR or CIF and the price quotation is based on a hypothetical or soft quotation on the insurance premium and/or the freight charges. Upon presentation of the documents, the beneficiary invoices for the actual insurance and freight costs, which conceivably are less than those quoted originally in the purchase order. Therefore, a 5% tolerance is allowed in the beneficiary’s invoice, always provided that the quantity of the goods, if stipulated in the credit, is shipped in full, and a unit price, if