LC Payment Mechanisms

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED
HBL, MDI - LAHORE

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Slide No. 1
Parties to a Letter of Credit;
Opener
Beneficiary
Opening Bank
Advising Bank
Reimbursing Bank
Confirming Bank
Nominated Bank
Slide No. 2
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Mechanism of Letter of Credit

Opener LC application Shipment Contract Beneficiary
Documents
Payment
Opening Bank
Advising / Nominated Bank

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Slide No. 3
Types Of Credits
By Characteristics;
Revocable Irrevocable
By specific Purpose;
Confirmed Transit Stand by Revolving Red Clause Transferable Back to Back
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Slide No. 4
Types Of Credits
By Availability;
Sight Payment Deferred Payment Acceptance Credit Negotiation Credit
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Slide No. 5
Types Of Credits
In their nature of availability, the letters of credit are of four types,
Sight Payment Credit,

Payment available at sight, against presentation of sight draft and / or documents. Presentation at Nominated Bank. Nominated / Paying bank must have authority to claim reimbursement directly from a reimbursing bank.
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Slide No. 6
Types Of Credits
Deferred Payment Credits,
Draft is not required. Payment is deferred until future determinable dates. Issuing / confirming bank, if any, are required to make payment on due dates only.
Documents are presented to a nominated bank without engagement of the nominated bank.
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Slide No. 7
Types Of Credits
Acceptance Credit,
Usance draft is required along with documents.
Draft is required to be drawn on bank nominated as accepting bank. Maturity of time draft should essentially be determinable. After acceptance, the nominated / accepting bank may return the draft to the beneficiary. Beneficiary may get the draft discounted by accepting or any other bank. Acceptance credits , provide finance to buyer, and when discounted provide immediate source of fund to seller.
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Slide No. 8
Types Of Credits
Negotiation Credit,
Sight or usance drafts are required to be drawn on issuing or confirming banks.
A bank is nominated to negotiate the draft, unless credit is freely negotiable. Nominated bank, by negotiating infact provides funds to beneficiary until receipt of funds from issuing bank.
Issuing bank engages itself with drawers / endorsers, and bonafide holders of drafts to honour on due presentation at sight or future determinable due date.
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Slide No. 9
Settlement Under Letter of Credit;

Method 1
Claiming bank is authorised to debit NOSTRO account of the issuing bank if the submitted document are strictly in conformity to terms of the Letter of Credit.
Method 2
Claiming bank is authorised to claim reimbursement from another nominated bank, the Reimbursing Bank, if submitted documents are strictly in conformity to LC Terms.
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Slide No. 10
Settlement Under Letter of Credit;

Method 3;
The opening bank shall provide reimbursement to claiming bank, on receipt of documents, in accordance with the instructions of the claiming bank, provided the documents are strictly in conformity to terms of Letter
of Credit.
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Slide No. 11
DOCUMENTS IN INTERNATIONAL TRADE FINANCIAL DOCUMENTS & COMMERCIAL DOCUMENT FINANCIAL DOCUMENTS Bill of exchange
promissory Note
trust receipt Delivery order
COMMERCIAL DOCUMENTS
Commercial documents Official documents Transport document Insurance documents Other documents
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Slide No. 12
DOCUMENTS IN INTERNATIONAL TRADE
COMMERCIAL DOCUMENTS
Performa invoice Commercial invoice Certified invoice Consular invoice Certificate origin Packing list Weight Note Inspection Certificate Manufacturing analysis Certificate
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Slide No. 13
DOCUMENTS IN INTERNATIONAL TRADE OFFICIAL DOCUMENTS Health Certificate Grading Certificate
Chamber of Commerce Certificate of Origin/from any ministry

TRANSPORT DOCUMENTS Bill of Lading. Airway bill
Railway Receipt, etc.

INSURANCE DOCUMENTS Insurance policy insurance Cover note
Any other document called in the LC. Certificate of age of carrying vessel
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Slide No. 14
Documents
While calling documents under LC, terms like First Class, Well Known, Qualified, Independent, Official, Competent, local, and likewise should not be used to describe the issuer of documents. If such terms are used bank will accept the document as presented provided it appears on its face to comply other terms of the credit and appear not to have been issued by the beneficiary himself.
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Slide No. 15
Documents
Unless otherwise stipulated in the credit, banks will accept as an original a document produced or appearing to have been produced by reprographic, automated, computerized system or as carbon copies, provided that it is marked as original and where necessary appears to be signed. A document may be signed manually, by facsimile, by perforation, by stamp, by symbol, or by any other mechanical or electronic method of authentication.
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Slide No. 16
Documents
Unless otherwise stipulated in the credit banks will accept as copy, a document either labeled as copy or not marked as original and it need not be signed. Where multiple documents are required in the credit such as duplicate, two fold, two copies and like, one original and remaining number in copies will be accepted. If credit calls for a document to be authenticated, validated, legalised, visaed, certified, or any other similar requirement, document which on face appears to satisfy the said conditions carrying any signatures, stamp, mark, or label will be acceptable unless otherwise stipulated in the credit.
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Slide No. 17
Documents
While calling documents other than transport documents, insurance documents, and commercial invoices, the credit should specify by whom such documents are to be issued and their wordings or data contents. In the absence of such stipulation banks will accept such documents as presented, provided that their data content is not inconsistent with any other stipulated document presented.
Unless otherwise stipulated in the credit, banks will accept a document bearing date of issuance prior to date of credit, provided such documents is presented within stipulated validity of the credit and articles of UCP 500.
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Slide No. 18
Bill of Exchange / Draft:Draft is drawn under correct LC number. Draft is manually signed by beneficiary of LC. Draft is drawn on party as mentioned in the LC. Tenor of draft is in accordance with the LC. Properly endorsed if endorsement is required. Amount in words and figures is same. Amount of draft is that of invoice. It is currently dated. Meets all other terms & conditions as specifically mentioned in the LC.
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Slide No. 19
Commercial Invoice:Invoice is issued by beneficiary, unless otherwise stipulated in the LC. Correct number of invoices as called for in the LC has been submitted. Shipment is invoiced to the opener of credit unless otherwise stipulated in the credit. Description of goods on invoice is identical to that called for in the LC. Unit price and total vale agrees with the credit terms.
Correct Incoterms as mentioned in the credit is used.

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Slide No. 20
Calculations are correct.

Cuttings / alterations are properly authenticated. Correct reference of LC number appears on invoices. Invoice is signed as desired in the LC. Information given on invoice corresponds to that on all other documents. All certificates on invoice are worded in terms of the LC. Invoice meets all other terms & conditions as mentioned in the LC.
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Slide No. 21
Packing List:Packing list relates to correct LC number. Correct number of copies as called for in the LC is submitted. It is issued by beneficiary of LC or as stipulated in the LC. Total contents of each packing equals total quantity of goods as mentioned on invoice. All information , as required in the credit to appear on packing list. Cuttings / alterations are properly authenticated. All information corresponds that on all other documents.
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Slide No. 22
Insurance Policy:Policy refers to correct LC number. Number of original and copies as called for in the LC are submitted.
Policy is issued by insurance company or its named agent, or as specified in the LC.
Effective date of insurance is not later than the date of shipment or dispatch, as the case may be, as evidenced by transport document. In case of multi model transport documents, cover date of policy should not be later than date of taking in charge of the goods. Policy should be drawn or endorsed to party as mentioned in the credit.
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Slide No. 23
Insurance Policy:Policy is issued in the currency of credit unless otherwise stipulated in the credit. Amount of insurance should be 10 % more than the amount of invoice unless otherwise stipulated in the LC. Name of carrying vessel and date of shipment corresponds with that on transport documents. Policy should cover specific risks as stipulated in the credit. Unless shipment on deck is allowed in the LC, policy should not state shipment on deck.
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Slide No. 24
Insurance Policy:All insurance riders are affixed to the insurance document and are cross referenced and stamped or signed to form part of the document.
Cuttings / alterations are properly authenticated.

Information such as, merchandise description, quantity, shipping marks and numbers, place of shipment, destination etc should correspond with that on other documents and as stipulated in the credit. Policy meets all other term and conditions of the Letter of Credit.
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Slide No. 25
Certificate of origin:It refers to correct LC number. It shows name of beneficiary and opener as stipulated in the credit. Merchandise description corresponds with that on invoice. Issuer is as stipulated in the credit. Certifies that origin of goods is as stipulated in the credit. All information on certificate corresponds with that on all other documents and is as stipulated in the credit. Cuttings / alterations are properly authenticated.
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Slide No. 26
Transport Documents:Bill of Lading:It comprises of full set of originals, and copies as required in the credit. Shipper is beneficiary, unless otherwise stipulated in the LC. It is consigned to or endorsed to the order of opening bank. Name & address of notify parties are as per LC. Port of loading or place of taking goods in charge is same as required in the LC. Port of discharge or place of final destination are same as required in the LC.
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Slide No. 27
Merchandise description corresponds with that on the invoice and other documents, and is in terms of the LC. Shipping marks and numbers correspond with that on invoice, packing list, insurance and other documents. Name of carrying vessel appearing on BL should be same as mentioned on other documents. Should bear date of issuance. Should indicate date of loading on board after date of issuance of BL and such date should be within latest date of shipment stipulated in the LC.
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Slide No. 28
On Board notation , if printed, should bear vessel name and date of loading on board, under signatures of carrying vessel or its named agent.
There should be no superimposed clauses on face of BL, which expressly declare a defective condition of the goods or packing, such as, contents leaking, bags broken or similar. Indication of freight should correspond with incoterms used in the transaction. Total number of boxes, crates, bags etc or tonnage or quantity indicated on bill of lading agrees with the same information appearing on invoice and other accompanying documents.
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Slide No. 29
If LC prohibits transhipment, bill of lading should not indicate as such.

Unless LC permits charter party bill of lading, there should be no indication on BL that it is subject to charter party. In case LC prohibits short form / blank back BL, general conditions should appear on back of the bill of lading.
Bill of lading meets other stipulations of LC.

Cuttings / alterations on bill of lading should be properly authenticated.
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Slide No. 30
Airway Bill:Airport of departure and destination are in consistence with LC terms. AWB is issued by either the carrier or its named agent. It should bear a date of issue not later than last date of shipment provided in the LC.
Should give reference of credit to which it relates.

Original AWB should be submitted. Should meet other stipulations of LC. Cuttings / alterations should be properly authenticated.
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Slide No. 31
Thank You For Participation

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Slide No. 32
Documents
Transport Documents
Marine / Ocean Bill of Lading; If credit calls for a bill of lading covering port to port shipment, banks will, unless otherwise stipulated in the credit, accept a document however named which; Appears on its face to indicate name of the carrier and to have been signed or otherwise authenticated by The carrier or a named agent for or on behalf of the carrier or the master or a named agent for or on behalf of the master;
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Slide No. 33
Documents
Transport Documents
Marine / Ocean Bill of Lading, Any signatures or authentication of the carrier or master must be identified as carrier or master, as the case may be. An agent signing or authenticating for the carrier or master must also indicate the name and capacity of the party, i. e carrier or master, on whose behalf that agent is acting.
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Slide No. 34
Documents
Marine / Ocean Bill of Lading; Indicates that goods have been loaded on board, or shipped on a named vessel If loading / shipped on board a named vessel is indicated by preprinted wording, date of issuance of BL will be deemed to be the date of shipment. In all other cases loading on board a named vessel must be evidenced by a notation on the BL which gives the date on which the goods have been loaded on board, in which case such date will be deemed to be the date of shipment.
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Slide No. 35
Documents
Marine / Ocean Bill of Lading; Indicates that goods have been loaded on board, or
shipped on a named vessel If BL indicates intending vessel or similar words
in relation to vessel, loading on board a named

vessel must be evidenced by notation showing date of loading and name of vessel. In that case such date will be deemed to be the date of shipment.
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Slide No. 36
Documents
Marine / Ocean Bill of Lading; If BL indicates place of taking in charge different from the port of loading, the on board notation must also include the port of loading stipulated in the credit and the name of the vessel on which the goods have been loaded, even if they have been loaded on vessel named in the BL as pre printed or otherwise.
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Slide No. 37
Documents
Marine / Ocean Bill of Lading; Indicates the port of loading and the port of discharge stipulated in the credit, notwithstanding that it; Indicates a place of taking in charge different from the port of loading, and / or a place of final destination different from the port of discharge. Contains the indication intending or similar in relation to the port of loading and / or port of discharge, as long as the document also states the port of loading and / or discharge stipulated in the credit.
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Slide No. 38
Documents
Marine / Ocean Bill of Lading; Consists full set or originals as issued. Appears to contain all of the terms & conditions of the carriage, or some of such terms & conditions by reference to a source of document other than the BL (short form/ blank back BL) ; banks will not examine the contents of such terms & conditions. Contains no indication that it is subject to charter party. Contains no indication that carrying vessel is propelled by sail only. In all other respects meets stipulations of the credit.
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Slide No. 39
Documents
Marine / Ocean Bill of Lading; Transhipment means unloading and reloading from one vessel to another vessel during the course of ocean carriage from the port of loading to the port of discharge stipulated in the credit. Unless credit prohibits transhipment, banks will accept a BL indicating that the goods will be transhipped, provided that entire ocean carriage is covered by one and the same BL.
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Slide No. 40
Documents
Marine / Ocean Bill of Lading; Even if credit prohibits transhipment, bank will accept a BL which; Indicates that transhipment will take place as long as goods are shipped in container, trailer, LASH barges as evidenced by the BL, provided that the entire ocean carriage is covered by one and the same BL. Indicates that the carrier reserves the right to tranship.
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Slide No. 41
Documents
Non Negotiable Sea Waybill; This type of BL is different from traditional negotiable BL and is not a document of title to goods, since delivery of goods is made to nominated consignee upon proof of identity and not necessarily upon production of original sea waybill. Use of this kind of transport documents is common in Europe, Scandinavia, North America, and certain Far Eastern countries. Purpose for usage of such BL is to avoid un necessary delay in release of goods on arrival at port of discharge.
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Slide No. 42
Documents
Non Negotiable Sea Waybill; All the sub articles of UCP 500 which apply to Marine/Ocean Bill of Lading also apply to Non Negotiable Sea Waybill.
Charter Party Bill of Lading;
Under charter party contract, applicant and beneficiary agree to arrange hiring of entire vessel or part thereof, in order to have the cargo delivered according to their intention and presentation of charter party bill of lading is stipulated in the credit.
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Slide No. 43
Documents
Charter Party Bill of Lading; Sometimes charter party contract is also
required in terms of the credit, but banks are not

required to examine contents thereof.
Vessel is chartered for specifically agreed

period and voyage. If the vessel is chartered without crew it is called a bare boat charter.
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Slide No. 44
Documents
Charter Party Bill of Lading If credit calls for or permits a charter party bill of lading banks will, unless otherwise stipulated in the credit, accept a document however named which;
Contains any indication that it is subject to a charter party. Appears on its face to have been signed or otherwise authenticated by; The master or a named agent for or on behalf of the master. The owner or a named agent for or on behalf of the owner
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Slide No. 45
Documents
Charter Party Bill of Lading
Any signatures or authentication of the master or owner must be identified as master or owner, as the case may be. An agent signing or authenticating for master or owner must also indicate the name and capacity of the party, i. e master or owner, on whose behalf that agent is acting.
Does or does not indicate name of the carrier.
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Slide No. 46
Documents
Charter Party Bill of Lading Indicates that goods have been loaded on board, or shipped on a named vessel If loading / shipped on board a named vessel is indicated by preprinted wording, date of issuance of BL will be deemed to be the date of shipment. In all other cases loading on board a named vessel must be evidenced by a notation on the BL which gives the date on which the goods have been loaded on board, in which case such date will be deemed to be the date of shipment.
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Slide No. 47
Documents
Charter Party Bill of Lading; Indicates port of loading and port of discharge as stipulated in the credit. Consists full set or originals as issued. Contains no indication that carrying vessel is propelled by sail only. In all other respects meets stipulations of the credit. Multimodal Transport Document; Transport documents issued by a carrier or multimodal transport operator, covering at least two modes of transportations e.g. road, rail, or air etc.
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Slide No. 48
Documents
Multimodal Transport Document;
If credit calls for transport document covering at least two different modes of transport (multimodal transport), banks will, unless otherwise stipulated in the credit, accept a document, however named which, Appears to indicate the name of the carrier or multimodal transport operator and to have been signed or otherwise authenticated by, The carrier or multimodal transport operator or a named agent for or on behalf of the carrier or multimodal operator or, The master or a named agent for or on behalf of the master.
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Slide No. 49
Documents
Any signatures or authentication of the carrier, multimodal transport operator or master must be identified as carrier, multimodal transport operator or master, as the case may be. An agent signing or authenticating for the carrier, multimodal transport operator or master must also indicate the name and capacity of the party, i. e carrier, multimodal transport operator or master, on whose behalf that agent is acting.
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Slide No. 50
Documents
Indicates that goods have been dispatched, taken in charge or loaded on board, If dispatch, taking charge, loading on board a named vessel is indicated by preprinted wording, date of issuance of multimodal transport document will be deemed to be the
date of shipment.
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Slide No. 51
Documents
Dispatch, taking in charge or loading on board may be indicated by wording to that effect on the multimodal transport document and the date of issuance will be deemed to be the date of dispatch, taking in charge or loading on board and the date of shipment. However if the document indicates, by stamp or otherwise, a date of dispatch, taking in charge or loading on board, such date will be deemed to be the date of shipment.
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Slide No. 52
Documents
Indicates the place of taking in charge stipulated in the credit which may be different from port, airport or place of loading, and the place of final destination stipulated in the credit which may be different from port, airport or place of discharge. May contain indication intended or similar qualification in relation to the vessel and / or port of loading and / or port of discharge.
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Slide No. 53
Documents
Consists full set of original multimodal transport documents as issued. Appears to contain all of the terms & conditions of the carriage, or some of such terms & conditions by reference to a source of document other than the BL (short form/ blank back BL) ; banks will not examine the contents of such terms & conditions.
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Slide No. 54
Documents
Contains no indication that it is subject to charter party. Contains no indication that carrying vessel is propelled by sail only. In all other respects meets stipulations of the credit. Even if transhipment is prohibited, banks will accept a multimodal transport document which indicates that transhipment will or may take place, provided that the entire carriage is covered by one and the same multimodal transport document.
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Slide No. 55
Documents
Air Transport Document
If credit calls for an air transport document, banks will, unless otherwise stipulated in the credit, accept a document however named which;
Appears on its face to indicate name of the carrier and to have been signed or otherwise authenticated by;
The carrier or a named agent for or on behalf of the carrier.
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Slide No. 56
Documents
Any signatures or authentication of the carrier must be identified as carrier . An agent signing or authenticating for the carrier must also indicate the name and capacity of the party, i. e carrier on whose behalf that agent is acting. Indicates that goods have been accepted for carriage.
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Slide No. 57
Documents
Air Transport Document;
Where credit calls for actual date of dispatch, indicates a specific notation of such date, the date of dispatch so indicated on the air transport will be deemed to be date of shipment. for the purpose of this article, the information appearing in the box on the air transport document marked For carrier use or similar wording, relative to flight number and date will not be considered as a specific notation of such dispatch.
In all other cases date of issuance of air transport document will be deemed to be the date of shipment.
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Slide No. 58
Documents
Indicates the airports of departure and destination as stipulated in the credit. Appears to be original for consignor / shipper even if credit stipulates a full set of originals, or similar expressions. Air waybills are issued in a straight consignment manner and not to order, that is, they are issued on non negotiable basis and upon arrival at the airport of destination the goods are released to the consignee upon proof of identity and not by surrendering the original air waybill.
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Slide No. 59
Documents
Appears to contain all of the terms & conditions of the carriage, or some of such terms & conditions by reference to a source of document other than the air transport document banks will not examine the contents of such terms & conditions. In all other respects meets the stipulations of the credit.
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Slide No. 60
Documents
Transhipment means unloading and reloading from one aircraft to another aircraft during the course of carriage from the airport of departure to the airport of destination stipulated in the credit.
Even if the credit prohibits transhipment, banks will

accept an air transport document which indicates that transhipment will or may take place, provided that the
entire carriage is covered by one and the same air

transport document.
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Slide No. 61
Documents
Road, Rail or Inland Waterway Transport Documents; If credit calls for a road, rail, or inland waterway transport document, banks will, unless otherwise stipulated in the credit, accept a document of the type, however named which; Appears on its face to indicate name of the carrier and to have been signed or otherwise authenticated by; The carrier or a named agent for or on behalf of the carrier, or to bear a reception stamp or other indication of receipt by the carrier or a named agent for or on behalf of the carrier.
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Slide No. 62
Documents
Road, Rail or Inland Waterway Transport Documents; Any signatures, authentication, reception stamp or other indication of receipt of the carrier, must be identified on its face as that of carrier. An agent signing or authenticating for the carrier must also indicate the name and capacity of the party, i. e carrier on whose behalf that agent is acting. Indicates the place of shipment and the place of destination stipulated in the credit.
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Slide No. 63
Documents
Road, Rail or Inland Waterway Transport Documents; Indicates that goods have been received for shipment, dispatch or carriage or wording to this effect. The date of issuance will be deemed to be the date of shipment unless the transport document contains a reception stamp, in which case the date of the reception stamp will be deemed to be the date of shipment. In all other respects meets the stipulations of the credit.
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Slide No. 64
Documents
Road, Rail or Inland Waterway Transport Documents; In the absence of any indication on the transport document as to the number issued, banks will accept the transport documents presented as constituting full set. Banks will accept as original the transport document whether marked as original or not. Transshipment means unloading and reloading from one means of conveyance to another means of conveyance, in different modes of transport, during the course of carriage from the place of shipment to the place of destination stipulated in the credit.
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Slide No. 65
Documents
Road, Rail or Inland Waterway Transport Documents; Even if credit prohibits transhipment, banks will accept a road, rail, or inland waterway transport document which indicates that transhipment will or may take place, provided that the entire carriage is covered by one and the same transport document and within same mode of transport.
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Slide No. 66
Documents
Courier and Post Receipt; If credit calls for a post receipt or certificate of posting, banks will, unless otherwise stipulated in the credit, accept a post receipt or certificate of posting which; Appears on its face to have been stamped or otherwise authenticated and dated in the place from which the credit stipulates the goods are to be shipped or dispatched and such date will be deemed to be the date of shipment or dispatch. In all other respects meets the stipulations of the credit.
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Slide No. 67
Documents
Courier and Post Receipt; If credit calls for a document issued by a courier or expedited delivery service evidencing receipt of the goods for delivery, banks will, unless otherwise stipulated in the credit, accept a document, however named, which;
Indicates a date of pick up or of receipt or

wording to this effect, such date will be deemed to be the date of shipment or
dispatch.
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Slide No. 68
Documents
Courier and Post Receipt; Appears on its face to indicate the name of the
courier / service, and to have been stamped,

signed or otherwise authenticated by such named courier/ service, unless the credit
specifically calls for a document issued by a

named courier / service, banks will accept a document issued by any courier / service.
In all other respects meets the stipulations of the

credit.
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Slide No. 69
Documents
Transport Documents issued by Freight Forwarders; Unless otherwise authorised in the credit, banks will only accept a transport issued by freight forwarders if it appears on its face to indicate; The name of the freight forwarder as a carrier or multimodal transport operator and to have been signed or otherwise authenticated by the freight forwarder as carrier or multimodal transport operator or,
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Slide No. 70
Documents
Transport Documents issued by Freight Forwarders; The name of the carrier or multimodal transport operator and to have been signed or otherwise authenticated by the freight forwarder as a named agent for or on behalf of the carrier or multimodal transport operator.
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Slide No. 71
Documents
On Deck, Shippers Load and Count, Name of Consignor; Unless otherwise authorised in the credit, banks will accept a transport document which; Does not indicate, in case of carriage by sea or by more than one means of transportations including by sea, that the goods are or will be loaded on deck. Nevertheless, banks will accept a transport document which contains a provision that goods may be carried on deck, provided that it does not specifically state that they are or will be loaded on deck. and / or
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Slide No. 72
Documents
On Deck, Shippers Load and Count, Name of Consignor; Unless otherwise authorised in the credit, banks will accept a transport document which;
Bears a clause on its face such as shippers load & count or said by shipper to contain or words of similar effects. And / or
Indicates as the consignor of the goods a party other than the beneficiary of the credit. (Third party transport document)
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Slide No. 73
Documents
Clean Transport Documents; Transport document which bears no clause or notation which expressly declares a defective condition of the goods and / or the packaging. Banks will not accept transport documents bearing such clauses or notation unless the credit expressly stipulates the clauses or notations which may be accepted. Banks will regard a requirement in a credit for a transport document to bear the clause Clean on Board as complied with if such transport document meets the requirements of related articles / sub articles on transport documents.
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THE POWER TO LEAD
Slide No. 74
Documents
Freight Payable / Prepaid Transport Documents;
Unless otherwise stipulated in the credit, or inconsistent with other presented documents under the credit, banks will accept transport document stating freight is payable. Transport document, under a credit calling for such document to indicate freight has been paid, will be accepted by banks if it contains words clearly indicating prepayment of freight by stamp or otherwise. If credit requires courier charges to be prepaid, banks will accept transport document issued by courier evidencing that courier charges are for account of a party other than the consignee.
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THE POWER TO LEAD
Slide No. 75
Documents
Freight Payable / Prepaid Transport Documents; The words freight prepayable, freight to be prepaid, or words of similar effect, will not be accepted as evidence of payment of freight. Banks will accept transport documents bearing reference by stamp or otherwise to cost additional to the freight, such as costs of, or disbursements incurred in connection with loading, unloading or similar operations, unless the conditions of the credit specifically prohibits such reference.
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THE POWER TO LEAD
Slide No. 76
Documents
Insurance Documents; Articles on Insurance Documents apply to credits issued under incoterms CIF/CIP, where beneficiary has to arrange insurance cover and is required to present insurance documents along with other stipulated documents. Insurance documents must appear on their face to be issued and signed by insurance companies or underwriters or their agents. Unless otherwise stipulated in the credit, full set of original insurance documents must be presented. Unless terms of credit allow, cover notes issued by brokers will not be accepted.
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THE POWER TO LEAD
Slide No. 77
Documents
Insurance Documents; Unless otherwise stipulated in the credit, banks will accept an insurance certificate or a declaration under an open cover note pre signed by insurance companies or underwriters or their agent. If a credit specifically calls for an insurance certificate or declaration under an open cover note, banks will accept, in lieu thereof, an insurance policy.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 78
Documents
Insurance Documents; Unless otherwise stipulated in the credit, banks will not accept insurance documents bearing date of issuance later than date of shipment, dispatch, taking in charge as the case may be. However such insurance documents are only acceptable if they indicate that cover is effective from the date of shipment, dispatch, taking in charge as the case may be. Credits must stipulate specific insurance risks required to be covered. If terms like, usual risks, customary risks are used, banks will accept insurance documents as presented without responsibility for any risk not being covered.
HBL, MDI - LAHORE
THE POWER TO LEAD
Slide No. 79
Documents
Insurance Documents; Unless otherwise stipulated in the credit insurance document must be expressed in the currency of credit. Unless otherwise stipulated in the credit, the minimum amount for which insurance document appears to cover the insurance must be 110% of the CIF / CIP value of the goods. However if CIF or CIP value can not be determined from the documents on their face, banks will accept as such minimum amount 110% of the amount for which payment, acceptance or negotiation is requested under the credit or 110% of the gross invoice value which ever is higher.
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THE POWER TO LEAD
Slide No. 80
Documents
Insurance Documents; Credits must stipulate specific insurance risks required to be covered. If terms like, usual risks, customary risks are used, banks will accept insurance documents as presented without responsibility for any risk not being covered. Failing specific stipulations in the credit, banks will accept insurance documents as presented, without responsibility for any risk not being covered.
Unless otherwise stipulated in the credit, banks will accept an insurance document which indicates that the cover is subject to a franchise or an excess (deductible).
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 81
Documents
Insurance Documents; Example: An insurance certificate states that insurance is subject to a franchise of 5%. Claims will only be payable if any losses exceed this figure.
Credit stipulates insurance against all risks, banks will accept an insurance document which contains any all risks notation or clause, whether or not bearing the heading all risks, even if the insurance document indicates that certain risks are excluded, without responsibility for any risk not being covered.
HBL, MDI - LAHORE
THE POWER TO LEAD
Slide No. 82
Documents
Commercial Invoices; Unless otherwise stipulated in the credit, commercial invoices; Must appear on their face to be issued by the beneficiary named in the credit (except in case of transferable credits). Must be made out in the name of the applicant (except in case of transferable credits).
Need not be signed.

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THE POWER TO LEAD
Slide No. 83
Documents
Commercial Invoices;
Unless otherwise stipulated in the credit, banks may

refuse commercial invoices issued for amounts in excess of the amount permitted by the credit.
Nevertheless, if a bank authorised to pay, incur a

deferred payment undertaking, accept draft or negotiate under a credit accepts such invoices, its decision will be binding upon all parties, provided that such bank has not paid, incurred a deferred payment undertaking, accepted draft or negotiated for an amount in excess of that permitted by the credit.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 84
Documents
Commercial Invoices;
The description of goods in the commercial invoices must correspond with that in the credit. In all other
documents the goods may be described in general

terms not inconsistent with the description of the goods in the credit.
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THE POWER TO LEAD
Slide No. 85
Documents
Other Documents;
If a credit calls for an attestation or certification of weight in the case of transport other than by sea, banks will accept a weight stamp or declaration of weight which appears to have been superimposed on the transport document by the carrier or his agent unless the credit specifically stipulates that the attestation or certification of weight must be by means of a separate document.
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THE POWER TO LEAD
Slide No. 86
International Standard of Examining Documents under LC
ICC Publication No. 645

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THE POWER TO LEAD
Slide No. 87
General Principles for Scrutiny of Documents.

Abbreviations; The use of generally accepted abbreviations such as, Ltd for Limited Intl for International Co for Company Ind for Industry Kgs or Ko for Kilograms Does not make a document discrepant
Slash / may have different meaning and unless apparent in the context used, should not be used as substitute for a word.
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THE POWER TO LEAD
Slide No. 88

Corrections & alterations, Corrections & alterations on documents, other than those created by beneficiary, must appear to have been authenticated by the party who issued such document. Corrections & alterations on legalized, visaed etc. documents must appear to have been authenticated by party who legalized, visaed etc. The authentication must show name of party with signature or initials of such party who has authenticated. Corrections & alterations in documents issued by beneficiary itself, except draft, which have not been legalized, visaed or like, need not be authenticated.
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THE POWER TO LEAD
Slide No. 89

Corrections & alterations, The use of multiple typing styles or fonts sizes or handwriting in the same document does not signifies a correction or alteration. Each correction or alteration on a document must be authenticated separately, however if corrections and alterations are numbered, a certificate at the end of the document stating so many number of corrections / alterations authenticated will be sufficient.
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THE POWER TO LEAD
Slide No. 90

Dates, Draft, transport and insurance documents must be dated even if not called for in the credit.
Unless otherwise stipulated in the credit, documents such as, certificate of analysis, inspection certificate, and pre shipment inspection certificate may be dated after date of shipment.
A document indicating a date of preparation and a later date of signing will be deemed to be dated on the date of signing.
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THE POWER TO LEAD
Slide No. 91

Dates, within 2 days after. will mean a period from the date of event until 2 days after the event. at least 2 days before . will mean something must not take place later than 2 days before an event. There is no limit as to how earlier it may take place. within 2 days of will mean a period 2 days prior to the event until 2 days after the event. within when used in connection with date excludes that date in the calculation of the period.
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THE POWER TO LEAD
Slide No. 92

Expressions not defined in UCP, Shipping documents means all documents except draft. Stale documents are documents presented later than 21 days after the date of shipment, unless specifically allowed otherwise in the credit.
If credit allows third party documents, all documents except draft, may be issued by a party other than beneficiary.
Exporting country means, country of domicile of beneficiary, and / or country of origin of goods or country of shipment.
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THE POWER TO LEAD
Slide No. 93

Mathematical calculations,
Banks are not required to check detailed

mathematical calculations. Banks are only obliged to check total values against the credit and other required documents.
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THE POWER TO LEAD
Slide No. 94

Misspellings or typing errors, Misspelling or typing errors which do not affect meaning of a word or sentence does not constitute discrepancy. For example,
Mashine instead of machine.

Fountan pen instead of fountain pen. Modle in stead of model, however model123 instead of model321 is not a typing error and is a discrepancy.
HBL, MDI - LAHORE
THE POWER TO LEAD
Slide No. 95

Shipping marks, The purpose of shipping marks is to enable identification of a box, bag or package. If credit specifies shipping marks, the document (s)
must carry the same shipping marks.

Additional information in shipping marks is not to be construed as a discrepancy, provided it is not
inconsistent with credit terms.
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THE POWER TO LEAD
Slide No. 96

Shipping marks, Sometimes shipping marks contain information which normally is not considered as shipping marks like, Type of goods. Warning as to handling of the goods. Net and / or gross weight of the goods. The fact that some of the documents show such additional information, while others do not, is not a discrepancy.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 97

Shipping marks, Transport documents covering containerized goods some times only show a container number under the heading Shipping Marks, while other documents may show a detailed marking. It will not be considered that documents are inconsistent for that reason.
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THE POWER TO LEAD
Slide No. 98

Signatures,
Even if not stated in the credit, drafts, certificates and

declarations by their nature require signatures. Transport documents and insurance documents must
be signed in accordance with provisions of UCP 500.

The fact that a document has a box or space for signatures does not mean that such box or space must be completed with a signature.
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THE POWER TO LEAD
Slide No. 99

Signatures, A signature need not be handwritten, unless specifically allowed in the credit. Photo copy of a signed document does not qualify to
be signed original document, nor does a signed

document transmitted through fax machine, without an original signatures.
The requirement of signed and stamped is not met if the document is signed and name of party is typed or handwritten instead of stamped.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 100

Title of documents and combined documents, Documents may be titled as called for in the credit, bear a similar title, or be untitled.
For example credit requirement for a Packing List

may be satisfied by a document containing packing details whether titled Packing Note, Packing and Weight List, etc or an untitled document. The contents of a document must appear to fulfill the
function of the required document.

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THE POWER TO LEAD
Slide No. 101

Title of documents and combined documents, Documents listed in the credit should be presented as
separate documents.
If a credit requires a packing list and a weight list, such requirement will be satisfied by presentation of two separate documents, or by two originals of combined packing and weight list, provided such document
states both packing and weight details.

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THE POWER TO LEAD
Slide No. 102
Bill of Exchange / Draft

Tenor of draft,
UCP being silent, as per international standards the terms from and after have the same effect when used for the purpose of calculating maturity of the draft.
In both the cases i.e. from and to, the calculation of maturity date of time draft will commence the day following the date of the document. i.e. 10 days after or from November 01 is November 11.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 103

Maturity date of draft, For drafts drawn at xxx days sight the maturity is to be calculated as under, In case of complying documents, the first day of calculating xxx days will be the following day of receipt of documents by the drawee bank. In case of non complying documents which are subsequently approved by the drawee bank, the first day of calculation will be the date on which the draft has been accepted.
HBL, MDI - LAHORE
THE POWER TO LEAD
Slide No. 104

Maturity date of draft, In all cases, the drawee bank must advise the maturity date to the presenter. The same rule of calculating maturity date would also apply to credits designated as being available by deferred payment, where beneficiary is not required to present a draft along with the documents.
Payment on due date,
Payment must be made available at designated place on due date.
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THE POWER TO LEAD
Slide No. 105

Payment on due date, If the due date is a non banking day, payment will be due on first banking day following the due date, unless credit states otherwise. Delays in remittance of funds, such as grace days, the time it takes to remit funds etc, must not be in addition to the stated or agreed due date as defined by the draft or documents ( in case of deferred payment credits).
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 106

Corrections and alterations, Corrections and alterations on draft must appear to have been authenticated by the drawer. In some countries drafts showing corrections and alterations are not acceptable even with drawers authentication. Issuing bank in such countries should make a statement in the credit to the effect that no correction or alteration must appear in the draft.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 107
Commercial Invoice
Invoice is issued by beneficiary, unless otherwise stipulated in the LC.
telex or fax numbers forming part of the address, need not be mentioned, or if mentioned need not be identical to that in credit.
Invoice must be made out by the applicant, unless otherwise stipulated in the credit. telex or fax numbers forming part of the address, need not be mentioned, or if mentioned need not be identical to that in credit.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 108
Commercial Invoice
Correct number of invoices as called for in the LC has been submitted.
Description of goods on invoice is identical to that called for in the LC.
Invoice must reflect what goods have actually been shipped. For example if LC calls for shipment of Cricket bats and balls the invoice showing shipment of only Cricket bats is acceptable provided LC does not prohibit partial shipment.
Invoice showing the entire description Cricket bats and balls and stating what has actually been shipped is also acceptable.
HBL, MDI - LAHORE

THE POWER TO LEAD
Slide No. 109
Commercial Invoice
Unit price and total value agrees with the credit terms. Correct Incoterms as mentioned in the credit is used. Unless required by credit, the invoice need not be signed. Quantity, weight and measurements shown on invoice must correspond with those on other documents. Banks are not required to check calculations on the invoice, however the total value mentioned on invoice must correspond to that called for in the credit and that on the other documents.
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THE POWER TO LEAD
Slide No. 110
Certificate of origin
Must appear to relate to the invoiced goods, however good may be described in general terms on C.O. Consignee must be as on bill of lading, however if B/L is made out to order, or to order of shipper, or consigned to issuing bank, the C.O may carry name of applicant as consignee. If the LC has been transferred to a second beneficiary, the name of first beneficiary on certificate of origin is also acceptable. The cert. of origin may show the consignor or exporter as a party other than beneficiary or the shipper on transport document.
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THE POWER TO LEAD
Slide No. 111
Transport Documents Airway Bill

Airport of departure and destination are in consistence with LC terms. Use of IATA codes to mention airport of departure and destination is not a discrepancy. If credit gives a geographical area for airports of departure and destination, the AWB must indicate actual airports within the give geographical areas. It should not be issued to order or to order of a named party, because AWBs are not documents of title.
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THE POWER TO LEAD
Slide No. 112
Transport Documents Airway Bill

If credit does not state a notify party (ies), the respective field in the document may be left blank or completed in any manner. Transshipment, defined by ICC, unloading and reloading of goods from one aircraft to another during the course of carriage from the airport of departure to airport of destination stipulated in the credit. If this does not occur between these two airports, unloading and reloading is not considered to be transshipment.
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THE POWER TO LEAD
Slide No. 113

LC Payment Mechanisms

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MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Parties to a Letter of Credit;

HBL, MDI - LAHORE

Mechanism of Letter of Credit

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

Advising / Nominated Bank

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Sight Payment Credit,

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

HBL, MDI - LAHORE

HBL, MDI - LAHORE

HBL, MDI - LAHORE

Settlement Under Letter of Credit;

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Settlement Under Letter of Credit;

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

HBL, MDI - LAHORE

DOCUMENTS IN INTERNATIONAL TRADE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

DOCUMENTS IN INTERNATIONAL TRADE OFFICIAL DOCUMENTS Health Certificate Grading Certificate

Chamber of Commerce Certificate of Origin/from any ministry

Railway Receipt, etc.

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Correct Incoterms as mentioned in the credit is used.

HBL, MDI - LAHORE

Calculations are correct.

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

HBL, MDI - LAHORE

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Cuttings / alterations are properly authenticated.

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

HBL, MDI - LAHORE

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

If LC prohibits transhipment, bill of lading should not indicate as such.

Bill of lading meets other stipulations of LC.

MANAGEMENT & ORGANISATION DEVELOPMENT DIVISION HABIB BANK LIMITED

HBL, MDI - LAHORE

Should give reference of credit to which it relates.

HBL, MDI - LAHORE

Thank You For Participation