Parties in voluved in Documentary L/C & Procedures
The parties involved in a letter of credit transaction include: applicant, opening bank, advising bank, beneficiary, negotiation bank, paying bank and confirming bank.
1、 Applicant is the party who applies for the opening of a letter of credit, that is, the importer.
开证申请人是指向银行申请开立信用证的人，即进口方
Opening bank is the bank located in the importer’s country that opens the letter of credit on behalf o the importer. By issuing a credit, the bank assumes full responsibility for payment after the proper draft and documents have been presented.
开证银行是指接受开证申请人的委托开立信用证的进口方所在地的银行。银行开出信用证就意味着该银行就意味着该银行要承担在合适的汇票和但具被出示后付款的责任。
Advising bank is the bank located in the exporter’s country who informs the exporter that a letter of credit have been opened in his favor and transfers the L/C to the exporter, It is usually the correspondent of the issuing bank.
通知银行是指接受开证行的委托，通知出口方信用证已开出并将信用证转交壶口人的银行。该银行通常是开证行的代理行。
Beneficiary is the party in whose favor the letter of credit is issued, and who is entitled to redeive the payment, that is , the exporter.
受益人是指信用证中所制定的有权接受货款的人，即出口方。
Negotiating bank is the bank who buys an exporter’s draft submitted to it under a letter of credit and then forwards the draft and documents to the opening bank for reimbursement. Usually the advising bank is also the negotiation bank.
议付银行指买入出口人交来的跟单汇票并将汇票和单据寄送进口地开证行以索回款项的银行。通常通知行也就是议付行。
Paying bank is the bank that makes payment to the beneficiary against presentation of stipulated documents. It is usually the opening bank but can also be a third designed bank.
付款行即在所规定的单据被出示时向受益人付款的银行。付款行一般就开证行，当然也可能是被指定的第三家银行。
Frequently, an advising ban k is requested to add its own commitment to the letter of credit, In this case, it is called the confirming bank.通常，通知行被要求对信用证加保，在这种情况下该银行叫保兑行。
Procedures使用步骤
The procedure leading to opening a letter of credit starts with the foreign buyer agreeing with the exporter that payment will be by a documentary credit. The buyer then instructs his bank at his place to open a documentary credit for the exporter on the terms and conditions agreed upon by both the buyer and the exporter. The issuing bank, not being experts in the products, will require very detailed instructions covering products descriptions: quantities, agreed unit prices and total shipment values, terms of trade, date payment is due after presentation of the correct documents, packing, shipping period and so on. It is very common for a buyer to clearly specify a period of validity of the letter of credit.
After issuing the L/C, the issuing bank sends it to the advising bank, usually his correspondent bank in the exporter’s country and asks the bank to advise the exporter of the establishment of the L/C and pass the credit to the exporter for study prior to release of the goods. If the seller requires a confirmed letter of credit, then the correspondent bank may be asked to confirm the L/C opened by the issuing bank, and a fee will be charged to the buyer for this service. After the seller receives the L/C and is satisfied with the stipulations he will be in a position to load the goods.
After shipment of the goods, the seller will send the draft accompanied by all the necessary documents to the negotiation bank for negotiation within the validity of the L/C. If the documents are full and correct, the bank will pay, or accept the draft and then send the documents to the paying bank(issuing bank). After careful checking of the documents, and no problems are found, the paying bank will reimburse the money to the negotiating bank in accordance with the terms of the credit. The issuing bank(paying bank) then presents the documents to the buyer for payment or acceptance. Documents will be handed over to the buyer upon buyer’s payment of the amount due or acceptance of the draft. With the documents, the buyer can take delivery of the goods.
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