Welcome to TRADEGOODS.COM

Home | Contact Us

Goods Search :

Home		Login		Register Procedure		Register		Renew		Recover		Change		Goods search

Trade Helper

	Trade Forms
	International Trade Contracts
	International Trade Rules
	Claim, Unpaid Cases
	Ex-Import Procedure(to Way of Payment)
	L/C
	Abbreviation
	International Factoring

L/C(Letter of Credit)	Home > Helper

{1} Letter of credit

[11] All banking charges and commissions to L/C

(1) Summary

- Service fee refers to the service fees of banks rather than a opening bank related to L/C.
- As per the Article No. 18 of UCP, it specifically indicates that the person in charge of the service fee is the "person order the affair". Then the L/C related service fees are to be shoulder ban an opening bank in principle.
- However, in actual practice, there is a wording that makes a exporter to shoulder the responsibility by indicating in special clause in L/C "All Banking Commissions and charges outside of issuing country are for account of Beneficiary".
- The order of interpretation of L/C are 1 Enforcing legislation of the said countries 2 Special agreement 3 Since it is UCP, the person to shoulder service fee is a person which is clearly indicated in the special agreement.

(2) The kinds of service

<1> Correspondent charge

- Correspondent Charge is a service fee if an opening bank receives all kinds of service from many different bank (Notifying, Purchasing, Payment, Reimburse, Take over, Confirming bank etc).
1 Advising charge

- Service fee to a bank that exercise notifying business of L/C. - Classify as Advising Charge, Amendment charge and Cable charge.
- These service fees are divided into the standard fee(Per service) and additional fee to compute the total (depends on the number of notifying affairs).

2 negotiating commission

- Service fee occurring while inspection documents from a exporter of restricted L/C and negotiating L/C.

3 Payment commission

- The service fee for a bank to exercise payment and documents inspection for a dedicated L/C Deferred Payment Letter of Credit.

4 Acceptance commission

- service fee to a bank that take charge of Usance L/C.
- Changes depends on the Usance period and endow term charge per every 3 months.

5 Reimbursing charge

- Adjustment of accounts expense to transfer money from a opening bank to an purchasing bank account when reimbursing bank that is requested to reimburse purchasing bank of Reimburse L/C from a purchasing bank.

6 Confirming charge

- The service fee pay to a confirming bank from a confirming L/C

<2> Interesting charge (The kind of service fee same as interest)

1 Exchange commission

- if At sight L/C or Domestic Banker's usance L/C which shoulder by an opening bank : After documents inspection, a purchasing bank pre-paid to a exporter and the prepaid amount is to be received from an opening bank a few days later, this is the interest for this term. (exporter is responsible)
- Profit rate of current exchange commission is LIBO rate(yearly rate) + 1%.
- If calculate exchange commission, per US 1 dollar, the exchange commission is, 10 / 360 x exchange commission rate(LIBO + 1%) x book value.
- LIBO rate : It stands for London-Inter-Bank-offered Rate. The banks in London put up as call interest in foreign currency market by classifying the rate as per period (1year, 6months, 3months, 1 month etc).

2 Delay charge

- Although a Nego bank requested to an exporter of the payment request by sending shipping documents to an opening bank, it occurs if payment has not been settled within a mail period (maximum 12 days). If a opening bank fail to make settlement to an importer within 7 days after the documents arrival, then an opening bank will process the payment first on the 8th day and it is the interest for until the payment is completed to the bank from the date the payment was made by an opening bank.
- For export delay charge, the exchange commission interest is applied and for clean nego, the exchange commission is applied, and for vice Nego, 1.5% addition to exchange commission is applied.

3 In lieu of exchange commission

- If a exporter or an importer reserve the banks's foreign exchange account, a bank will apply T/T selling rate (Or T/T buying rate) but if a bank's expecting profit is largely decreased because the prior interest request is impossible under the pretext of exchange commission this is a special service fee that a customer gets shoulder by a bank.
- Replacement fee calculation formula: Foreign exchange amount x 0.1%
x book value

<3> Bank service fee with many problems

1 Reimbursing charge

- Most of excesses reimburse service fees occurs due to an opening bank shift over draft or refinance interest as a name of reimbursing charge to a exporter when an opening bank has insufficient balance.

2 Less charge

<4> Service fee to open L/C

- Expense fee by a importer to a opening bank when opening a L/C.
- The service fee is term charge that levy in every 90 days.