| Glossary of International Finance and Banking |
- M-
Master Credit
In back-to-back operations, the original export credit against which the second credit is opened.
Maturity
Due date of payment of a usance bill or promissory note.
- N -
Negotiable/Non-Negotiable
Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not -
the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.
Negotiate
To verify that the documents presented under an L/C conform to requirements and, if documents are in order, to honor the
presentation by acceptance or payment as required by the letter of credit.
Negotiating bank
Bank that negotiates the exporter抯 documents, customarily the exporter抯 bank. Usually also the paying bank, unless the
letter of credit provides or allows for another bank to pay (e.g. the draft is payable in foreign currency and the negotiating
bank does not have ready access to the currency. See also 揚aying bank.?
Net Weight
The weight of the merchandise before any packaging.
Non-DC Bills
Bills not drawn under DC, ie sent on a collection basis (D/P or D/A). In common usage we distinguish between Non-DC
bills which are financed collections and DCs which are non-financed.
Non-Financed Bills
Bills sent on collection in which the remitting branch has no financial interest.
Noting
The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non-acceptance, the collecting bank
must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next
business day. If the drawee still refuses the bill the notary public 'notes' on the bill: the amount of his charges, the date and
his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested
- O -
Opener
See Applicant
Opening bank
See 揑ssuing bank.?
- P -
Packing Credit
A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to
deposit the DC with the bank as security.
Past Due
Bill or loan that has not been paid on the maturity date/due date.
Paying bank
Bank that effects payment of documents negotiated under a letter of credit, customarily the buyer抯 bank. It is usually also
the negotiating bank, unless the L/C allows another bank to negotiate, or unless the paying bank is unable to negotiate. See
also 揘egotiating bank.?
Perils of the Seas
They are accidents or casualties of the sea. The ordinary actions of the winds and waves are not included. Heavy or
tempestuous weather on a voyage is of sufficient violence to constitute a peril of the sea.
Power of Attorney
Authority given to one party to act for another.
Presentation
Presentation for acceptance or payment on a collection or letter of credit.
Presenting Bank
The bank that requests payment of a collection bill - may be the collecting bank or its nominated branch or local
correspondent, which is better placed to contact the importer.
Principal
The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages
(may be used to refer to any customer who initiates a transaction, eg the opener of a DC).
Promissory Note
A signed statement containing a written promise to pay a stated sum to a specified person at a specified date or on
demand.
Protest
The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee - if
refused again, it is noted?- see Noting. The notary public then issues a formal protest, an official certificate that the bill has
been refused: the drawer can use this certificate to sue the drawee in court.
- R -
Recourse
The right to claim a refund from another party which has handled a bill at an earlier stage.
Red clause
Clause in a letter of credit that authorizes the advising/negotiating bank to make an advance payment to the beneficiary
before presentation of shipping documents, usually against a simple receipt.
Red Clause Credit
A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary.
Reimbursing Bank
The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.
Remitting Bank
The exporter's bank in collection transactions, which remits the bill to the collecting bank.
The exporter's bank in DC transactions, which dispatches the documents to the issuing bank.
Retirement
The act of paying or settling an outstanding bill or import loan, ie payment by the importer to the bank.
Revocable Credit
One that may be amended or cancelled without notice to the beneficiary.
Revolving Credit
A credit automatically reinstated after each drawing or upon receipt of authorisation from the DC issuing bank, with limits
as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing
- S -
Schedule
The remitting/negotiating bank's letter covering a bill sent to the collecting/issuing bank, which lists the documents attached
and gives collection and/or payment instructions.
Self-Liquidating
A transaction is said to be self-liquidating when there is a known source of funds available for its settlement on the due date.
Shipment Date
The date inserted on the Bills of Lading evidencing goods received on board is regarded for documentary credit purposes
as being the date of shipment.
Shipper
See consignor.
Shipping Guarantee (SG)
Guarantees of this nature are required to enable customers to obtain goods before the arrival of the documents of title, and
are issued to the shipping companies by the bank against an undertaking to forward the Bills of Lading when they are
received. The bank normally takes 100 per cent cash margin against the value of the goods if the customer does not have
T/R facility.
Shipping Terms
See Incoterms.
Sight
A bill payable at sight is payable on presentation to the drawee, ie on demand.
Sight draft
Draft payable immediately upon presentation or demand (搊n sight?.
Snags
Irregular bills; import and export.
Spot transaction
Foreign exchange transaction in which foreign currency is bought at the current rate of exchange and delivered within two
business days after the transaction date.
Spread
An amount representing a risk allowance for a borrower's credit or the mark-up between a wholesale price and a retail
price.
Standby Credit
This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the DC
applicant.
Status Report
Produced by a bank's trade and credit information (TCI) department or a credit information bureau, giving details of the
creditworthiness and business background of traders and manufacturers.
Substitution
The act whereby the prime beneficiary substitutes his own documents, ie invoices and drafts, in back-to-back and
transferable credit operations prior to negotiation of the master credits.
- T -
Tenor
Term or period of credit granted by the drawer. See Usance Bill.
Trade acceptance
Draft drawn by the seller of goods on the buyer and accepted by the buyer for payment at a specified future date.
Trade and Credit Information (TCI)
A bank department that prepares and distributes status reports on its own customers, and maintains records of traders and
manufacturers with whom its customers deal.
Transferable Credit
Permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary or
beneficiaries.
Transferee
A party (second beneficiary) to whom a transferable credit is transferred in whole or in part.
Transferor
A party (first beneficiary) at whose request a transferable credit is transferred to a second beneficiary in whole or in part.
- U -
UCP
Uniform Customs and Practices for Documentary Credits. Publication issued by the International Chamber of Commerce
(1993 revision, ICC Publication No. 500, or 揢CP 500? that outlines the rules and guidelines involved in a Letters of
Credit transaction. These provisions are followed by Union Bank of California, and by most other banks, unless there is an
expressed agreement otherwise. See ICC 500.
Uniform Rules for Collections
See ICC 522.
Usance Bill
A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance).
The term is usually stated in days (eg 30 days) or months and starts either from the date of the bill (eg 30 days date) or
from the date of bill of lading, or from sight by the drawee (eg 30 days sight) which in practice means from the date of
acceptance.
An essential feature of acceptance credits and D/A collections.
- V -
Value (settlement) date Contracted date on which the foreign exchange is to be delivered or received.
-W-
Waive
To relinquish a right: used in collections with BC charges and/or interest to be collected from the drawee: these can be
waived in certain circumstances as set out in ICC 522.
Master Credit
In back-to-back operations, the original export credit against which the second credit is opened.
Maturity
Due date of payment of a usance bill or promissory note.
- N -
Negotiable/Non-Negotiable
Usually used with regard to Bills of Lading: a negotiable B/L is a valid document of title, while a non-negotiable B/L is not -
the beneficiary of a DC (the exporter) may send the importer a non-negotiable B/L for information.
Negotiate
To verify that the documents presented under an L/C conform to requirements and, if documents are in order, to honor the
presentation by acceptance or payment as required by the letter of credit.
Negotiating bank
Bank that negotiates the exporter抯 documents, customarily the exporter抯 bank. Usually also the paying bank, unless the
letter of credit provides or allows for another bank to pay (e.g. the draft is payable in foreign currency and the negotiating
bank does not have ready access to the currency. See also 揚aying bank.?
Net Weight
The weight of the merchandise before any packaging.
Non-DC Bills
Bills not drawn under DC, ie sent on a collection basis (D/P or D/A). In common usage we distinguish between Non-DC
bills which are financed collections and DCs which are non-financed.
Non-Financed Bills
Bills sent on collection in which the remitting branch has no financial interest.
Noting
The first stage in protest of a dishonoured bill: if instructed to protest for non-payment/non-acceptance, the collecting bank
must send the bill to a notary public who will represent it to the drawee on the same day it was refused, or the next
business day. If the drawee still refuses the bill the notary public 'notes' on the bill: the amount of his charges, the date and
his initials. The reason for refusal is shown on a note attached to the bill. The bill is then protested
- O -
Opener
See Applicant
Opening bank
See 揑ssuing bank.?
- P -
Packing Credit
A loan given to the beneficiary by the bank to enable him to purchase raw materials. The beneficiary is usually requested to
deposit the DC with the bank as security.
Past Due
Bill or loan that has not been paid on the maturity date/due date.
Paying bank
Bank that effects payment of documents negotiated under a letter of credit, customarily the buyer抯 bank. It is usually also
the negotiating bank, unless the L/C allows another bank to negotiate, or unless the paying bank is unable to negotiate. See
also 揘egotiating bank.?
Perils of the Seas
They are accidents or casualties of the sea. The ordinary actions of the winds and waves are not included. Heavy or
tempestuous weather on a voyage is of sufficient violence to constitute a peril of the sea.
Power of Attorney
Authority given to one party to act for another.
Presentation
Presentation for acceptance or payment on a collection or letter of credit.
Presenting Bank
The bank that requests payment of a collection bill - may be the collecting bank or its nominated branch or local
correspondent, which is better placed to contact the importer.
Principal
The exporter in collection transactions, being the initiator of the transaction, whose instructions are followed at all stages
(may be used to refer to any customer who initiates a transaction, eg the opener of a DC).
Promissory Note
A signed statement containing a written promise to pay a stated sum to a specified person at a specified date or on
demand.
Protest
The formal representation of a dishonoured bill of exchange: the bill is presented by a notary public to the drawee - if
refused again, it is noted?- see Noting. The notary public then issues a formal protest, an official certificate that the bill has
been refused: the drawer can use this certificate to sue the drawee in court.
- R -
Recourse
The right to claim a refund from another party which has handled a bill at an earlier stage.
Red clause
Clause in a letter of credit that authorizes the advising/negotiating bank to make an advance payment to the beneficiary
before presentation of shipping documents, usually against a simple receipt.
Red Clause Credit
A credit with a clause which authorises the advising bank to make an advance payment to the beneficiary.
Reimbursing Bank
The bank nominated by the DC issuing bank that will pay the value of the DC to the negotiating/paying bank.
Remitting Bank
The exporter's bank in collection transactions, which remits the bill to the collecting bank.
The exporter's bank in DC transactions, which dispatches the documents to the issuing bank.
Retirement
The act of paying or settling an outstanding bill or import loan, ie payment by the importer to the bank.
Revocable Credit
One that may be amended or cancelled without notice to the beneficiary.
Revolving Credit
A credit automatically reinstated after each drawing or upon receipt of authorisation from the DC issuing bank, with limits
as to the duration of the facility and as to the (cumulative or non-cumulative) amount involved for each drawing
- S -
Schedule
The remitting/negotiating bank's letter covering a bill sent to the collecting/issuing bank, which lists the documents attached
and gives collection and/or payment instructions.
Self-Liquidating
A transaction is said to be self-liquidating when there is a known source of funds available for its settlement on the due date.
Shipment Date
The date inserted on the Bills of Lading evidencing goods received on board is regarded for documentary credit purposes
as being the date of shipment.
Shipper
See consignor.
Shipping Guarantee (SG)
Guarantees of this nature are required to enable customers to obtain goods before the arrival of the documents of title, and
are issued to the shipping companies by the bank against an undertaking to forward the Bills of Lading when they are
received. The bank normally takes 100 per cent cash margin against the value of the goods if the customer does not have
T/R facility.
Shipping Terms
See Incoterms.
Sight
A bill payable at sight is payable on presentation to the drawee, ie on demand.
Sight draft
Draft payable immediately upon presentation or demand (搊n sight?.
Snags
Irregular bills; import and export.
Spot transaction
Foreign exchange transaction in which foreign currency is bought at the current rate of exchange and delivered within two
business days after the transaction date.
Spread
An amount representing a risk allowance for a borrower's credit or the mark-up between a wholesale price and a retail
price.
Standby Credit
This may be established as security for facilities granted at another branch or bank, usually to a subsidiary of the DC
applicant.
Status Report
Produced by a bank's trade and credit information (TCI) department or a credit information bureau, giving details of the
creditworthiness and business background of traders and manufacturers.
Substitution
The act whereby the prime beneficiary substitutes his own documents, ie invoices and drafts, in back-to-back and
transferable credit operations prior to negotiation of the master credits.
- T -
Tenor
Term or period of credit granted by the drawer. See Usance Bill.
Trade acceptance
Draft drawn by the seller of goods on the buyer and accepted by the buyer for payment at a specified future date.
Trade and Credit Information (TCI)
A bank department that prepares and distributes status reports on its own customers, and maintains records of traders and
manufacturers with whom its customers deal.
Transferable Credit
Permits the beneficiary to transfer all or some of the rights and obligations under the credit to a second beneficiary or
beneficiaries.
Transferee
A party (second beneficiary) to whom a transferable credit is transferred in whole or in part.
Transferor
A party (first beneficiary) at whose request a transferable credit is transferred to a second beneficiary in whole or in part.
- U -
UCP
Uniform Customs and Practices for Documentary Credits. Publication issued by the International Chamber of Commerce
(1993 revision, ICC Publication No. 500, or 揢CP 500? that outlines the rules and guidelines involved in a Letters of
Credit transaction. These provisions are followed by Union Bank of California, and by most other banks, unless there is an
expressed agreement otherwise. See ICC 500.
Uniform Rules for Collections
See ICC 522.
Usance Bill
A Bill of Exchange which allows the drawee a term or period of credit (this period is also called usance).
The term is usually stated in days (eg 30 days) or months and starts either from the date of the bill (eg 30 days date) or
from the date of bill of lading, or from sight by the drawee (eg 30 days sight) which in practice means from the date of
acceptance.
An essential feature of acceptance credits and D/A collections.
- V -
Value (settlement) date Contracted date on which the foreign exchange is to be delivered or received.
-W-
Waive
To relinquish a right: used in collections with BC charges and/or interest to be collected from the drawee: these can be
waived in certain circumstances as set out in ICC 522.
| ABC --- DEFGHIJKL --- MNOPQRSTUVW |
| ABC --- DEFGHIJKL --- MNOPQRSTUVW |
|
| |||||||||||||||||||||||||||||||||||||||||
|
