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Assessment of Inland

LCCredit Management in Practice

Submitted by: Group 8

Shashi Prabha(P!"#"#CMG#$"%

Adarsh (P!"#"#CMG# %

Su&it 'umar &ena(P!"#"#CMG# %

Appora (P!"#"#CMG# %

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2

Agenda

)ypes of LC

Parties in LC

Assessment of LC Limit

 Assessment *A LC Limit

Assessment of *A LC +ith ,-.

Introduction

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Introduction

3

Letter -f credit “A written instrument issued by a banker at the

request of a Buyer(applicant) in the favor of theseller(beneciary) undertaking to honor thedocuments in accordance with the terms andcondition specied in the credit, within a specied

time

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!

)ypes -f Letter of Credit "nland#$oreign %&

'ight#sance %& evocable %&

"rrevocable %&

Back to back

&onrmed %& ed &lause %&

*reen &lause %&

evolving %&

'tandby %&

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Parties in Letter of credit

Applicant

Beneciary

"ssuing Bank

Advising Bank

&onrming Bank +egotiating Bank

Accepting Bank

eimbursing Bank

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Assessment of LC Limit

I/ )erm of LC(*A0*P%

II/ Aerage Amount of LCIII/ Periodicity of supply by the seller

I1/ Credit period aailable

1/ Lead )ime

1I/ LC outstanding at particular time

1II/ Min leel of stoc2s to be 2ept at all times1III/Storage facility

I3/ .uota Allotment

3/ Min si4e of each consignment

3I/ 5reight cost6 Insurance Charges

3II/ CI5 alue of goods3III/Adherence to 5,MA79I ;CP*C guidelines

-

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*A0*P Calculation

.

 *P LC Limit Assessment s/ In)housands

 /otal Annual 0urchase of aw 1aterial(1) !2 33 0urchases nder %&(34) 5!33

 "mport 0urchases nder %&(34) 6533

 %ead /ime(1onths) 5

 1onthly purchase of "ndigenous 1(5!3376533)#65(A%

633

 "nland %& requirement i8e (A< Lead )ime) 533

*A LC Limit Assessment

s/ In

)housands

 /otal Annual 0urchase of aw 1aterial(1) !233

0urchases nder %&(34) 5!33

"mport 0urchases nder %&(34) 6533

%ead /ime(1onths) 5

1onthly purchase of "ndigineous 1(5!3376533)#65(A%

633

sance 0eriod (9%in months 5

"nland %& requirement i8e (A< (Lead )ime=9%) !33

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*A LC Assessment +ith ,-.

2

*A LC Limit Assessment +ith ,conomic order

.uantity

s/ In

)housands (A% /otal Annual 0urchase of aw 1aterial(1) 5!33

 (9% 1inimum 9rder %evel (:9;) -33

 %ead /ime(1onths) 6

sance Available(1onths) -

 (C% /otal %ead /ime

%& outstanding at any point of (C0,% 58>>

ounding o? to nearest =igit 5

%& %imit(5@-33) 6533

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