CII Virtual Session on ‘Managing Risks in International Trade with Letters Of Credit, Standby Credit and Bank Guarantees’ 30 - 31 July 2025
Context Setting
A country may never produce whatever they want to consume and a country may never consume whatever they produce. As far our country is concerned we depend on import of crude, defense equipment and capital goods. And we have surplus production of certain items which we may be compelled to export. It is the order of the global market. Hence cross border trade cannot be avoided.
Cross border trade (foreign trade) never happens with known parties always. Counter party risk and country risk cannot be avoided in foreign trade. Very rarely Indian exporter takes risk on the unknown overseas buyer. To manage the country and counter party risks traditionally global market believes certain instruments like letters of credit, standby credit and bank guarantees. When more parties are handling such instruments and letter of credit is based on presentation of documents there should be a set of Rules acceptable to all parties (buyer, seller, buyer’s bank and seller’s bank).
International Chamber of Commerce (ICC) Paris had taken the lead since 1930 onwards and introduced Rules for such instruments accepted by more than 150 countries. These Rules are known as UCP 600 for letters of credit, ISP 98 for Standby letters of credit and URDG 758 for bank guarantees. Besides, ICC Paris has also published another set of guidelines known as ISBP (International Standard Banking Practice for examination of documents under Documentary Credit) known as ISBP 745. This publication exclusively prescribes the procedure for examining documents drawn under letters of credit (documentary credit).
Even after receiving letters of credit most of export transactions could not be completed successfully. It was found that exporters (beneficiaries) are accepting letters of credit with risky conditions without proper understanding and presenting documents with avoidable discrepancies. As far as importer transactions are concerned, the importer could not get the desired benefit of letters of credit because his inability to prescribe appropriate documents which can safeguard its interest.
To go one step backward, at the time of finalizing the commercial contract, both buyer and seller are to be clear with their delivery terms because terms of delivery will influence the pricing and also the point of risk transference from seller to buyer. This issue is also generally covered under ICC Publication known as INCOTERMS 2020. This publication exclusively deals with the expenses relating to delivery of goods and transference of risk from seller to buyer at which point.
Objective
This two day virtual session is designed in such a manner to provide practical inputs to the companies which are involved in foreign trade and also domestic trade. Even for domestic transactions when the companies are using letters of credit, it is subject to UCP 600 only.
Key Takeaways
The following issues will be taken up for discussion in this session:
- INCOTERMS 2020 and its relevance to LC transactions.
- Operational issues that are to be carefully considered by the importers at the time of preparing the commercial contracts, submitting letter of credit application to the banks and establishing letters of credit
- Interpretation of some of the fields in the LC format (SWIFT) with specific reference to the relevant UCP /ISBP provisions.
- Check list for exporters at the time of confirming the draft LCs received from the importer and on receiving the letter of credit.
- Check list for analyzing the LC terms and conditions with reference to preparation of documents that are to be presented under letter of credit.
- How to identify the risky conditions in the letter of credit.
- Discrepancies in documents which can be avoided at the time of presentation of documents by the exporters
- Bank guarantees – Inland and foreign guarantees – significance of claim period and the implications of amended Indian Contract Act
- Difference between Standby letter of credit and bank guarantees.
- We will be discussing variouse case studies to explain in detail the significance of LC SWIFT format / list of discrepancies to understand ISBP 745, etc
Participation Fees
| Type of Organisation | Fees per Participant |
| CII Members (Large and Medium) | Rs.7,500/- (+ 18% GST) |
| CII SSI Members | Rs.6,500/- (+18% GST) |
| Non Member Companies | Rs.8,500/- (+18% GST) |
SPECIAL DISCOUNT:
10% on 3 or more nominations from an organization.
Participation fees is non-refundable/ non-adjustable against any other programme of CII, but change in nomination(s) is accepted.
Registration: Prior registration for participation by the sponsoring companies is necessary.
