As you know the Iran-India payment issues are going on and UCO bank is the only bank to settle the payments through L/C.
My queries are: 1)What will be the actual mechanism of payment? 2) What will be the currency for transaction? 3) What if we have the a/c in other bank say PNB then who is liable to pay us the money? UCO will settle or PNB ? 4)How many banks will be involved if we have a/c in other bank? 5) Can we get the payment upfront against L/C or I have to wait for 120 days or the specified period mentioned in L/C?
19 October 2012
HERE IS I POSTING dgft notification all the condition same country. ************************
To be published in the Gazette of India Extraordinary Part II Section 3, Sub Section (II)
Government of India Ministry of Commerce & Industry Department of Commerce Udyog Bhawan
Notification No.105 (RE-2010)/2009-2014 New Delhi, the 5th March, 2012
SUB: Grant of export benefits / incentives to export proceeds realized even in Indian rupees – Exports to Iran regarding.
S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with Para 2.1 of the Foreign Trade Policy, 2009-2014, the Central Government hereby makes the following amendment in the Para 2.40 of Foreign Trade Policy, 2009-2014:
2. The following Sub-Para is added to Para 2.40 of Foreign Trade Policy, 2009-2014: Para 2.40 A: Export proceeds against specific exports to Iran realized in Indian rupees are permitted to avail exports benefits/ incentives under the Foreign Trade Policy, 2009-14, at par with export proceeds realized in freely convertible currency.
3. Effect of this notification: In respect of exports to Iran, export proceeds realized even in Indian rupees will be eligible to avail export benefits and incentives.
(Anup K. Pujari) Director General of Foreign Trade E-mail: dgft@nic.in
Thanks for your prompt reply I gone through that notification but i am not clear with it. Is it related to current scenario? And if yes then who is liable to make the payment if other Indian bank is involved and not UCO? Please explain me the L/C mechanism and the how many banks will be involved (Negotiating,Nominated, Issuing....) and will the payment be upfront?
23 October 2012
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately (thereby generating a debt), but instead arranges either to repay or return those resources (or other materials of equal value) at a later date. The resources provided may be financial (e.g. granting a loan), or they may consist of goods or services (e.g. consumer credit). Credit encompasses any form of deferred payment. Credit is extended by a creditor, also known as a lender, to a debtor, also known as a borrower.
Credit does not necessarily require money. The credit concept can be applied in barter economies as well, based on the direct exchange of goods and services . However, in modern societies credit is usually denominated by a unit of account. Unlike money, credit itself cannot act as a unit of account.
VOSTRO AND NOSTRO ACCOUNT ************************
Nostro Account An account at a foreign bank where a domestic bank keeps reserves of a foreign currency. A bank keeps a nostro account so that it does not have to make a currency conversion (which brings with it foreign exchange risk) should an account holder make a deposit or a withdrawal in that foreign currency.
VOSTRO
The account that a correspondent bank, usually located in the United States or United Kingdom, holds on behalf of a foreign bank. A vostro account is one in which the domestic bank (from the point of view of the currency in which the account is held) acts as custodian or manages the account of a foreign counterpart. Also known as a loro account.
25 October 2012
Thanks for your replies. my next question is that:
1) Will the exporter get the payment upfront if the documents are in order as per L/C? 2) Will the payment be at sight or at a period of 60/90/120/180 days? 3) Also tel me that if other Indian bank is involved then will the exporter get the payment through UCO bank only or the other Indian bank in which he has his EEFC account?
Please reply the answers from the point of view of current Iran-India Payment issues.
29 October 2012
Sir I am confused regarding the first two answers as they seem to be contradictory.
If the payment is upfront then it should get immediately and not after 180 days? Am i correct?
And if the L/C is at a period of 180 days then the payment will get after 180 days??
Please clear the above two point. According to me the payment should be upfront means it should get immediately and if its at a period of 180 days then it should get after 180 days. So, just one option should be there. Please reply
CAclubindia
