The Deferred Payment Letter of Credit is essential in international trade finance, particularly when buyers require extended payment terms while ensuring sellers receive payment security. This document is commonly used in Indian cross-border trade transactions where immediate payment is not required or desired. It provides a structured payment mechanism that typically allows 30 to 180 days of deferred payment after document presentation. The document must comply with Indian banking regulations, particularly RBI guidelines, FEMA requirements, and international UCP 600 rules. It's especially valuable in capital goods transactions, large-scale imports, and situations where buyers need to align payment timing with their cash flow cycles while providing sellers with bank-backed payment assurance.
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1. Letter Reference and Date: Unique LC reference number and issuance date
2. Applicant Details: Complete name and address of the party requesting the LC (buyer/importer)
3. Beneficiary Details: Complete name and address of the party in whose favor the LC is issued (seller/exporter)
4. Issuing Bank Details: Name and address of the bank issuing the LC
5. Credit Amount and Currency: The maximum amount and currency for which the LC is valid
6. Form of Credit: Specification that this is a deferred payment letter of credit and its type (irrevocable/confirmed)
7. Payment Terms: Detailed payment schedule, maturity date, and deferred payment period
8. Documents Required: List of documents required for presentation under the LC
9. Shipment Terms: Details of goods, shipment schedule, and delivery conditions
10. Expiry Date and Place: Final date and location for document presentation
11. Presentation Period: Timeframe within which documents must be presented after shipment
12. Governing Law and Jurisdiction: Specification of Indian law and relevant jurisdiction
13. UCP 600 Declaration: Statement that the LC is subject to UCP 600
1. Advising Bank Details: Details of the bank advising the LC to the beneficiary, used when there's an intermediary bank
2. Confirmation Instructions: Instructions regarding confirmation, used when confirmation is requested from another bank
3. Transhipment Terms: Specific terms regarding transhipment, used when transhipment is permitted or prohibited
4. Partial Shipment Terms: Terms regarding partial shipments, used when partial shipments are allowed or prohibited
5. Special Conditions: Any additional terms or conditions specific to the transaction
6. Transfer Provisions: Terms regarding transferability of the LC, used when the LC is transferable
7. Insurance Requirements: Specific insurance requirements, used when insurance details need to be specified
8. Bank Charges Distribution: Detailed breakdown of bank charges, used when standard charge distribution doesn't apply
1. Schedule A - Description of Goods: Detailed specification of goods including quantity, quality, and price
2. Schedule B - Document Requirements: Detailed list and format of required documents including commercial invoice, transport documents, certificates etc.
3. Schedule C - Payment Schedule: Detailed breakdown of payment installments and their respective due dates
4. Appendix 1 - Standard Banking Instructions: Standard banking procedures and instructions for document handling
5. Appendix 2 - Special Instructions: Any special instructions regarding document presentation or handling
6. Appendix 3 - Shipping Terms: Detailed shipping instructions and requirements
Authors
Relevant legal definitions
Clauses
Relevant Industries
Manufacturing
International Trade
Import/Export
Textiles
Automotive
Agriculture
Pharmaceuticals
Electronics
Heavy Machinery
Consumer Goods
Commodities Trading
Chemical Industry
Mining
Steel Industry
Relevant Teams
Finance
International Trade Operations
Treasury
Legal
Compliance
Trade Finance
Credit Operations
Documentary Credits
Risk Management
Procurement
Supply Chain
Banking Operations
Relevant Roles
Trade Finance Manager
Import Manager
Export Manager
International Business Development Manager
Finance Director
Treasury Manager
Chief Financial Officer
Banking Operations Manager
Credit Manager
Trade Operations Officer
Compliance Officer
Documentary Credits Specialist
International Trade Specialist
Supply Chain Manager
Procurement Manager
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