What is Remittance and Letter of Credit?

Remittance in Nepal and Letter of Credit 

 

Content:-

 
1.What is Remittance? 
2.Main four parties? 
3.Types and Benefits? 
4.Modes and instruments? 
5.Some data 6.Letter of Credit ( LC) 
6.Concept of LC 8.Purpose of LC 
7.Features of LC 
8.Parties involved 
9.Types of LC 
10.Summary of LC

Definitions: 

A Remittance is a transfer of money by a foreign workers to an individual in his/her home country.

Remittance is a non-funded and less risky business where there is no physical movement of money. There are at least 4 parties are involved while remitting the fund.

          Main four parties of Remittance

 

Types of Remittance:

Following below are  the types of Remittance:

1. National
2. International
3. Inward
4. Outward
5. Formal (using Bank and Financial Institutions)
6. Illegal (by means of Hundi, Individual person)
   

Top recipient countries of remittances (in billions of $)

Source : Wiki and various sites

Nepal received remittance of $8.1 billions in 2018
Nepal received remittance of Rs. 25.42 billion 2019

 

Letter of Credit

According  to Bank and Financial Institution Act 2063:-

 

‘ Letter of Credit’ means a letter written by one bank of financial institution to another bank  or financial authorizing the letter to accept cheques , drafts or bills of exchange of any specified person with in the limit of the amount specified there in.

LC are often used in International transactions to ensure that payments will be received where the buyer and seller may not know each other and are operating in different countries.

 

Parties involved in LC

 

  Beneficiary: A person or company who will be paid.
 Buyer: Applicant of goods
 Bank: Issuing bank or Institution issuing LC.

Tags:-

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          Here you go with more details: