Frequently Asked Question

What can be changed in Transferable LC?

The following can be changed in a transferable LC:-

• The amount of the LC
• The unit price of the goods
• The time of shipment
• The last date for the presentation of documents
• The expiry date of the LC

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• Cost, Insurance, and Freight
• Sight LC
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When a Sight Letter of Credit becomes due?

A Sight LC becomes payable as soon as the beneficiary provides the required documents to the bank, fulfilling the conditions of the sight letter of credit. However, the bank gets a reasonable time to process the requested payment. This time typically goes up to five banking days. (As per ICC guidelines).

What difference between Incoterms CFR (Cost and Freight) and CIF (Cost, Insurance, and Freight)?

• Cost and freight (CFR) and cost, insurance, and freight (CIF) are terms used in international trade for the shipping of goods by sea.
• CFR requires the seller to arrange for the transport of goods by sea to the buyer’s (required) destination. This includes the cost of shipping but excludes the purchase of marine insurance.
• CIF is similar to CFR, except it also requires the seller to take out an agreed amount of marine insurance to protect against the loss, damage, or destruction of the order.

What are the payments borne by the seller under incoterm CFR (Cost and Freight)?

Payments bore by the seller include:

• Maintenance charges, for holding goods in the warehouse.
• Inland charges, for loading goods and carrying them to the designated port.
• Depot charges, for terminal proceedings and duty charges.
• Documentation charges, for preparing all the necessary documents.
• Export customs charges, for carrying out customs proceedings.
• Freight charges, for delivering goods through the shipping process, to the designated port.

Who pays FOB (Free On Board) destination freight?

As the responsibility under FOB transfers to the buyer after the goods are delivered at the agreed destination, the FOB freight charges are borne by the buyer.