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Slc isbp-bpo

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Saras Singh

Standby letters of credit (SLCs) are used similarly to guarantees in countries where banks cannot legally issue guarantees. An SLC requires the issuer bank to pay the beneficiary before the SLC expires if the applicant fails to pay or perform. The beneficiary receives payment when the applicant defaults. SLCs can act as advance payment guarantees, performance guarantees, or secure payment of outstanding invoices. SLCs are subject to rules under the Uniform Customs and Practice for Documentary Credits or the International Standby Practices publication.

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Standby Letter of Credit (SLC) • SLC is similar to Guarantee. • In USA , Japan due to legal position, banks are unable to issue guarantees, bonds. • Instead, SLCs are used.
Standby Letter of Credit (SLC) • Issuer bank at request of applicant agrees that • Beneficiary will be paid before L/C expiry • Upon presentation of • a. demand for payment and • b. document evidencing applicant’s non-performance
Standby Letter of Credit (SLC) • In this arrangement, • Beneficiary gets payment when • applicant fails to pay • or fails to perform
Standby Letter of Credit (SLC) • SLC acts as • Advance payment guarantee or • Performance guarantee or • Secure payment of outstanding invoices
Standby Letter of Credit (SLC) • SLC can be subject to • UCP 600 or • ISP 98 ( Publication 590 )
International Standard Banking Practice – ISBP • First introduced in 2002 - 645 • Updated in 2007 – 681 • Revised in 2013 – 745E
International Standard Banking Practice – ISBP • ISBP is companion to UCP and to be read in conjunction. • Does not amend UCP. • Reflects worldwide standard practices.
International Standard Banking Practice – ISBP • There are 291 articles/paragraphs • Divided in 15 sections.
Bank Payment Obligation – BPO • UR-BPO ( Pub 750E) introduced in July 2013. • Has 15 articles. • BPO relates to underlying trade transactions – • using Transaction Matching Application - TMA
BPO means – • irrevocable & independent undertaking • Of Obligor bank to pay or incur deferred payment obligation or pay at maturity • Specified amount • To recipient bank • On submission of data sets reqd by Established Base Line • Resulting in data match

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Slc isbp-bpo

  • 1. Standby Letter of Credit (SLC) • SLC is similar to Guarantee. • In USA , Japan due to legal position, banks are unable to issue guarantees, bonds. • Instead, SLCs are used.
  • 2. Standby Letter of Credit (SLC) • Issuer bank at request of applicant agrees that • Beneficiary will be paid before L/C expiry • Upon presentation of • a. demand for payment and • b. document evidencing applicant’s non-performance
  • 3. Standby Letter of Credit (SLC) • In this arrangement, • Beneficiary gets payment when • applicant fails to pay • or fails to perform
  • 4. Standby Letter of Credit (SLC) • SLC acts as • Advance payment guarantee or • Performance guarantee or • Secure payment of outstanding invoices
  • 5. Standby Letter of Credit (SLC) • SLC can be subject to • UCP 600 or • ISP 98 ( Publication 590 )
  • 6. International Standard Banking Practice – ISBP • First introduced in 2002 - 645 • Updated in 2007 – 681 • Revised in 2013 – 745E
  • 7. International Standard Banking Practice – ISBP • ISBP is companion to UCP and to be read in conjunction. • Does not amend UCP. • Reflects worldwide standard practices.
  • 8. International Standard Banking Practice – ISBP • There are 291 articles/paragraphs • Divided in 15 sections.
  • 9. Bank Payment Obligation – BPO • UR-BPO ( Pub 750E) introduced in July 2013. • Has 15 articles. • BPO relates to underlying trade transactions – • using Transaction Matching Application - TMA
  • 10. BPO means – • irrevocable & independent undertaking • Of Obligor bank to pay or incur deferred payment obligation or pay at maturity • Specified amount • To recipient bank • On submission of data sets reqd by Established Base Line • Resulting in data match