Import Letters Of Credit (LC)
A Letter of Credit (LC) is an undertaking by a bank, on behalf of an importer (the applicant) to the beneficiary to make payment, provided that the exporter complies with all the terms and conditions stipulated by the credit. Letters of credit can be confirmed or unconfirmed and are irrevocable upon Issuance. Payment is made at Sight, Deferred Payment, and Mixed payment or by Acceptance.
CASH BACKED LC
Cash Backed LC involves the applicant providing funds for the opening of the LC.
UNCONFIRMED SIGHT AND DEFERRED LC
Unconfirmed Sight and Deferred LC involves payment at a later date upon presentation of compliant shipping documents.
CONFIRMATION LINE AND USANCE LC
Confirmation Line and Usance LC involve opening a Confirmed LC using the bank’s offshore facility which will be repaid by the customer at maturity.
REQUIREMENTS FOR LC
- One set of documents from the supplier to the issuing bank (Zenith Bank).
- Two sets of documents submitted to overseas bank for payment (the document will later be forwarded to the bank).
The documents required for processing of Risk Assessment Report (RAR)
- Copy of Form M
- Transport Document
- Commercial Invoice/Final Invoice
- Packing List
- Standard combined Certificate of value and Origin (CCVO) (Form C16)
- Manufacturer Certificate/Certificate of analysis/Phytosanitary Certificate
NB: All Shipping documents must be issued after Form M approval date and Letters of Credit issuing date. That is, shipping document must not predate Form M and Letters of Credit.
Import Bills For Collection
A documentary Bill for Collection is an order by the seller to his bank to collect a certain sum from the buyer against the transfer of the shipping documents. Payment can be made by cash or by acceptance of a Bill of Exchange.
This means the handling by banks of documents in accordance with instructions received in order to obtain payment and/or acceptance, or deliver documents against payment and/or against acceptance, or deliver documents on other terms and conditions.
Against Acceptance of Bill of Exchange or Promissory Note or Letter of Undertaking to make Payment Against acceptance of Bill of Exchange or Promissory note or Letter of Undertaking to make payment involves the release of the shipping document to the buyer based on the release condition stated on the Collection Order. Release Free Of Payment Release Free Of Payment implies that the shipping document be delivered to the buyer without extracting any commitment to make payment. Documents Against Payment Documents Against Payment implies that the buyer makes payment before documents are released for clearing the imports. Though internationally recognized, this does not apply in Nigeria as the Central Bank of Nigeria guidelines state that the imported items must be cleared from the port before payment can be made to the supplier.
Non-Valid For Forex / Advance Payment
This involves processing of Online Form M and shipping documents for Pre Arrival Assessment Report to enable the importer clear consignment on arrival at the ports. The bank does not facilitate the payment on this mode of importation.
Export transactions refer to the sales of goods by our customers to buyers outside the shores of Nigeria. Exports of goods may be Commercial whereby payments are received in foreign currency as proceeds of sale, or Non-commercial whereby no payment is expected or received.
The internationally accepted means of payment for commercial exports are Letters of Credit, Bill for Collection and Payment In Advance. Commercial export amount can be FOB (Free on Board) whereby total value of goods does not include freight, or C&F (Cost and Freight) where total value of goods include freight. The exporter will process the Form NXP, forward shipping documents and inflow the Export Proceeds through the bank.
PROCESSING OF COMMERCIAL EXPORT
This is done through Letter of Credit, Bills for Collection, and Advance payment. We negotiate Export documents, process export levy, draft and certify export proceeds repatriation to the CBN on behalf of our customers
Invisible Remittances relate to payment for services (intangible transactions) such as School fees, Technical fees, Dividends, Airline Tickets, Loans repayment, Judgment debt, Personal Home Remittance, etc.
Payment is by either SWIFT or by Foreign Drafts. However, for Travel allowances, payment is by Traveler’s cheque or Cash. Each payment type has its specific document requirement as stipulated in the Central Bank of Nigeria FX Manual.
E- LC Application and Trade Finance Online. The Following are available on our Trade Finance Online:
- The Scanning Company that processed your Form M
- The Status of Form M (Accepted/Rejected)
- The Approval date of the Form M
- The Amount of the Form M
- The Currency of the transaction
LETTER OF CREDIT
- The Letters of Credit number
- The Beneficiary
- The Expiry date
- The Type of Letters of Credit (Confirmed/Unconfirmed/Usance)
- Status of Unconfirmed Letters of Credit (Confirmed/Outstanding unconfirmed balance)
- Payment of Letters of Credit (Paid/Outstanding balance)
- Status of Letters of Credit (Expired/Active)
- Status of your shipping documents
- Shipping document received
- Bill of Lading Number
- Amount of Shipping documents
- Availability of Risk Assessment Report (RAR)
- Risk Assessment Report number
- Notification of Form M batched to Scanning Companies.
- Notification of Acceptance and Rejection of Form M
- Notification of receipt of Risk Assessment Report
- Notification of document batched to Scanning Companies
- Notification of Rejection of Shipping Document fromScanning Companies
- Notification of Bills for Collection payment
- Notification of Established Letters of Credit and amendment of Letters of Credit. In addition to this notification copies of the established Letters of Credit and any amendment are attached to such notification to enable you to have them in soft copies
- Notification of discrepancies on Letters of Credit
- Notification of Matured Usance and Deferred payment Letters of Credit