m
  

    
 

 I 
 
 !
 " #$%&#' &(
 !)#$%&#' &
 " %*(
 *
 %+m   
 ,-',-'I+

"
 International transaction have to effect payment from one party
to another party. There are various ways to effects this
payments. Payment may be gifts or remittances; it could be
export import or trade transaction. Trade of merchandise as
well as services is to be considered.

 This broadly includes in two parts as follows:

Common trade transaction and
Bank process in effecting payments.
 Ks ´deliveryµ is the essence of the contract for the importer
(overseas buyer), timely sure receipt of payment is the matter
that is of prime interest to the exporter.

 In a contract fro export of goods, it is natural that there are

number of clauses defining in exact term how the payment is to
be made to the exporter.

 There are different modes of making payments to the exporter.

K. Clean Payments Without an Intermediation of
Commercial Bank.

B. Documentary Bills on D/K Terms

C. Banker·s Documentary Letter of Credit

(Documentary Credit)
O Consignment Terms : Not sold to the buyer, but to the
agent of the exporter in the foreign country.
 K letter of credit is a written commitment by a bank to make a
payment of a defined amount of money to a beneficiary
(exporter) according to the terms and conditions specified by
the importer (applicants)

 It undertakes to pay a certain amount of money on presentation

of stipulated documents and the fulfillment by the exporter of
all terms and condition.
 K guarantee is understood as a supplementary contract
based on an already existing original contract between
the debtors and creditors
 Such as;
¶K· is designated as debtor
¶B· is designated as creditor and
¶C· enter into a contract of guarantee with ¶B·
L/C
 Original contract
 Two contracting parties
1. Debtor
2. Creditor
 Banker accepts the certain
obligations and directly,
upon the beneficiary
fulfilling the terms and
conditions.
 Correspondent
 It can be negotiated in parts
stretched over a period
Guarantee
 Supplementary contract
 Three parties
1. Debtor
2. Creditor
3. Guarantor
 The rights of the beneficiary
on the guarantor is
contingency right.
 One branch
 Guarantee cannot be
invoked more than once.
 Banks are the entites that pay and receive for one the
behalf of the client.
 Banks have to effect the credit-debit entries to finally
transfer the credit from one party to other party.
 Banks perform this task by either passing credit-debit
messages to its own branch. This is done when the
bank has branches in both paying and receiving
locations.
 If not then, correspondent banks help in completing
transaction.
 Correspondent
Indian US Bank
Bank BoNY

Buyer Seller
A B
 ð
S system is a funds transfer mechanism
where transfer of money takes place from one
bank to another on a ³real time´ & on ³gross´
basis

astest possible money transfer system through
the banking Channel
 oney transfer takes place in the books of the
ðeserve Bank of India, payment is taken as final &
Irrevocable
 No Credit & Liquidity ðisks
 Seamless movement of funds through I platform
 ðeduces the systematic risks in the settlement
system

unds are received online
 Immediate use of funds by both the parties without
exposing them to settlement risk
 Clearing House Interbank Payment System
(CHIPS)
 Society
or Worldwide Interbank
inancial
elecommunications (SWI
)

OWIð
 CHAPS
 There are the different types of risk in payment systems
depend on their stage of development.
 Our main interest behind this project is to give a detail
information about international payment systems along
with risk.
 However the recognition of payment system risk has
been universal.