3-1- Foreign exchange L/C is one kind of payment and is one of bank’s services which is requested by applicant and established by bank. This credit supposed for ordering or purchasing goods or services from one seller to seller’s benefit. These credits can pay by cash (liquid) or by credit (trust).
3-2- in order to making limits, responsibilities and duties of contract’s sides clear and using identical legal basis between bank and costumer, collection of international chamber of commerce terms (Incoterms) will extrapolate.
3-3- local L/C opens as irrevocable credit.
3-4- credit opening duration for purchasing all type of goods, raw materials and services, is based on agreement between buyer and seller and is according to central bank of Islamic republic of Iran’s disciplines. This period could not exceed from 18 month. By request of one side and confirmation of another and after payment of related charges, it is possible to prolong it for foreign exchange opening L/C opening.
3-5- receiving deposit for foreign exchange L/C opening from buyer depends on the whole proforma invoice cost and credit amount and cooperation duration of bank and buyer and specified item by item. This number is assigned as 10% of the total amount of L/C opening. Guarantee for the rest of credit fund is acceptable for bank in one or more of the following authorized guarantee forms, based on current disciplines of bank. It would be at least equal to 120% of the total amount of credit opening cost. [Guarantees forms are: real estate mortgage, blocking time deposite into bank's profit, debentures with government guarantee, other bank’s guarantee , coverage of authorized insurance companies (by buyer’s expense ) and other mortgages (securities) acceptable for BIM. ]
3-6- paying prepayment to seller (based on contract or proforma invoice conditions) also is possible for bank. This payment is maximum equal to pre-received money from buyer in time of L/C opening and after reception of a bank guarantee.
3-7- amount of commission of service offering for L/C opening for the first 3 months totally amounts to 0.002 of the whole credit cost, and for each additional month 0.0005 of the whole credit cost.
3-8- expenses related to mail service, tax stamps and Telex or SWIFT should pay by buyer.
3-9- different procedures of executive actions for foreign exchange L/C opening described as following: (related forms are offered in enclosure of this guide.)
3-9-1- Buyer refers to one BIM’s branch and receives all required forms for foreign exchange L/C opening, including: L/C opening application form and credit opening terms and conditions from.
3-9-2- Buyer should study credit opening terms and conditions paper and fills L/C opening application form ,then he should sign and stamp them. Buyer submits these forms with proforma invoice issued by seller to that branch.
3-9-3- after documents were filled out and offered by buyer, branch comprehensively controls them and compares with seller’s proforma invoice information and other related resources and documents such as: Rules for L/C opening published by international chamber of commerce (UCP) , assignments of central bank of Islamic republic of Iran and current bank’s rules and disciplines. In case of any problem or ambiguity in received documents they will be removed.
3-9-4- with respect to proforma invoice price, credit time , type of goods or services and other related parameters , bank appoints amount of deposit and buyer settles appointed fund to bank’s account by bank’s declaration.
3-9-5- with respect to credit conditions, type of goods or services, amount of deposit and other related parameters, bank assigns type and amount of guarantee for payment of remained credit cost and buyer embarks to provision of assigned guarantee(s).
3-9-6- foreign exchange L/C is opened to seller’s benefit with respect to entered information in credit opening application forms and seller’s proforma invoice. It serves to seller via executor bank by means of SWIFT.
3-9-7- seller’s declaration for acceptance of reception of served credit and its conditions is sent to bank via executor bank by SWIFT and finally delivered to buyer.
3-10- increasing or decreasing in credit cost, to prolong credit deadline and every modification in its conditions or revocation of credit needs for offering written agreement between seller and buyer. Bank will perform required actions after reception of related charges under current bank’s rules and disciplines.
3-11- offering dealing deeds from seller, by which executor bank is authenticated for determining payment of the whole or part of credit cost to seller is defined as following:
- Invoice issued by seller
- official Bill of lading predicating shipment of goods with inclusive packing list or expense statement (if L/C has created for service offering)
- Certificate of General inspection report
- Certificate of Technical inspection report (depends on buyer request)
- Certificate of origin (Approved by chamber of commerce in seller’s locality)
3-12- After abovementioned documents (dealing deeds) were received to executor bank of seller, this bank controls and confirms them. Afterward Executor bank is allowed to paying price of invoice to seller according to credit conditions. Executor bank of seller then would send dealing deeds enclosed to document description form to bank by express mail.
3-13- Simultaneous with payment of invoice price to seller by executor bank of seller, and its declaration to bank, bank requires buyer to settle the remained credit cost into bank’s account.
3-14- In case of any suspension from buyer in provision of remained credit cost, bank will calculate and receive the profit of that price from buyer. This profit should be paid from payment date to executor bank of seller up to reckoning time and delivering related documents from buyer.
3-15- If buyer could not provide the remained credit cost (invoice cost) and required for provision of credit cost by bank facilities, bank can confirm his request and provide the desired cost maintaining bank’s rules and disciplines and in one Islamic contraction form. This payment will receive in installment form. If anyinterruption occurs between invoice cost payment to executor bank of seller and buyer’s request, in addition to the profit of related contract, penalty of satisfaction delay (subject of article No. 3-14) also will be calculate and received from buyer.
3-16- if the whole or part of L/C subject was different type of goods or raw materials, endorsement and goods shipment documents consignment (for discharging from customhouse and delivering to buyer), required for complete reckoning between buyer and bank. In case of “article No. 3-15” subject has made real, endorsement and goods shipment documents consignment (for discharging from customhouse and delivering to buyer) required for making suitable contract and provision of remained credit cost from fund of approved facilities. These facilities will tracked by related executives of bank.