How to Open Master Export L/C in Garment Buying House

L/C means Letters of Credit which is in general a conditional document extended by the bank in connection with presentation of export value. L/C plays a very dominant role in this matter. There are various types of L/C. In this article I will explain what is Master L/C and how to open a master L/C? 

 Master L/C:
When a L/C is opened to import goods directly from the exporter is called master L/C. Master L/C is issued by the buyer (Buyer’s bank) to manufacturer. Master L/C has higher financial value than back to back L/C. It is used in international trade between buyers and sellers of different countries.

In this article I will give a sample of Master L/C. I think it will be helpful to know that how to open a master L/C in garment export business.

Example a Master L/C:

ATLX7052 17H 26 04/05/92NACHR, NR A 28E3991
From: Commerce Bank AG
04-04-93 MEMO ZOAX. 1
Message: NR 50264 RB

TEST commerce bank purt for used 120.540.10
To: Sonali Bank, head office Motijheel commercial area, Dhaka 1000, Bangladesh.

Without adding your confirmation please advice HROUGH INTERNATIONAL FINANCE INVESTMENT AND COMMERCE BANK LTD. Motijheel branch, Dhaka, Bangladesh by order of Nilla Import GMBH & Co. Windallee-15, D-2930 Varel-1, in favour of H.L WORLD WIDE LTD. 10/a Circuit House road, Dhaka. We open our irrevocable transferable doc. Credit covering no nilla 1000644824 for USD 120.540.60 CDF bremen covering.

Men shirts 65-35 T/C print SZ: 38-46

a. 10.020. pcs, art 17.17389 price: USD 2.40 per piece C + F bermen
b. 10.020. pcs, art 17.7400 price: USD 2.40 per piece C & F bermen
c. 10.020. pcs, art 17.7410 price: USD 2.40 per piece C & F bermen
d. 10.020. pcs, art 17. 7413 price: USD 2.365 per piece C & F bermen
e. 10.020. pcs, art 17. 7417 price: USD 2.365 per piece C & F bermen for item (a to e)

Quality:
Fabric T/c 65/35 Pct
Construction: 96 x 72, 45 x 45
Guaranteed without formaldehyde
Fab bein processed by guaranteed without smell.

Color fastness:
Color fastness being guaranteed washing 60 degree.

Packing:
Each piece per polybag and all further
Details against order no. 93-17/35

Label:
Each piece with label showing international washing instruction size.
Quality description in six languages.
All details against order no. 93-17/35 and all TLX/ letter/ fax. Of Nilla Import Exporter gmbh & Com.
All A/M details must be confirmed in the commercial invoice.

Doc. Credit is valid until 10th October 2003 for presentation of following documents at the counter of any bank in Bangladesh.

Full set of clean signed on board ocean shipping lines bills of lading of Maersk Line, issued to the order of the bank in bangladesh which is remitting the documents and endorsed by this bank to the order of commerce bank a & f notify A/M applicant, marked freight prepaid.

B/L must mention the carrying ocean vessel inspection certificate signed by Nilla Textile-import or by Mr. ………………. Of Ltd. Certifying that, of the order have been fully complied with………………….

Official certificate of origin for textile products, issues by export promotion bureau in Dhaka or Chittagong/Bangladesh, evidencing goods to be of Bangladesh origin.

Packing list issued in three originals.
Signed commercial invoice issued in three originals

Letter of confirmation signed by world wide ltd, Dhaka, certifying that full set of copy documents sent to applicant Nilla by telefax-no, 49-4451-12088-or by DHL courier service indicating relevant DHL for warder air-bill number.

Evidencing Shipment of Goods as Specified Above:
From chittangong by Maersk Line latest 30th july 2003 to bremen / Germany.

Trans shipment allowed
Part shipment allowed

Documents to be presented within 10 days after the date of issuance of the shipping documents (s) but within the validity of credit.

Credit available with any bank in Bangladesh by negotiation.

We here by engage with drawers and for bona fide holders that drafts drawn and negotiated in conformity with the terms of this credit will be dully honored on presentation, the amount of each draft must be endorsed on the reverse of the original credit instruments. The negotiating bank must certify to this effect, negotiation under reverse not acceptable.

All bank charges and commission incl. eventual negotiation charges arising outside the federal republic of Germany are to be borne by the beneficiaries.

Please forward the documents by first and second registered airmail to. Commerz Bank A & G. Montsstr, 6. D-2940 Wilhel Mshaven, credit subject to U.C.P, for documentary credits 2003 revision I.C.C publication number 400.

Stop
This is the operative credit instrument and no mail confirmation will follow.

Commerz bank A & G foreign dept.
Foreign dept.
Tex…………

Note: It is just an example, please don't take it other ways. If you have any suggestions then comment below.

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How to Open Back to Back L/C in Garment Export Business

This type of L/C is opened against the original master L/C. A back to back letter of credit is a new credit. It is different from the original credit based on which the bank undertakes the risk under the back to back credit. In this case the bank’s main security is the original credit. There are two types of Back to Back L/C, one is congruent and another is incongruent.

Fig: Line diagram of Back to back L/C

In this article I will give a sample of Back to back L/C. I think it will be helpful to know that how to open a Back to back L/C in garment export business. In previous article I have given an example of Master L/C.

642725-ABD BJ     JUL-20-04-93    GA 0080273654 6427571-ABD BJ    73675 AMEXC HX   642757- ABD BJ

To: American Express Bank Ltd. Hongkong
From: Agrani Bank Ramna Branch, Dhaka, Bangladesh
Message no. 10601. Dated 10th april 2003

Test 1385 for USD 64,030,00 with our principle branch as on 20- 04-2003
We open our irrevocable letter of credit No.: 2530/441/87/2003/DTD-20-04-2003

Detail as follows:

Applicant:
Hire Fashion Ltd. 700- Mohakhali c/a, Dhaka-1212, Bangladesh.

Beneficiary:
M/s. Palash Trading Agency RM, 905 A, Pacific Trade Center Kal Hing road, Kowloon Bay, Kowloon, Hongkong (code)

Amount:
USD 64,030,00 (say USD, sixty four, thousand thirty only) C & F, Chittangong(.)

Draft:
To be drawn on applicant at 120 days sight from the date of negotiation of documents available for 100 percent of the invoice value (.)
Shipment withing 20-5-93 but within 11 days from the date of shipment (.)
Expiry with 30-5-93 but within 11 days from the date of shipment.

Merchandise:

Fabrics for ready made garments………. Quality, specification strictly as per pro-forma invoice.
No. …………………. Dated: …………………….

Shipment: from China/ Hongkong port to Chittagong port by steamer excerpt Iarael, Iraq and South African flag vessels (.)

Partial shipment and transshipment allowed (.)

Documents Required:

1. Commercial invoice in quadruplicate signed by the beneficiary, certifying merchandise to be of china/ Hongkong origin (.)

2. Full set of clean shipped on board ocean bills of lading drawn or endorsed to the showing freight prepaid Ramna branch, Dhaka showing freight prepaid list in quadruplicate required (.)

3. 3. Packing list in quadruplicate required (.)

4. Beneficiary’s certificate starting that the merchandise have been shipped strictly asper pro-forma invoice no. …………

5. Draft must be marked drawn Agrani Bank letter of credit number 2530/441/87/03 (.)

6. Insurance covered by the applicant(.) all shipment under this credit this must be adviced by the beneficiary after shipment direct to M/S. Central Insurance Company Ltd. 83 Motijheel C/A, Dhaka, Bangladesh and to the applicant, referring to cover note on. CIC/LO/MC-461/04/03 Date 20-04-03 giving full details of shipment (.) a copy of the advice is to accompany each set of documents.

Other terms and conditions:

7. All bank charges outside bangl;adesh are on beneficiary A/C.

8. Short form bill of lading are not acceptable.

9. Invoice exceedingthe credit amount will not be acceptable.

10. Bill of lading must show weight of the goods and freight charges.

11. A set of non negotiation shipping documents should be sent by DHL orspeed post directly to opener after shipment.

12. TheFollowing should be quoted on invoice and bill of lading L/C No. 2530/441/03, L/CA no 46310 pro forma invoice on IWL/DDHT/F-029/03 and export LC No. Nilla !0064828.

13. Guaranteed without formal dehyde.

14. Fabric has been processed by curing/ guaranted without soneel.

15. Shrinkage maximum 4 PCT for 100 cotton in case of T/C 65.35 bPCT.

16. Color fastness must be guaranteed 40 degree for 100 PCT. Cotton in case or T/C washing 60 degree for.

17. Beneficiary must send 10 yards of sample from each color design to the L/C opened by DHL/Courier service latest within 3 days of shipment effected and the receipt must accompanied with the shipping documents.

18. If any transfer is done than the advising bank is requested to provide us with all particulars of beneficiary as soon as the transfer of this L/C is done.

19. L/C is trandferable.

20. Third parties documents acceptable.

21. Interest for usance period are on openers account at bank rate in Hongkong or Labor whichever is lower if payment made before maturity date interest to be reduced proportionately.

22. Pre shipment clause will be vided later on.

Instruction for negotiation bank:

23. Six copies of invoices to be sent to us (Agrani Bank Ramna branch, Dhaka) by DHL or speed post with original set. JIHS tele message will be passed as per above credit instrument and MHIL confirmation will be issued end.
 

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