Dear Friends,
Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?
Hope to receive your replies.

Thanks and Best Regards,

R.C.Sukhtankar

Quoting from[essar53]:


Dear SIR,

THISIS NICE TOPIC, I MUST SAY INDIAN BANKERS ARE NOT GIVING PRESHIPMET CREDIT TO INDIAN SUPPLYERS.EVEN AFTER RECOMANDED BY MINISTERY OF FINANCE, THIS FACILITY ENJOYED BY VERY FEW BIG SHOTS ONLY. IF NEW SUPPLYER ASK FOR SUCH FACILITY INDIAN BANK ASK SECURITY IN TERMS OF CASH DIPOSIT OR IMMOVABLE PROPERTY. AND IT TAKES LONG TIME TO SENCTIONED PRPOSOL, BANK LAVID SO MANY CHARGES FORM CUSTOMES, BANK FINANCE AGAINST LETTER OF CREDIT BUT ASK FOR IMMOVABLE PROPERTY, TOTAL CHARGE ON RAW MATERIALS, FINISHED GOODS ,

PACKING MATERIALS AND WHAT NOT AFTER FILLFULLSUCH FORMALITY L/C OPENNING CHARGES AND INTEREST ON FINANCE AMOUNT IS TO HIGH.THERE IS NO CONTROLL OG THE GOVERNMENT ON BANKING INDUSTREES.IT IS IN CONTROLL OF  BANK UNION. YOUCAN SEE THSI FROM LAST 6 DAYS BANKS ARE NOT OPEN. ACCORDING TO ME ALL BANK STAFF SHOULD BE SUSPEND WITH EMEDIATE EFFECT.

.THESE ARE MAIN RESON FOR NOR ACCEPTING L/C AND INSIST FOR T.T.

NO DOUBT T.T. IS NOT RELIABLE FORM SUCH AFRICAN COUNTERY THEY CAN DO PRODUCE ANY THING FAC DOCU,ENTS BECAUSE DIRECLY OR INDIRECTLY THEY ARE SUPPORTED BY RULERS.

KUMU DAVE

DEAR SIR

MAKE THE L/C AN IRRREVOCABLE AND CONFIRMED L/C.  IF THE SUPPLIER DO NOT ACCEPT THIS THEN I AM MYSTIFIED.  MAYBE THEY LACK KNOWLEDGE OR BANK CHARGES ARE VERY HIGH. ALSO L/C DOES NOT MAKE SENSE FOR SMALL AMOUNTS. I DO NOT KNOW THE INDIAN BANKING SYSTEM BUT MAYBE THE SUPPLIER'S BANK DOES NOT HAVE INTERNATIONAL LINKS.

 

 

 

 r />Dear Friends,

most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

 

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtan

I wan't to share with yu one of the very important point in LC.  I think very few people knows that even if yu have LC, your payment is not guranteed.  I mean most of the our exporters think that once they receive the LC from the buyer, the bank has to pay the payment.  But there is a hidden and most important condition, which no body knows.    NOw I tell yu,  as when yu export any goods and send the documents to the bank, the bank is lyable to pay yu the money only when your customer claims for these documents.  I mean when customer accpet these documents and take it .  But if your customer dosn't accept, then the bank is also not lyable for paying that money.  THe bank will then wait for required time and in that time if the customer dosn't come to take that documents, then bank will return back to yu. In this situation, yu have no legal option to pursue against that bank.  Because bank is not in fault.  

So, even if we have LC from the buyer, if buyer has good relations with the shipping company and forwarder, which most of the big buyer always have, they take the delivery of the goods without showing the original doucments, there is no gurantee that we will get our payment for sure.

 

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

I think that they prefer to accept telegraphic transfer payment rather than the letter of credit because  TT payment  is more easier than LC negotiation. 


In the LC, you need to be precise with the terms and conditions stated and if there are discrepancies, you need to pay penalty charges.


In Telegraphic Transfer payments- once you remit the money in the bank- that's it!


SO probably Indians negotiates based on trust.

iv gone thru all the replies in this forum regarding this question. now i want to know what happens if the same problem occurs for a domestic l/c

will i face the same problem ?

well i am a supplier of iron ore fines. i usually tell my buyers to open an irrevocable confirmed l/c of the full contract value payable on part on daily basis.'

BUT

along with this i tell my buyer to send the daily unloading payments by rtgs. in case he is unable to pay me any day this l/c is to be encashed for that quantity immiediately.

am i safe and secure ?

blockquote>Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

dear mr kumud ,

can u tell me when the circular of ministry of finance was issued  for preshipment credit and when this was issued to the banks. can u give the circular date details ?

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

Dear Sir,

                 L/C is always safe and secure.But if the clauses are not satisfied as mentioned in the L/C it becomes a real headache to get payment.So you need to be careful on that front.

Thanks and Best Regards,

R.C.Sukhtankar

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

1) Most of the Exporters are over invicing the products to benefits the export rebate incenticves.

2) They can make their black money as white money

3) sometimes under invoices the amount and the received the balance amount through unofficial channel.

4) To encourage corrupt practices in each and every departments to evade taxes.

5) there are so many untold truths

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

Hi,

    I think the main reasons Indian Suppliers do not accept LC are :

Buyer proposes 100% confirmed L/C  at sight,

1.in this case the buyer has the potential to withdraw if goods do not match the samples.

but suppliers seek 100% confirmed Irrevokable LC which is not in the favour of buyer.,

 

2.If documents are not correct your money will held

 

3.There should be a prime Bank which confirms the validity of L/c

prefferably U.S. (most of the cases it isn't)

 

4.L/C are most of the times headaches for some remotely located suppliers in INDIA

who are worried due to some lack of information.

Any how The TT is the best mode , buyer can pay 30% advance and 70% after he sees the goods are ready and as per his specifications.

Everyone dealing first time with L/c please be carefull & get informed well

 before proceeding / accepting.

Wish you all Happy Festival season coming ahead.

Regards

Gaurav

 

Quoting from [essar53]:


Dear Friends,

Why most of the Indian suppliers prefer to accept Telegraphic transfer as the payment method over Letter of Credit?

Hope to receive your replies.


Thanks and Best Regards,


R.C.Sukhtankar

I  think most exporters like T/T payment,so that money can run quick in their company,they can buy raw material or other things, L/C is so late to collect money .we prefere to do T/T payment also .