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There are many types of letters of credit. Each one of the most commonly used international letter of credit (LOC) are briefly described below: 1. Transferable international letter of credit - This type of LOC would allow the user to pass on the benefits of the instrument to another party. The LOC here could be both revocable or irrevocable. 2. Standby international letter of credit - This is more or less used as a payment guarantee. There would be a special agreement here whereby if the client/ patron does not pay, the supplier can use this instrument for the purpose. Hence, this is closer to a standby payment rather than a payment mechanism. 3. Revocable Letter of Credit - This type of international letter of credit is risky for the suppliers and they do not normally prefer it. This is because such a letter could be modified at any time by the provider, changed completely or even revoked/ canceled. The very purpose of the instrument is not fulfilled here and hence, the suppliers avoid receiving this particular type. It is too much risk. 4. Irrevocable international letter of credit - An irrevocable LOC is just as its name implies - does not allow any changes to it once it has been issued. If you must have any change at all, you would need to draw up a new agreement with the party involved. This is one of the most preferred types of LOC that suppliers like better because it assures them of their payment. |
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Banking on Sharia Principles - Islamic Banking and the Financial Industry
By Linda Eagle
There are an estimated 1.61 billion Muslims worldwide, making Islamic banking one of the fastest growing segments of the financial industry. Banks serving the Islamic population must comply with several very specific principles of Islamic law if they hope to retain existing customers and attract new ones. Banks must be ready with specialized products and services and they must put programs in place to train their personnel to support these products and services in order to exist in this competitive marketplace.
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Overview of Zimbabwean Banking Sector (Part One)
By Dr Tawafadza A. Makoni
Entrepreneurs build their business within the context of an environment which they sometimes may not be able to control. The robustness of an entrepreneurial venture is tried and tested by the vicissitudes of the environment. Within the environment are forces that may serve as great opportunities or menacing threats to the survival of the entrepreneurial venture. Entrepreneurs need to understand the environment within which they operate so as to exploit emerging opportunities and mitigate against potential threats. This article serves to create an understanding of the forces at play and their effect on banking entrepreneurs in Zimbabwe.
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