The Discounting Letter of Credit is a crucial instrument in international trade finance under Malaysian jurisdiction, typically used when a beneficiary of a Letter of Credit requires immediate access to funds rather than waiting for the LC's maturity date. This document becomes relevant when an exporter or seller, having received a Letter of Credit from a buyer's bank, wishes to obtain financing before the actual payment date. The document details the discounting arrangement, including the calculated discount rate, fees, payment terms, and required documentation. It operates within the framework of Malaysian banking laws, particularly the Financial Services Act 2013, and incorporates international banking practices such as the UCP 600. The document serves as evidence of the agreement between the discounting bank and the beneficiary, establishing their respective rights and obligations in the discounting transaction.
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1. Letter Reference Details: Document reference number, date, and addressee details
2. LC Reference Information: Details of the original Letter of Credit being discounted, including LC number, issuing bank, and amount
3. Discounting Request: Formal request for discounting the LC, including the proposed discounting amount
4. Payment Terms: Specific details about the discounting rate, fees, and payment arrangements
5. Documents Required: List of required documents for the discounting process
6. Bank's Rights and Recourse: Statement of the bank's rights regarding the discounted LC
7. Authorizations: Required authorizations and confirmations from the beneficiary
8. Signature Block: Space for authorized signatures and company stamp
1. Confirmation of Goods Shipment: Required when goods have already been shipped and shipping documents are available
2. Assignment of Proceeds: Used when the beneficiary wishes to assign the LC proceeds to a third party
3. Sanctions Compliance Declaration: Required for international transactions involving certain jurisdictions
4. Foreign Exchange Instructions: Needed when the LC and discounting currencies are different
1. Schedule 1 - Discounting Calculation: Detailed breakdown of the discounting calculation, including rates, fees, and final amount
2. Schedule 2 - List of Supporting Documents: Checklist of all required supporting documents with their current status
3. Schedule 3 - Original LC Terms: Key terms and conditions from the original Letter of Credit
4. Appendix A - Bank's Standard Discounting Terms: Standard terms and conditions for LC discounting operations
5. Appendix B - Authorization Specimens: Specimen signatures and authorization documents of the beneficiary
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
International Trade
Manufacturing
Export-Import
Logistics and Supply Chain
Commodities Trading
Retail
Wholesale Distribution
Agriculture
Energy and Resources
Relevant Teams
Trade Finance
International Banking
Corporate Banking
Treasury
Financial Control
Risk Management
Compliance
Legal
Operations
Documentary Credits
Export
Transaction Banking
Relevant Roles
Trade Finance Manager
International Banking Officer
Export Finance Specialist
Treasury Manager
Financial Controller
Trade Operations Manager
Credit Risk Officer
Documentary Credits Specialist
Relationship Manager - Corporate Banking
Chief Financial Officer
International Business Development Manager
Export Manager
Banking Operations Manager
Compliance Officer
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