ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Using documentary collections seller ships the goods and provides draft and documents to the bank. Using clean collection seller provides only draft without transport documents. Clean collection can serve the main documentary transaction or financial transaction.

Detailed explanation-2: -Clean collection means the collection business of financial documents without any commercial documents as entrusted by the customer of Bank of China. Functions. It is used for international trade settlement in two forms: documents against payment (D/P) and documents against acceptance (D/A). Features.

Detailed explanation-3: -Understanding Documentary Collection Shipping documents are required for the buyer to clear the goods through customs and take delivery. 1 They include a commercial invoice, certificate of origin, insurance certificate, and packing list.

Detailed explanation-4: -A letter of credit is a legally binding document that guarantees payment to a seller. A documentary collection allows a buyer to refuse a shipment if it does not match the standards of excellence. The importer’s bank issues the letter of credit, while the exporter’s bank issues a documentary collection.

Detailed explanation-5: -Documentary Collection Process The seller submits a collection order to his or her bank. The seller’s bank then submits the collection order to the bank of the buyer. The buyer’s bank presents a “presentation document” to the buyer, who then must make a payment or acceptance to his or her bank.