What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI

Home » What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI

What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI

What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI

What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI -So students the topics like LoU, SWIFT, CBS, Letter of Credit (LoC) are now very important from the point of upcoming competetive Examinations.

 

What are LoU, CBS, LoC, SWIFT? - For Banking Exams SBI,IBPS,RBI

What are LoU, CBS, LoC, SWIFT? – For Banking Exams SBI,IBPS,RBI

What is a ‘Letter Of Credit’?

A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.

What is SWIFT?

When an LoU is issued, the message of credit transfer is conveyed to overseas banks through the Society for Worldwide Interbank Financial Telecommunication (SWIFT)system. This is a significant information as it gives the bank’s consent and guarantee. To issue SWIFT, an official has to log in and fill up confidential information such as the account number and SWIFT code. It generally has three layers of security – a maker, a checker and a verifier within the core banking system before it is issued.

What is CBS? 

CBS refers to Core Banking System where all branches are inter-connected to ensure that the bank customers – regardless of their home branch – are able to operate their account and transact in any of the member branch located anywhere in the world.

What is Letter of Undertaking (LoU)?

An LoU is an assurance given by one bank to another to meet a liability on behalf of a customer. The LoU is akin to a letter of credit or a guarantee. LoUs are used in international banking transactions. An LoU is issued for overseas import remittances and involves four parties — an issuing bank, a receiving bank, an importer and a beneficiary entity overseas. According to norms, the term of an LoU is 180 days, and can be rolled over once for six months. Since LoUs are a form of lending, they are typically backed by security.

By |2018-08-31T21:21:41+00:00August 31st, 2018|Categories: Banking|0 Comments

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