MINISTRY OF EDUCATION AND TRAINING HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY AND EDUCATION GRADUATION THESIS INTERNATIONAL BUSINESS COMPLETE THE PROCESS OF IMPORT DOCUMENTARY CREDIT O
INTRODUCTION TO NAM A COMMERCIAL JOINT STOCK
Development history of Nam A Commercial Joint Stock Bank
21/10/1992: Nam A Bank started its operation, becoming one of the first commercial joint-stock banks established during Vietnam's economic renovation 2004: Quang Trung Branch (HCMC) officially opened
2005: The first head office of Nam A Bank officially opened at 97 Bis Ham Nghi, Ho Chi Minh City
2011: Nam A Bank expanded its headquarters, moved to Cach Mang Thang Tam, District 3, Ho Chi Minh City, and has grown strongly since then
2017: Nam A Bank completed the standardization of brand image across the system under the motto "Beautiful bank, good service"
2018: Achieved the highest profit milestone and expanded the nationwide network, especially in the North, with the opening of 30 transaction offices and 5 new branches
2020: Nam A Bank introduces OPBA robots and digital transaction space based on artificial intelligence, supporting integrated multi-channel transactions on 4.0 technology devices
2021: Nam A Bank officially launched the ONEBANK digital ecosystem, making a strong impression in the field of digitalization for the bank, marking success in digital transformation and determination to become one of the leading banks in technology
2023: Nam A Bank completes its 2023 network expansion strategy, bringing the
Core values of the bank
Vision: To become the leading retail commercial joint stock bank in Vietnam to bring the best financial solutions to individual customers, and small and medium business customers
Mission: Contribute to the strong and safe development of the banking system
Contributing to the economic development of the country, based on timely meeting the needs of production – business – services of customers Maximize benefits for shareholders, customers, partners, and all Nam A Bank's employees.
Business strategies of Nam A Bank
Extensive development strategy and advertising campaign:
Customers increasingly expect financial experiences that are flexible, convenient, and especially online As online financial transactions increase, increasing safety and security is a top priority Therefore, Nam A Bank chose to apply a "Digital Financial Strategy” to optimize processes and bring better experience to customers + Focusing on investment, technology development, and digitization of products and services: Aiming to attract and build a large amount of customer data through many different policies, Nam A Commercial Joint Stock Bank is focusing on developing a digital financial model based on two main factors "Renewable energy" and "Financial digitization"
At present, Nam A Bank sets out the spearhead strategy of the whole system as a technology strategy: focusing on investment, developing technology infrastructure, focusing on digitizing products and services to enhance the comprehensive digital financial model
+ Network expansion: In addition to the technology aspect, the Bank also aims to expand the system network to create more opportunities and facilitate access to the increasing needs of customers
+ Building a prestigious and standard brand image: Pioneering in implementing and participating in the project of building a green economy, Nam A Bank has taken the lead in investment and financing in the field of renewable energy This has helped Nam A Bank successfully build the image of a "Green Bank".
Management organization of Nam A Commercial Joint Stock Bank –
Figure 1.1: Management organization of Nam A Bank – Quang Trung Branch
(Source: Compiled from Nam A Bank – Quang Trung Branch)
Functions and duties of Departments at the branch:
• Board of Directors: The Board of Directors acts as the lead body that determines the overall direction and strategy of the business unit In addition, the Board of Directors monitors and supervises the business activities of the entity to ensure process compliance and achieve business objectives as well as has the authority to sign credit contracts, make decisions on debt settlement and settlement, as well as the extension and adjustment of overdue debts In addition, the Board of Directors will read and review financial statements to ensure accuracy, and compliance with regulations and review appraisal reports from the credit department on issues related to financing and lending
• Corporate Customer Relation Department: The Corporate Client Department will be responsible for serving, consulting, and building relationships with customers who are businesses, such as companies, provided with relevant banking services, including corporate credit, deposit products, guarantees, international payments, and digital banking services Some activities in the department:
1 Introduce and advise financial products for businesses: loans, payment services,
2 Financial consultancy and strategy for businesses: When connecting with customers, experts will perform financial analysis, and assess the actual financial situation and solvency of the business to give appropriate advice as well as decisions on lending and other activities
3 Performing transactions with businesses: money transfers, bank transfers,
5 Support and handle financial issues for businesses
6 Sales promotion, customer search: Every 6 months, the management of Nam A Bank system always creates opportunities for branches to register individual and corporate customer targets, so during that time, the corporate customer relations department and personal customer relations department will continuously look for new customers, build and maintain relationships with existing customers
International payment division: responsible for providing international payment services to customers who are economic organizations; directly make payment for imported goods and services by payment method; Open import L/C documents; Receive the L/C opened by the foreign bank and notify the customer as the beneficiary; Discounting export goods documents; Announce transaction rates according to bank regulations at the branch and perform foreign currency trading operations; Domestic guarantee operations,
• Private Client Relationship Department: Some of the main activities of this department are introducing financial products, opening accounts, consulting loans, resolving complaints, taking care of customers, and customers Mostly households, students, businessmen
• Business Planning Department : Some of the main activities of this department are strategizing, analyzing the market (especially the area in which the branch operates), evaluating projects, monitoring the situation, and business performance This is also a key department to help the bank develop more sustainably and efficiently thanks to the direction that this department gives
• Treasury Accounting Department: Managing and regulating the bank's treasury is the responsibility of this department In particular, specific activities include treasury management, tracking cash transactions, bookkeeping, balance moderation, financial reporting, treasury reconciliation, and ensuring compliance with regulations
• Business Support Department: The work of supporting business activities as well as ensuring the effective and professional provision of services and products to customers will be the responsibility of the Business Support Department
• Administrative Department: The activities and work of the bank's administration and internal management will be responsible for this department Management of documents, records, facilities management, personnel management, and legal and security issues to ensure a safe and professional working environment are the main activities of the administrative department.
Business activities of Nam A Commercial Joint Stock Bank – Quang Trung Branch
1.6.1 Core business operations of Nam A Commercial Joint Stock Bank – Quang Trung
+ Short-term loans satisfying capital needs for production and business
+ Medium and long-term loans for invested and developed projects
+ Loans for investment in infrastructure development
+ Loans to serve life needs
+ Guarantee to comply with the contract, payment guarantee
+ Some other types of guarantee
Deposits and packages: Payment accounts, Happy Combo packages (payment accounts, digital banking services, debit cards, and added utility services), Happy Lady product packages (savings deposits, loans, payment accounts, optimal account packages, combo packages, and international credit cards issued by Nam A Bank)
Savings: Double benefit savings, online savings, time deposit savings,
Loans: Business loans, unsecured personal account overdrafts, freelance business loans, Happy home (real estate loans), consumer loans with collateral, rural agricultural development loans, An Gia Lap Nghiep (apartment loans), unsecured consumer loans, unsecured loans without additional collateral, loans to pledge passbooks, valuable papers,
Credit card: Happy Golf card for Golfer customers
General insurance: Nam A Care Health Insurance, Human Accident Insurance
Services: Gold bars trading service, super-fast international money transfer – same day pickup, A-pay payment service, Asset preservation service, premium collection service, asset transfer payment, domestic money transfer, Western Union quick money transfer, receiving money from abroad, transfer of money abroad, services for preserving important documents,
Digital Banking: Open a beautiful digital account, Open Banking, Happy Be30 financial service package,
Corporate deposits: online time deposits, time deposits, margin deposits, and dedicated capital deposits
Loans and financing: overdraft of legal entity accounts, discounting sets of export documents, green credit, additional working capital loans, car dealer financing, project loans, machinery, and equipment investment loans, loans for pledging valuable papers, export financing before delivery
International Payments: receive SWIFT GO international money, super fast international money transfer – same-day receipt, UPAS L/C, import L/C issuance, export L/C, international money transfer inbound and outbound, import and export collection
Digital Banking: Online international money transfer - eT/T, Open Banking
Corporate Customer, HappyPay payment service (QR Code), SMS Banking service, State budget collection service and electronic tax payment, bill payment service
Up to this point, Nam A Bank operated mainly in the domestic sector As for the business unit of Nam A Bank – Quang Trung branch, this unit is currently focusing on Quang Trung, Go Vap, and surrounding areas Based on the products and operations that the unit provides, the Nam A Bank – Quang Trung branch focuses on exploiting the financial needs of individual customers and small and medium enterprises in the area
NAB Quang Trung mainly exploits the sources of customers living and working in Quang Trung and Go Vap areas Which, the customer source includes individuals as well as small and medium enterprises wishing to use financial products and services For individual customers, the Bank focuses on providing services such as home loans, business, payment activities, digital banking For corporate customers, the business unit will support consulting appropriate financial solutions or providing products and services on loans and trade finance
1.6.5 Competitors in the operating area of Nam A Bank Quang Trung branch
Table 1.3: SWOT analysis of NAB Quang Trung
Invest heavily in technology and digitalization
Risk management meets international standards
Implementation and dense coverage in social activities
Limited market share because of being a "private bank" – lack of State support and protection
Nam A Bank needs to make efforts to build and maintain a strong brand image
Opportunities for economic development in Ho Chi Minh City with new dynamics and strategic geographical position
Strategies for developing products and services with high digital technology content
Strengthen partnerships with businesses and organizations in the region to provide financial services
The area of operation is becoming an international trade center, opening up opportunities for the Bank to enhance financial services to support import-export enterprises
Strong competition with the presence of commercial joint-stock banks in the area
Products of state-owned commercial banks are more competitive than joint-stock commercial banks
The trend of rising value interest rates, shifting cash flows outside the banking system
Table 1.4: SWOT analysis of Sacombank Go Vap
Advantages of International Payment, foreign exchange trading, and card services
Professional customer service, especially for businesses and high-end customers
Card market share has not stood out
The law on loans is increasingly transparent
A gradual economic recovery paves the way for stable and solid growth in the financial banking industry
The banking industry lags in adopting digital HR practices Digital transformation challenges
Products of state-owned commercial banks are more competitive than joint-stock commercial banks
Table 1.5: SWOT analysis of Agribank Go Vap
The prestigious brand, positioned, is one of the largest commercial banks currently
Offer a wide range of banking services
Weaknesses Some processes and procedures are complex
The rapid development of scientific and technical advances There is greater stability and reputation in the eyes of customers because it is a state-owned commercial bank
Competition from other banks in the region should require investment and improvement of products and services
Emphasis should be placed on risk management and the ability to respond to technological change
1.6.6 Business performance of Nam A Bank - Quang Trung Branch
Table 1.6: Profit and loss statement of NAB Quang Trung 2021-2023)
(Source: Compiled from the annual report of NAB Quang Trung)
From NAB Quang Trung's pro-forma income statement over the past 3 years (2021-2023), we see that total income increased Specifically, in 2021 the total income reached 126.451 million VND, then in 2022, the total income was 164.853 million VND, increasing to 38.401 million VND or an increase of 30,37% compared to 2021 By 2023 the total income reached 2323.864 million VND, increasing to 69.011 million VND or an increase of 41.86% compared to 2022 The reason, the total income of Nam A Bank increased over the years, especially in 2023, the reason is that Nam A Bank has attracted more reputable customers bringing about the increase of credit activities from loan interest, thereby increasing total income,
3 Income from trading of foreign currencies 13.841,66 20.621,05 20.960,37 6.779,39 48,98 339,32 1,65
4 Income from capital contributions and equity investments
3 Trading of foreign currencies expense 2.531,30 3.856,20 4.089,55 1.324,90 52,34 233,35 6,05
7 Depreciation expense of fixed asset 1.588,42 1.694,38 2.349,55 105,96 6,67 655,17 38,67
Profit before tax 28.922,47 60.170,46 73.960,34 31.247,99 108,04 13.789,88 22,92 Profit after tax 23.074,97 48.051,37 59.078,27 24.976,39 108,24 11.026,91 22,95
Along with the increase in income, the expenses have also increased correspondingly over the years Specifically, in 2022 the total expenses were 104.682 million VND, an increase of 7.153 million VND compared to 2021 or an increase of
7,34% In 2023, operating costs increased to 159.904 million VND, an increase of
55.221 million VND or an increase of 52,75% compared to 2022
Overall, the average increase in total income is 36,115%, while the average increase in total expenses is 30,045% So in general, income has increased faster than total expenses over the years, which can be said to be a positive sign
In 2022 net profit reached 48.051 million VND, an increase of 24.976 million
VND or an increase of 108,24% compared to 2021, in 2023 due to reasonable business policies such as expanding market share, finding significant improvement measures to reduce operating costs in addition to measures to increase income, the profit reached 59.078 million VND, an increase of 22,95% or an increase of 11.026 million VND compared to 2022 This rate shows that the NAB Quang Trung is operating more and more efficiently, although costs are increasing at the same time.
CHAPTER 2: THE THEORETICAL BASIS FOR INTERNATIONAL PAYMENT ACTIVITIES AND DOCUMENTARY CREDIT
Overview of international payments
According to Nguyen Van Tien (2017):
International payment is the implementation of payment obligations and monetary benefits arising based on economic and non-economic activities between organizations and individuals in one country and organizations and individuals in another country, or between a country and an international organization, through relationships between banks of related countries (p.219)
International payments act as the final step, completing the cycle of buying and selling goods or services between international organizations and individuals The organization of International Payments conducted quickly and accurately will make manufacturers feel secure and promote their import and export activities, thereby promoting the development of foreign economic activities, especially foreign trade activities At the same time, international payment activities contribute to limiting risks in the process of performing foreign trade contracts
In foreign economic activities, due to the geographical location of distant partners, it is difficult to understand the financial possibilities and solvency of buyers
If international payment is well organized, it will help import-export goods traders limit risks in the process of implementing foreign economic contracts, thereby promoting the development of foreign economic activities
In short, it can be said that the foreign economy can expand or not is partly due to whether international payment activities are good or not Good international payment will promote import and export activities, develop domestic production, and encourage enterprises to improve the quality of goods
According to Thi Thu Tran et al (2020):
International payment is not only a profitable activity of commercial banks but also one of the central activities of other trade activities at the bank Thereby, export-import finance, international credit, and capital mobilization activities at commercial banks are promoted based on the participation in international payment services of clients at banks As a result, the improvement of this activity will help commercial banks have more opportunities to increase their benefits from other services, such as foreign currency trading, and mobilizing capital, especially foreign currency capital
Firstly, it broadens the bank's customer base by attracting businesses and individuals involved in international transactions This larger customer pool translates to increased revenue streams through fees associated with payments, foreign exchange conversions, and so on Secondly, by facilitating trade finance activities, the bank strengthens its relationships with corporate clients and generates additional income This not only expands their foreign exchange trading capabilities but also provides resources for other international banking operations such as guarantees and letters of credit Lastly, international payments contribute to the bank's overall liquidity by attracting deposits from clients engaged in cross-border transactions While the specific margins on these deposits vary based on customer risk profiles, the overall volume can play a significant role in the bank's financial strength Therefore, while waiting for payment, banks can use these funds to support liquidity when needed, and can even use them for business and short-term investments to make profits
International payments are the final stage to complete foreign trade relations Import-export activities in particular and foreign trade in general can only be developed normally when payment is made and settled International payment not only has the effect of maintaining foreign trade relations but also has the effect of activities are expanded and developed, the more conditions there are to promote international cooperation in the field of economy and trade, accelerate the process of international economic integration, create conditions to expand relations between countries in the fields of culture, social, diplomatic, scientific and technical cooperation
In addition, international payment helps ensure safety for both exporters and importers Forms of payment such as drafts, cheques, and letters of credit reduce the risk of loss and fraud in transactions The use of official payment methods such as L/C enhances trust between the parties to the transaction The importer knows that they only pay when they receive complete documentation from the exporter International forms of payment reflect compliance with international regulations and rules Letters of credit, for example, are usually subject to the UCP600, which ensures accuracy and fairness in transactions
According to Tran Hoang Ngan (2013):
The method of payment by Collection is a payment method in which the exporter, after fulfilling the obligation to deliver goods or provide services, will entrust the bank serving it to collect money from the importer based on a bill of exchange (or cheque) and a set of documents presented by the exporter (p.208)
In addition, according to Anders Grath (2016):
Documentary collection, also sometimes referred to as bank collection, is a method of payment where the seller’s and buyer’s banks assist by forwarding documents to the buyer against payment or some other obligation, such as acceptance of an enclosed draft or bill of exchange (p.49) b Classification
Based on the duration: Documents against Payment (D/P), documents against acceptance (D/A)
Based on the documents: Clean collection, documentary collection
According to Tran Hoang Ngan (2013):
The remittance method is the simplest payment method, in which a customer (payer, buyer, importer ) requests the bank serving you to transfer a certain amount of money to the beneficiary (seller, exporter, recipient of money) at a specified location within a certain time (p.196) According to Anders Grath (2016):
The seller delivers goods or services to the buyer without receiving cash, a bill of exchange, or any other legally binding and enforceable undertaking at the time of delivery, and the buyer is expected to pay according to the terms of the sales contract and the seller’s later invoice (p.39) b Classification
Mail transfer remittance (M/T) or telegraphic transfer remittance (T/T) Telegraphic transfer remittance is often used because of its speediness There are 3 methods: sight payment, deferred payment, and advanced payment
According to Tran Hoang Ngan (2013):
Documentary Credit is an agreement in which one bank (Issuing bank) satisfying the needs of the customer (Applicant) undertakes or authorizes another bank to pay or accept the claims of the beneficiary upon presentation of documents by the terms and conditions specified in the Letter of Credit (p.127)
In addition, according to Anders Grath (2016): “The documentary credit (or just thereby constitutes a definite undertaking by the issuing bank to honor a complying presentation.” (p.56) b Concerned parties
There are 4 indispensable parties in Documentary Credit according to Nguyen Van Tien (2017), p.331:
Applicant: usually the buyer or importer According to Article 2 of UCP 600, the person requesting to open an L/C is the party at whose request the Letter of Credit is issued
Beneficiary: is a seller or an exporter of goods According to UCP 600 article
2, the beneficiary is the party for whose benefit a Letter of Credit is issued
Issuing bank: a bank that serves the importing unit, in the importing country, provides credit to the importing unit, and is a bank that is often agreed upon, selected, and regulated by the importing and exporting parties in commercial contracts If there is no prior regulation, the importer has the right to choose According to Article 2 of UCP 600, the issuing bank is the bank that, at the request of the applicant to open an L/C or on his behalf, issues a letter of credit
Advising bank: is the bank serving the exporting unit, notifying the exporting unit that the letter of credit has been opened This bank is usually located in the exporting country and may be a branch bank or agent of the bank issuing the letter of credit
In addition, depending on the requirements and type of L/C, there may be several parties involved as follows:
Efficiency of international payment activities by Documentary Credit
2.2.1 Definition of international payment activities’ efficiency by
Evaluating a bank's international payment services necessitates a three-pronged approach, examining the economic benefits it fosters, its contribution to the bank's profitability, and its success in fulfilling customer needs in cross-border transactions:
For the economy: the effectiveness of international payment activities is assessed through promoting import and export payment activities, promoting direct and indirect foreign investment activities, promoting and expanding service activities such as tourism, international cooperation, and increased attraction of foreign exchange and other financial resources, increasing budget revenue, facilitating a stable economy and addressing balance of payments challenges
For commercial banks: They can leverage effective international payment services as a powerful growth engine These services contribute to the development of core banking operations and act as a catalyst for international trade by facilitating smooth and efficient cross-border transactions This strategic move allows banks to client base Banks benefit from established service fees, foreign exchange opportunities generated by client transactions involving buying, selling, or converting currencies, and the potential to earn interest on funds held during the payment process This comprehensive approach strengthens the bank's overall financial health and positions it for long-term success in the global marketplace
For customers: the effectiveness of commercial banks' international payment activities is evaluated by promoting the total import-export turnover of businesses, transactions are carried out quickly, safely, and accurately, and enhancing the reputation of the bank
The effectiveness of international payment operations has been studied from many diverse angles depending on different research purposes Researching the effectiveness of international payment operations based on economic efficiency assessment standards, demonstrating the optimal relationship between the results obtained and the costs spent to obtain those results, that is, the ability to profit or reduce profits spend costs to increase revenue, increase profits, and increase competitiveness
According to the definition in the book "English - Vietnamese Dictionary of Economic Mathematics, Statistics, and Econometrics" by Associate Professor, Dr Nguyen Khac Minh, "Efficiency" in economics is defined as "the correlation between inputs of scarce factors with outputs of goods and services” and “the concept of efficiency is used to consider how well resources are distributed by markets.” (p.255)
Based on the concept of international payment operational efficiency, it is easy to come up with a basic concept of international payment efficiency under the public credit method as follows: "International payment operational efficiency under the
Documentary Credit method is an economic category that reflects the business results of banks in the field of international payment according to the Documentary Credit method It is measured by the difference between the revenue brought by international payment activities using the death certificate credit method and the costs spent to conduct international payment activities according to this method.”
2.2.2 Criteria for evaluating the efficiency of international payment activities by Documentary Credit
According to Nguyen Van Tien (2017), these criteria inflect the efficiency of international payment activities by Documentary Credit:
A crucial aspect of evaluating international payment efficiency through Documentary Credit (L/C) is the processing time for both issuance and payment Issuing Bank Processing is the time taken by the importer's bank to review the application, verify creditworthiness, and issue the L/C Payment Processing is the duration for the paying bank to scrutinize the documents presented by the exporter against the L/C terms and settle the payment Swift processing times by both banks demonstrate their responsiveness and operational efficiency This translates to faster turnaround times for exporters, facilitating timely access to funds and smoother cash flow management
International payments by Documentary Credit method require payment in foreign currency when dealing with international customers through correspondent banks in other countries Therefore, businesses that open L/C at branches often have to execute foreign currency purchase and sale contracts to pay overseas partners Not only does it support customers in making foreign currency payments and transferring money, but even when the business has revenue through guaranteed foreign currency flow to its bank account, customers will continue to make transactions Foreign exchange services, encompassing currency buying/selling and credit reporting, offer a win-win situation for businesses and banks Businesses leverage these services to secure working capital, ensuring smooth operations Banks, in turn, provide comprehensive financial solutions and generate revenue from these transactions Notably, a high volume of foreign exchange activity often coincides with efficient import-export L/C operations This not only signifies satisfied customers who benefit from streamlined international trade but also translates into a stronger reputation and
L/C is a payment commitment of the issuing bank to the beneficiary based on a set of documents that comply with the L/C terms Therefore, security plays a key role in minimizing financial risks for banks In addition, security also contributes to maintaining the bank's reputation and brand in the international market The ability to protect customers' information and finances will help banks attract and retain customers, enhancing their competitive position in the market Security is also an important factor for banks to comply with legal regulations, especially regulations on international payments, anti-money laundering, and terrorist financing Furthermore, security also helps improve the efficiency of banking operations In short, security is a key factor in the L/C operations of the issuing bank
The successful implementation rate of Import Documentary Credit
The success rate and failure rate of imported L/C contracts are an effective measure of the bank's international payment process by L/C A high success rate shows that the L/C process is safe, and effective, and ensures payment On the contrary, a high failure rate indicates risks and errors, leading to losses Banks with high success rates demonstrate risk management capacity, good payment, and high reputation Ratio analysis helps banks identify strengths and weaknesses, thereby improving processes, minimizing risks, and attracting customers Besides, improving the L/C success rate will promote trust in this payment method, attracting many businesses to participate in the market
Proportion of Import Documentary Credit sales to international payment sales
The volume of import documentary credit (L/C) transactions serves as a barometer for customer confidence in the bank's international payment services A rising proportion of import L/C activities within the bank's overall international payment portfolio signifies a growing customer base that trusts the security and efficiency offered by L/C This increasing reliance on L/C can be partially attributed to the effectiveness of the Import Documentary Credit services; The number of customers using the Import Documentary Credit in payment has increased, showing that this payment method has been meeting many of their payment requirements However, if this proportion gradually decreases, it also shows that the Import Documentary Credit does not fully meet customers' requirements in payment and customers are willing to switch to using open accounts, remittance, or collection
Revenue of Import Documentary Credit
When implementing the Import Documentary Credit, the bank will collect a certain fee according to the bank's service fee schedule such as the L/C payment fee, and L/C opening fee, The higher the fee collected, the greater the operational efficiency of payment by Documentary Credit,
Profit of Import Documentary Credit
This indicator stands out as a key quantitative measure for evaluating international payment activities according to the Import Documentary Credit method
It reflects the actual effectiveness of international payment activities according to the bank's Import Documentary Credit method It is an indicator that reflects the excess value and business efficiency that the bank obtains from international payment activities according to the Import Documentary Credit
Profit of Import Documentary Credit = Revenue of Import
Documentary Credit− Cost of Import
The ratio of profit to revenue of Import Documentary Credit
The ratio of profit to revenue of the Import Documentary Credit = Profit of Import Documentary Credit
Revenue of Import Documentary Credit
THE REAL STATE OF INTERNATIONAL PAYMENT
Processing Operations of Import Documentary Credit at Nam A Bank –
In the import L/C service, the customer will be the importer of goods, and Nam
A Bank will act as the bank issuing the Letter Of Credit Nam A Bank Quang Trung will guarantee the issuance of L/C and make payment to the customer's partner who is an overseas exporter when receiving a set of delivery documents following the terms and conditions clause of L/C
Figure 3.1: L/C issuance process at Nam A Joint Stock Commercial Bank
(Source: Compiled from NAB Quang Trung)
Figure 3.2: L/C issuance service registration portal on the NAB website
(Source: Compiled from NAB Quang Trung) Step 1: Receive & submit L/C application at NAB Quang Trung
The payment specialist at NAB Quang Trung receives the L/C application:
01 original copy of the application for issuance of import L/C according to Nam
01 original copy of Business Registration License (for customers making transactions for the first time)
01 original/true copy of the foreign trade contract
01 original copy of the Insurance Certificate (in case commercial conditions require the person to purchase insurance)
Other necessary documents according to Nam A Bank's current regulations for issuing Import L/C
Check the legality and reasonableness of documents (full signatures, seals, and appropriate content on the surface of documents to ensure that the information on the documents has not been erased or modified) ), check the completeness of the number of documents provided by the customer to ensure compliance with the provisions of this process, relevant regulations of Nam A Bank, and current regulations of other laws related to international payment activities
Figure 3.3: Sales contract - included in the L/C issuing documents
(Source: Compiled from NAB Quang Trung)
- The request for issuance of L/C must have full signatures of the account holder and chief accountant (if any), with stamps between pages
+ If there are unclear points, disadvantages, or inaccuracies that are different from the foreign trade contract/contract appendix The payment specialists must advise and guide customers to supplement and edit content accordingly
+ There are no conflicting terms or provisions that conflict with international practice
+ Expiry place: usually the same country as the Seller (the Exporter)
+ Expiry date: can be calculated by delivery date + presentation deadline, or same or after the latest delivery date
+ Description of goods: must clearly state the name of the goods (or can state the general name of the goods)
+ For L/C deposit