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(1) Letter of credit

(2) Bill of Exchange

(3) Invoice

(4) Bill of Lading

(5) Airway Bill

(6) Insurance Documents

(7) Certificate of Origin

Examination and Negotiation of Transport documents.

1. Negotiation of Export bill of Exchange

2. Examination of transport documents

(1)Out line of Negotiation of Export bill of Exchange

(2) L/C- based Negotiation of Export bill of Exchange.

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L/C based Export B/E

Non-L/C based Export B/E

Transport Document without B/Eand

L/C based B/E Without Transport Document

Including OAT(Open Account Transaction)

Normal Export B/E(foreign exchange business procedure in

corporate banking article 4)

L/C based and export B/E issued correspondent to L/C conditions.

This export B/E need to suffice following conditions

* The letter of credit has to be issued or confirmed on a irrevocable basis.

* There must be a clause in the letter of credit undertaking payment. Negotiation of acceptance

* There should not be any unrealizable special condition

•There muse be no needs for requirement of any collateral and guarantor as per internal provisions prescribing, by the head of Loan Approval Division, Credit Rating for the country where the issuing Bank is Located.

(However, if the credit rating is lower than grade 7 in case of sight payment, and under grade 5 in case of deferred payment, special requirement of any collateral and guarantor as per internal provision prescribing is necessary.)

1.Negotiation of export bill of exchange

1)Outline of Negotiation of Export bill of Exchange

Significance of Negotiation of Export B/E

Definition of Export B/E(Corporate banking article 2 )

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Authorized personal for approval of negotiation of export bill of exchange before collection

(note1) Includes Head of (R/C) Section.(note2) The approver of negotiation of bill from customers belonging to the Large Corporate Marketing Support Department (II) is the Head of Large Corporate Customer Support Team.

　 Authorized Personnel Head of

the Marketi

ng Support

Head of branch (note1)

Accounting

Manager

Manager

RemarkKinds of Bill of Exchange

　

Normal Export Bill under L/C (note2)

USD 500,000 or less (per case)

　 　 ○ 　 　

Exceeding USD 500,000 or less (per case)

　 ○ 　 　 　

Other Export Bill under L/C

USD 1mil (or its equivalent) or less per item

　 ○ 　 　 　

USD 1mil (or its equivalent) or more per item

○ 　 　 　

If the export bill bought amount is within the available collateral amount according to the kind of collateral stipulated in the Loan Policy, the approval can be given by the general Manager (branch or agency)

Export bill under L/C issued by a bank which has no correspondent bank relationship with the Bank or other domestic banks and under

a revocable L/C

Same as export bill under non L/C base 　

Export bill under Non L/C Base (L/C without undertaking for payment, negotiation and

acceptance included)As per Loan Policy 　

Re-negotiation of Export bill requested by other domestic banks

　 　 　 ○ 　

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Flow of Negotiation of Export Bill of Exchange

making foreign exchange transaction contract with customer

receive purchase application form with transport documents from the company

examine the documents

Negotiation forward them to the issuing bankmake follow up procedures

Determine to negotiate them

준비서류

New Foreign Transaction Contract

Company BankMake Foreign Exchange Transaction Contract

Foreign Exchange Transaction ContractForeign Exchange Transaction Contract

Required Document

- Foreign Exchange Transaction

Contract

Forwarding “General Terms and Conditions for Credit Transaction” to the company

Juridical person registration book & Articles of Incorporation

A copy of Business Registration Certificate

Report on seals and nameplates

A certificate of seal impression

Limited continuing guarantee

A certificate of seal impression of a joint surety

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2) Purchasing L/C form Export B/E

•약정서 적용의 범위 및 권리행사 , •담보 , •환율의 적용 , •수수료 비용 •손해의 부담 등

특약 •수출 , 수입 , 내국신용장 발행 •내국신용장 환어음매입 ( 추심 )

General Articles

- Major Contents of the Contract

- Foreign Exchange Transaction Contract : One initial agreement to make all foreign exchange

transactions between bank and the customer.

Special Articles

•Issue export, import, local L/C Negotiation of export bill of exchange and collection etc.

Limitation of Rights and Responsibility between Bank and the Customer

•Application range of the contract and exercising right ,•Mortgage, •Application of foreign exchange rate, •Terms & Commission, •Responsibility for loss, etc

- Guarantee and exemption at point of foreign exchange transaction contract (Foreign exchange business procedure in Corporate banking article 3 ) : You must guarantee more than 1 guarantor if you want to do export B/E transaction

　 * When negotiating of export bill of exchange within range of Collateral available amount by collateral type that is decided by credit loan provision * When purchasing within range of guaranty limit of comprehensive guarantor * When handling only normal export bill of exchange * When doing only negotiation of export bill of exchange after collection * When the client’s credit rating is 1st grade or 2nd grade, or when Head of Corporate Customer Support Team specially authorizes it

< Cases for Exemption >

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신 용 장

2.. 서류심사

Letter of Credit

 

Written Conditions of L/C

-Issuing bank and issue date -L/C type indication -L/C number -Expiry date and location -Applicant, beneficiary and advising bank. -L/C amount.

Written condition about L/C itself

Written conditions about B/E

-How to use L/C -Due date and bill amount of B/E -Drawee

•Written conditions about transportation

-Whether it allows installment shipment and transshipment-Port of registration, arriving port and registration date

•Written Conditions about transport document

-Details of transport document -Details of the goods

•Other written conditions

2. Examination of transport documents

•Special conditions

•- Bank commission payer

•- Document presentation due date

•- Sentence which a L/C is subject to UCP latest version

•- Reimbursing bank (in case of reimbursement L/C)

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< Sample>

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- Bill of Exchange

 

NO. BILL OF EXCHANGE Date: ② Seoul, Korea  FOR ① AT ③ SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND OF THE SAME TENOR AND DATE BEING UNPAID) PAY TO KOREA EXCHANGE BANK , ④ OR ORDER THE SUM OF ⑤ VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF ⑥ DRAWN UNDER ⑦ L/C NO. ⑧ DATED ⑨ TO ⑩ ⑪ EP-B-FM-002(2/2)(‘1989,January Revised,210x110)

 

< Sample>

① B/E amount : Written in Numbers (e.g : USD10,000) ② Issued Place and issued date ③ Maturity date of bill of exchange.          * Maturity date indication method - AT SIGHT - AT 30 DAYS AFTER SIGHT - AT 30 DAYS AFTER B/L DATE - ON XX(Month)-XX(Date)-20XX(Year) ④ Payee :The negotiating bank ⑤ Bill of exchange amount : Written in Letters ⑥ ACCOUNTEE : Applicant ⑦ , ⑧, ⑨ : L/C Issuing Bank, L/C NO, Issued date ⑩ DRAWEE : L/C issuing bank ⑪ Signs of exporter, the issuer, of bill of exchange

Mentioned Items

환 어 음 Bill of Exchange

-Items on examination of transport documents

• Has the bill of exchange been issued based on related L/C?

• Has the beneficiary issued and signed it?

• Is the maturity date the same with the condition on L/C?

• Has the bill been properly endorsed?

• Does the bill amount and currency of bill of exchange conform to that of L/C? Does the lettered amount and nu

mbered amount coincide with each other?

• Is the drawee correspondent with L/C condition?

• Is the amount within the L/C balance range? Is it within limit allowed by L/C?

• Is the bill amount same with amount of invoice?

• Is there any correction? If it has been corrected, has the issuer made indication about it?

• Does it include items required by L/C?

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General Mentioned Items

• Invoice numberOrder sheet or contract number.Name of goods, quantity, unit price, qualityPrice terms, payment termsexpenses, commission, invoice amountRelated items with B/E and L/C of B/E and L/CInsurance Related items with InsuranceName and address of buyerName and address of sellerPacking method and brand mark, etc,

- Invoice

Document examination Items

Has it been formed within expiry date of L/C?Is the issuer beneficiary of L/C? (Is the name of beneficiary correct?)Has it been issued towards the applicant? (Is the name of applicant correct?)Do the product details correspond with the L/C?Do the invoice amount and unit price conform to the L/C?Bank do not have to confirm the authenticity of details and calculation that have not been stated on the L/CIs the price term same with that of L/C? (Is there any expenditure that exceeds price term?)Do the invoice amount same with B/E amount? (Have it not exceeded L/C amount?)Is it signed? (Necessary only when L/C demands it)Is there a signature in case invoice demands certification?Do the shipping mark and number coincide with other documents?Are quantity, weight, volume same with other documents?Has it been presented in numbers required by L/C? As long as L/C do not approve it, have expressions such as ‘provisional’, ‘pro-forma’ been used?

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< Sample>

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① If the carrier is issuer※ How to Indicate Carrier and agent (☞ ICC POSITION PAPER NO. 4 )

※Indication Method   Write it on the heading of the transport document (e.g.: ABC Lines, carrier)   Put the name of the carrier on the space next to ‘carrier’ or write the fact that document issuer is the carrier himself in front of the document.

② If it has been issued by the agent (e.g : carrier → XYZ shipping, agent → ABC Co.,Ltd) ㉮ When the indication about ‘carrier’ is put in front of the transport document, and the vocabulary of ‘carrier’ has not been used. as agent for(or on behalf of) XYZ shipping, carrier (Signature) ㉯ When the indication about ‘carrier’ is put in front of the transport document, and the vocabulary of ‘carrier’ has been used, you can choose either method as agent for(or on behalf of) as agent for(or on behalf of) XYZ shipping, carrier XYZ shipping (Signature) (Signature)  as agent for(or on behalf of) as agent for(or on behalf of) the above named carrier the carrier (Signature) (Signature)

㉰ Document that has been signed by the captain does not have to include his name. If captain’s proxy signs on the document, name of agent and captain has to be indicated as following. (Suppose that the name of the captain is John Doe)

as agent for John Doe, Master (Signature)

해상선하증권

- 서류심사 항목

•신용장에서 별도로 명시하지 않는 한 선하증권은 전통이 제시되었는가?•운송인의 명칭 및 자격이 표시되어 있는가 ?•발행자의 명칭 및 자격은 표시되어 있는가 ?•본선적재 (loaded on board) 또는 선적 (shipped) 표시는 되어 있는가 ?•예정된 선박 (intended vessel) 또는 이와 유사한 표현이 있는 경우 본선적재부기상에 실제의 선박명이 표시되어 있는가 ?•선적항 및 도착항은 신용장의 조건과 일치하는가?•선적항과 관련하여 예정된 (intended) 또는 이와 유사한 표현이 있는 경우 본선적재부기상에 실제의 선적항이 표시되어 있는가?•선적항과 다른 수탁지 또는 인수지가 표시된 경우 , 본선적재부기상에 실제의 선적항 및 선박명이 표시되어 있는가 ?•선하증권의 약관은 표시되어 있는가 ?•수하인 및 도착통지처는 신용장과 일치하는가 ? 배서는 신용장 조건에 맞게 되어 있는가?•운임의 지급여부 표시는 신용장 조건과 일치하는가?•물품이나 포장의 하자상태에 대한 언급은 없는가 ?•선적일자 및 서류제시일자는 신용장에서 허용된 기일 이내인가?

•Has The original full set of B/L been presented unless the L/C indicates otherwise?•Is the name and qualification of carrier indicated?•Is the name and qualification of issuer indicated?•Does it indicate whether it is loaded on board or shipped?•If there is any mention on intended vessel or any similar expression on the document, has the actual vessel name been mentioned on board notation?•Do port of loading and port of discharge fit to the L/C condition?•If the word ‘intended’ or any similar vocabulary used related to the port of loading, has the actual port of loading mentioned on board notation ?•If port of loading and other port of discharge are mentioned, have the actual name of loading port and vessel name written on board notation ?•Does B/L contains terms and conditions of carriage?•Do the consignee and arrival Notify party coincide with the L/C?•Has it been endorsed according to L/C condition?•Does the indication on carriage payment correspond with L/C condition?•Is there any indication on defect of goods or package?•Is the shipping date and document presentation date within period allowed by L/C?

Ocean B/L

-Items on examination of B/L

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※ Indication Method on Consignee of B/L ① To the order of xxx ② To xxx ③ To bearer ④ To xxx or bearer

On L/C transaction, order B/L is generally used. If it is an order B/L that has been written ‘To Order’ or ‘To order of Shipper’ on the consignee item, exporter makes ‘Blank Endorsement’ and passes ownership of the goods to the bank.

Document Inspection Items- Airway Bill (AWB)

• Has the original copy of AWB for ‘consignor/shipper’ been presented?• Is the name and qualification of carrier indicated?• Is it signed by carrier or his agent?• Does it show that the goods are accepted?• If the L/C requires actual date of flight, is it separately mentioned? • Do the airport of departure and The airport of destination coincide with that of

L/C?• Does AWB contains terms and conditions of carriage?• Is there any indication about damage on goods, etc.?• Do the details of the goods correspond with that of L/C and Invoice?• Is the issuing date of transport document within the shipping date

designated by L/C?• Has the document been presented within the due date allowed by L/C?• Do the consignee and notifying party correspond with that of L/C?• Is carriage indication same with L/C condition?• If it is corrected, has it been authenticated by the issuer?

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◆Major mentioned items of AWB

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Document Inspection Items

- Insurance Document

◆Variety of Insurance Document

•If the L/C requests insurance policy, has the insurance certificate been presented?

•If the L/C requests insurance policy or insurance certificate, has the cover note been pr

esented?

•Is the presented all original insurance document?

•Has the document been issued by insurance company, underwriter or their agent?

•Is the date of the insurance document no later than the date of shipment?

•Has it been endorsed by the party to whose order claims are payable?

•Do the currency and amount coincide with L/C condition?

•Do the clause related to A clause stating that the insurance cover is subject to a franchise of an e

xcess deductable coincide with L/C condition?

•Are the goods and their transportation method same with those mentioned on the Invoice?

•If the L/C requests for special risk cover, is it covered?

•In case there is annexed document, does it show that it is part of insurance document thr

ough serial number and stamp?

•Insurance Policy :

Issued by insurance company or underwriter and their agent

•Insurance Certificate), Insurance Declaration :

Issued by insurance company or underwriter and their agent based on the

periodical open policy

•cover note :

Issued by broker and cannot be accepted unless L/C separately allows it

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◆Major Mentioned Items of Insurance Document

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Major Mentioned Items

(1)Seller Exporter. However, If the applicant has qualification of agent, expressions such as “on behalf of” or “instead of” are used. (2) Consignee Name or the consignee is written and generally on L/C transaction, consignee is the L/C issuing bank but som

etimes importer can be the consignee. ☞ If the B/L items o L/C are written as “issued to order, blank endorsed, marked “freight prepaid” and notify

AAA.”, when the consignee on L/C is designated as applicant it is accepted as normal document (ICC Official Opinion 470/TA.126rev)

(3) Particulars of Transport Vessel name, port of loading, port of discharge and shipping date are written (4) Buyer In case the buyer and consignee are different, buyer is seperately indicated and if the two are the same, it is in

dicated as ‘Same as Consignee’ (5) Country of Origin If the country of origin is Korea, write ‘Republic of Korea’ (6)   Invoice Number and Date (7)   Shipping Marks (8)   Number and kind of Packages : Description of Goods Number of product package and package type (9) Gross Weight or Other Quantity (10) Other Information

- Certificate of Origin

Document examination Items

• Has the C/O been issued by the person who designated on the L/C?

• Are the product details indicated on generally terms that do not contradict the

L/C?

• Is the consignee same with the consignee information on transport document?

(If the consignee on transport is in order, shipper in order, issuing bank in order

or if the issuing bank itself is the consignee, consignee of the C/O can be

expressed as applicant)

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◆Major Mentioned Items of C/O