Define HRM and Explain the Nature of Human Resource Management (HRM)/Subjective question with answer for Private Bank and Government Bank Exam

-
Image
  Definition of Human Resource Management (HRM)   Human Resource Management (HRM) is the strategic approach to managing people within an organization. It involves the recruitment, selection, training, development, compensation, and management of employees to ensure that they contribute effectively to the organization’s goals. HRM focuses on optimizing employee performance, fostering a positive work environment, and aligning human resources with the overall business strategy.   Nature of Human Resource Management (HRM)   1. Strategic Approach: HRM is a strategic function that aligns human resources with the organization’s long-term goals. It involves planning and implementing policies and practices that ensure the right people are in the right roles to achieve the organization’s objectives.   2. Comprehensive Function: HRM encompasses a wide range of activities, from hiring and onboarding employees to managing their performance, developing their skills, and ensuring thei
Post a Comment

Letter of Credit (LC)

-

 


                                                          Letter of Credit (LC)

 

A  Letter of Credit (LC)  is a financial instrument issued by a bank on behalf of a buyer, guaranteeing that the seller will receive payment for goods or services provided they comply with the specified terms and conditions. It is a crucial tool in international trade, providing a secure and reliable method for ensuring transactions is completed as agreed.

 

     Key Features of a Letter of Credit

 

1. Bank Guarantee:

   - The LC is a commitment from the issuing bank that payment will be made to the seller upon presentation of required documents.

 

2. Conditional Payment:

   - The LC specifies the documents that the seller must present to receive payment. These documents typically include a bill of lading, commercial invoice, and packing list, among others.

 

3. Types of Letters of Credit:

   - Revocable LC: Can be altered or canceled by the issuing bank without the consent of the beneficiary (seller).

   - Irrevocable LC: Cannot be changed or canceled without the agreement of all parties involved. It offers more security to the seller.

   - Confirmed LC: An additional guarantee is provided by a second bank, usually in the seller's country, ensuring payment even if the issuing bank fails to pay.

   - Unconfirmed LC: Only the issuing bank's commitment is present, without any additional guarantee from another bank.

   - Sight LC: Payment is made immediately upon presentation and verification of documents.

   - Deferred Payment LC: Payment is made at a future date specified in the LC after the documents are presented and accepted.

   - Standby LC: Acts as a secondary payment method if the buyer fails to fulfill the payment terms agreed upon.

 

4. Parties Involved:

   - Applicant: The buyer who requests the LC.

   - Beneficiary: The seller who receives the payment upon fulfilling the LC terms.

   - Issuing Bank: The buyer’s bank that issues the LC.

   - Advising Bank: The seller’s bank that receives and verifies the LC.

   - Confirming Bank: A second bank that guarantees the LC (in the case of confirmed LCs).

 

5. Process:

   - Application: The buyer applies for an LC at their bank.

   - Issuance: The issuing bank creates the LC and sends it to the advising bank.

   - Verification: The advising bank verifies the LC and informs the seller.

   - Shipment: The seller ships the goods and prepares the required documents.

   - Presentation: The seller presents the documents to the advising bank.

   - Examination: The advising bank examines the documents and forwards them to the issuing bank.

   - Payment: If the documents comply with the LC terms, the issuing bank makes the payment to the advising bank, which then pays the seller.

 

6. Advantages:

   - For Buyers: Ensures that payment is only made upon receipt of conforming documents, reducing the risk of non-receipt of goods.

   - For Sellers: Guarantees payment if they meet the LC terms, minimizing credit risk.

 

7. Risks:

   - Document Discrepancies: Even minor errors in documentation can delay payment.

   - Issuing Bank Risk: Risk associated with the issuing bank's financial stability.

   - Country Risk: Political or economic instability in the buyer’s country can affect the transaction.

 

Conclusion

 

A Letter of Credit is a vital instrument in international trade, offering security and confidence to both buyers and sellers by ensuring that payments are made in accordance with agreed terms and conditions. Its structured and legally binding nature helps mitigate various risks associated with cross-border transactions.

Comments

Post a Comment

Popular posts from this blog

Anti-Money Laundering Act, 2064, Most VVI for All Private and Government Bank Exam

-
Image
  Anti-Money Laundering Act, 2064 Introduction: Act number 34 of the year 2008 (2064) This act was formulated by the legislature-Parliament on 2064-10-14 and implemented form the date. It was felt necessary to prevent the action of laundering 9assets) money from criminal activities by formulating the related act. This act has 8 chapters and 46 sections. Strengths of the Act: ·        Clear guidelines for anti money laundering ·        Defined banking offence and their punishments ·        Formation of financial information unit ·        Formation of research department ·        Clear provisions of related authorities. Weaknesses of the Act ·        Coordination of various office required ·        Political power and influence to protect the criminal activities and assets. ·        Long process of court. ·        Hard to arrest and punish foreign nationals. This act is very important basically for the following reason: ·        It prevents assets (money
Read more

About Co-operatives, Most VVI for All Private and Government Bank Exam

-
Image
  About Co-operatives: The financial institution established by the voluntary association of people for common financial benefits is known as co-operative organization. It is usually established by financially weaker section of the society for mutual co-operation among themselves. It is not a profit motive organization. It has motto of 'one for all and all for one'. Co-operative organization performs limited banking activities. It collects deposits from the members and grants them loans at very cheaper rate of interest. According to Wikipeia , "A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and caltural needs and aspirations through a jointly-owned and democratically-controlled enterprise." According to prof. Heney Calvert , "A co-operative is an organization wherein persons voluntarily associate together as human beings on the basis of equality for the promotion of economic interest of them
Read more

Banking Development in Nepal, Most VVI for All Private and Government Bank Exam

-
Image
  Banking Development in Nepal The development of banking system in Nepal was started in the reign of "Ranodip Singh" in the year 1933 B.S. He had established an office name "Tejarath Adda" in Kathmandu. The modern banking system in Nepal was started after the establishment of Nepal bank limited on 30th Kartik 1994 B.S. This step in banking sector is another major steps of development of banking system in Nepal. It was established under Nepal Bank Act 1994. Here, we briefly discuss how banking sector evolved as a major industry of Nepal. Ancient time : Historical documents show that there were some basic bank operations in practice even in the ancient days. During the period of 8th century Gunakamadev had borrowed money to reconstruct the Kantipur. "Nepal Sambat" was introduced by Shankhadhar Shankhwa, a merchant of Kantipur in 879 or 880 A.D. after paying the debt. This means there were the practice of lending money and repaying the loan even in th
Read more