OPEN ACCOUNT TRADING SYSTEM TO REPLACE LC
The muscle power of global mega corps is now intimidating a host of wannable Indian suppliers and exporters into giving up their traditional forms of financing and accepting newer versions that suit the
large, consolidated buyers. A new form of trade finance is replacing the decades-old trusted Letter of Credit (LC) system. Although Indian suppliers support the continuation of LCs since it provides a
guarantee of payment by the buyer, on the contrary, the large Western buyers find it a drag on costs and time. Upshot: exit LC, enter new instruments that save costs called “Open Account Trading”. It
involves buyers and sellers dealing their transaction seamlessly through the Net.
large, consolidated buyers. A new form of trade finance is replacing the decades-old trusted Letter of Credit (LC) system. Although Indian suppliers support the continuation of LCs since it provides a
guarantee of payment by the buyer, on the contrary, the large Western buyers find it a drag on costs and time. Upshot: exit LC, enter new instruments that save costs called “Open Account Trading”. It
involves buyers and sellers dealing their transaction seamlessly through the Net.
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