Loan Against Trust Receipt (LATR) is a short-term loan granted to the importer to pay for imported goods. Ownership of the goods is held by the bank until the importer pays, but the buyer can take possession of the trust goods on resale before paying the bank on the attR due date. LATR funding applies to products imported under documentary credits. The first and the first step is therefore to ensure that the borrower has the necessary documents to use the trust, which is why the basic conditions are: Trust Receipt or TR is a document that comes into play when a buyer has a loan or other agreement, such as. B a letter of credit (LC) from a bank to buy an investment or property. Basically, it is a document that says that the business physically owns the assets or assets, but the bank retains ownership of the assets or assets. Trust Receipt is a short-term financing, in the form of a debt, to the bank, in which the loan used would be repaid to the customer on the sale of goods (locally or for export). In the case of TR, the buyer must keep the goods safely and separately from other stocks. The buyer acts as the bank`s agent for the storage and sale of the goods. Even if the title or ownership of the property remains in the bank, the buyer has the property. The buyer can do something with the merchandise or the estate as long as he (or she) does not violate the terms of the contract with the bank.

Extending short-term financing through a trust receipt assumes that the client or borrower is in a good position with the bank. The bank and the customer must also accept the terms of the trust report, including terms such as due date, interest expense and amount of financing. The purpose of this article is to analyze the extent of the fiduciary income loan (LTR) that commercial banks have given to their customers, namely importers, exporters and entrepreneurs, against letters of credit (LC). The usual duration of this facility is 90 days, but in some cases the repayment period may be extended at the request of customers. On the other hand, customers can ask the bank to convert the facility into a long-term loan. Banks generally do not hesitate to lend in trust. Because it is certain that the money will be repaid with interest as soon as the goods are sold. This is a win-win situation for both the bank and the borrower, as the bank receives money in the form of interest and the business earns money without having to invest in the first place. The cheapest source of financing, with a relatively flexible duration, is therefore proof of confidence. The source can be selected with the necessary cost-benefit analysis and submitting the necessary documents. This device has generally been made available to importers in order to remove shipping documents related to LC.

LTR may be subject to an advance against LTR if documents covering an import shipment are issued without payment. Until the LTR is fully repaid, the merchandise or its sale is transferred with confidence to the bank. The certificate of trust is retained as a primary guarantee that creates the banker`s right to pledge on the goods. The LTR facility is adjusted from the proceeds of the sale of imported goods or cash from the customer`s own sources within the time frame or during the bank`s extended period. A trust document is a notification of the release of property to a buyer of a bank, the bank retaining the title to the released assets.

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