Forfaiting Glossary:
Glossary items beginning with: c
Case of Need:
The person or firm to whom collecting banks will refer, if instructed to do so by collection orders, in case of difficulty. The powers of a case of need may be advisory only or full and must be specified.
Category I Countries:
Relatively rich countries as defined by the OECD.
Category II Countries:
Intermediate income countries as defined by the OECD.
Category III Countries:
Relatively poor countries as defined by the OECD.
CIM:
Rail consignment note (international).
CIRR:
Commercial Interest Reference Rates.
Clean Collection:
One which does not involve goods but consists of financial documentation only.
CMR:
Road Consignment note (international).
Co-financing:
Loans to developing countries made by commercial banks, export credit agencies, or other lending institutions in association with the World Bank and other multilateral development banks.
Collecting Bank:
The bank in the buyer’s (drawee’s) country to whom the collection order and documents are directed.
Collecting Order:
The set of instructions given by the principal to the remitting bank and relayed by them to the collecting bank.
Comecon:
Council for Mutual Economic Assistance, an organisation which promoted mutual trade and investment in the Communist countries of Eastern Europe, before the political changes of 1989 and 1990.
Commercial Interest Reference Rates:
Interest rates laid down by the OECD applicable to loans made under state supported export credits to Category I countries.
Commercial Risk:
The risk of non-payment by a non-sovereign or private sector buyer or borrower arising from default, insolvency, and/or failure to take up goods that have been shipped, according to the supply contract.
Commitment Fee:
A charge made by the forfaiter for undertaking to forfait a transaction and to hold a discount rate for a specified period of time. The Forfaiter will apply the commitment fee from the date of a firm commitment until the disbursement date, or payment date.
Comprehensive Coverage:
Insurance or guarantee cover for all or a negotiated portion of the export transactions of a supplier (exporter) or bank. These policies generally provide insurance at a lower premium rate than specific policies, as the risks for the agency are spread across a broader range of transactions.
Confirming:
Under letters of credit, the practice of advising banks of adding their separate undertakings to those of issuing banks and assuming liability for inspecting documents and making payment to beneficiaries.
Consensus:
Terms laid down by OECD governing official export credit lending.
Consignee:
The drawee (importer) in a collection.
Constructive Delivery:
The process of handing over documents to an applicant in a documentary credit.
Counter Credit:
A variation of the back-to back credit where a second bank (usually that of the original beneficiary) issues a separate L/C in favour of the second beneficiary. Also known as a countervailing credit.
Counter-indemnity:
The irrevocable commitment from the exporter that he will repay the bank if a bond is called.
Counterpurchase:
Two separate agreements under which the buyer agrees to purchase and pay for goods and the seller agrees to purchase and pay for goods of a (usually) equivalent value.
Countertrade:
The umbrella term referring to a growing number of trading and financing techniques in which payment is made either wholly or partly in the form of goods (see Barter).
Cover:
Provision of export credit guarantee/insurance against risks of payments delays or non-payments relating to export transactions. Cover is usually provided for commercial and political risk, from date of contract or date of shipment.