Negotiation of export bill of exchange refers to the purchase by bank, prior to collection, of bill of exchange and shipping documents, which the exporter has issued after shipment according to L/C, D/P. or D/A. As negotiation is not the bank's obligation but based on a transaction agreement with the exporter, in order to preserve its claims, the bank prudently examines whether there is any discrepancies between L/C or contract terms and presented documents. Required Document An application for negotiation (collection) of shipping documents L/C or the original copy of an export contract document A certificate of export declaration Documents required in L/C or an export contract document Payment of export price In the case where the negotiation currency is Korean won : (Amount of bill of exchange x T/T buying rate - Related commission) is deposited in the exporter's designated account. In the case of a foreign currency : (Amount of bill of exchange related commission) is deposited in the exporter's designated foreign currency account. In both cases, the designated account must be a KEB's account in the exporter's name. Payment of Postal Charge and Telegram Charges At-sight : Foreign currency amount x Exchange commission rate on standard collection period x Market average rate Standard collection period : 12 days (in the case of Renegotiation), 9 days (when the settlement currency is JPY, SGD, HKD, or MYR), 10 days (otherwise) Usance : Foreign currency amount x [Standard collection period + Bill period, (or the number of days to the fixed date in the case of fixed-date bill) / 360 (or 365) x (Annual exchange commission rate + Additional rate on bill period) x Market average rate] Remark: Such amount should be paid either by quarterly installment or by a lump sum within the period. In the case of negotiation under reserve, a 1.5% (1.3% for small- and medium-sized companies) is added to the exchange commission rate. Payment of in-lieu of exchange commission Postal charges: Charged according to the destination and the sending period. Special postal charges: 8,000 ~ 22,000 Korean won (actual expenses when sent directly by branches) Telegram charges are collected through notice to the bank or redemption request after negotiation. Dishonor of Export Bill of Exchange In the following cases, export bill of exchange that the bank negotiated prior to collection are regarded as dishonored and export amount is recovered from the exporter on the next business day. When the advising bank notices dishonor. When payment is not confirmed within one month from the negotiation date (or the maturity date for usance bill), or when acceptance notice is not received within one month from the date of negotiation of usance export bill of exchange. The export bill of exchange can be treated as dishonored when the bank judges that payment will not occur. The bank may give a grace period of up to one month, taking the exporter's credit standing or collaterals into account. Redemption of dishonored bill Once an export bill of exchange is treated as dishonored, redemption should be immediately made. Otherwise, such the applicant should redeem through available means such as offset. If the applicant applies for negotiation of another export bill of exchange, the bank may negotiate the bill and recover the unpaid amount from negotiation amount. Account Receivable in Korean Won If the unpaid export bill of exchange amount has not been recovered within six months after the date of the treatment of the export bill of exchange as an unpaid item, the amount should be converted into Korean won the next business day at the T/T selling rate and transferred to the Account Receivable in Korean won. However, even before such six months have elapsed, if the unpaid export bill of exchange is classified as "Recovery Doubtful" or "Loss Expected" according to the standard for asset performance, such export bill of exchange have to be converted into Korean won on the last business day of the month concerned at the T/T selling rate and transferred to the Account Receivable in Korean won and the exporter should repay such amount in Korean won. Delay Charge Negotiation under reserve for at-sight L/C: Exchange commission rate plus 1.5% for delayed days from the end of standard collection period (1.3% for small- and medium-sized companies except for affiliates of 30 largest companies) D/P Clean negotiation : Exchange commission rate Negotiation under reserve : Exchange commission rate plus 1.5% (1.3% for small- and medium-sized companies) Negotiation under reserve for usance L/C : Exchange commission rate plus 1.5% .???(1.3% for small- and medium-sized companies) D/A : Default interest rate on foreign currency-denominated loan Acceptance Delay Charges for Usance Bills Negotiation under reserve for usance L/C: When the maturity date of the acceptance notice is later than the estimated maturity date (standard collection period plus bill period)-> Exchange commission rate plus 1.5% (1.3% for small- and medium-sized companies) D/A Clean negotiation: Exchange commission rate Negotiation under reserve: Exchange commission rate plus 1.5% (1.3% for small- and medium-sized companies) Exchange Commission In the case that a renego is applied for other bank and the payment occurs later than exchange commission allocation period : Clean negotiation: Exchange commission rate for delayed period Negotiation under reserve: Exchange commission rate plus 1.5% (1.3% for small- and medium-sized companies) In the case that the reimbursement of usance export bill of exchange is made earlier than the maturity date because of a reduction in bill period: Refund of exchange commission for the period from the date of payment to the maturity date. Negotiation under reserve for usance export bill of exchange: Refund of additional commission for the period from the date of reception of acceptance notice to the maturity date. In the case that the issuing bank notices discrepancy in export bill of exchange after clean negotiation of the export bill of exchange: Additional 1.5% (1.3% for small- and medium-sized companies) for negotiation under reserve. In the case that negotiation under reserve for at-sight export bill of exchange is reimbursed earlier than standard collection period: Refund of additional commission (1.5%; 1.3% for small- and medium-sized companies) for the period of earlier reimbursement Interest on dishonor At-sight : (Interest on dishonor) = (Default interest rate on foreign currency-denominated loan) x (The next day to the maturity date of exchange commission payment ~ The date of reimbursement) Usance : (Interest on dishonor) = (Default interest rate on foreign currency-denominated loan) x [The next day to the maturity date of exchange commission payment (the date of dishonor if the export bill of exchange is treated as dishonored earlier than the maturity date) ~ The date of reimbursement] Remark : In the case of dishonor treatment before the maturity, the paid exchange commission is partially refunded if reimbursement occurs before the date maturity) The same dishonor interest for an external payment prior to reimbursement. If the applicant repays within one month from the date of negotiation (or the maturity date for usance L/C), the date of repayment should be considered to be the date of dishonor and interest on dishonor should be paid. If reimbursement is made before an external payment, the payment should be refunded to the applicant. However, interest on dishonor, which has already been paid, is not refunded.