What is LoU, SWIFT, CBS

Letter of Understanding -

  • Bank guarantee that allows a customer to raise money from another Indian bank's foreign branch.

  • Applicable in India in business agreements involving buyer and seller in which bank is obliged to pay to buyer in case the seller (bank's customer) has not delivered the product/services or performance as promised.

  • To obtain LoU, a customer is supposed to pay margin amount to bank.

  • The bank must also sanction credit limit for the customer.

  • The bank will enter into a pledge agreement with the customer & accept liquid assets like cash at bank, stocks & bonds.


  • Society of worldwide Inter-bank Financial Telecommunication. Its a messaging system that transmits financial information between International banks.

  • LoU can be sent to a foreign bank via SWIFT.


  • Acronym for CORE Banking Solutions. CORE is acronym for Centralized Online Real-time Exchange.

  • It's a software application that networks all the bank's branches thereby allowing you to operate your account from anywhere..

  • The top CBS application software providers are Infosys (FINNACLE), ORACLE (i-flex now called as Oracle Financial Services), TCS (FNS - Financial Network Services).

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