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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.
SWIFT -
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.
CBS -
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).
