FOB FULL FORM IN BANKING

In this article you get to know about FOB full from and other different abbreviations of FOB in various fields. FOB full form refers to Free On Board.

Free On Board is a term that is commonly used in shipping and logistics to refer to the transfer of ownership of goods between a buyer and a seller. In the context of banking, FOB can refer to a type of payment method that is used in international trade transactions. In an FOB transaction, the seller is responsible for the shipment of the goods to a specific location, typically a port or other transportation hub. Once the goods are loaded onto the shipping vessel, ownership of the goods is transferred to the buyer, and the seller is no longer responsible for any damage or loss that may occur during transit.

In a banking context, an FOB payment is a type of payment method that is used to facilitate the transfer of funds between a buyer and a seller in an international trade transaction. Under an FOB payment arrangement, the buyer is responsible for arranging and paying for the shipment of the goods, and the seller is responsible for providing the necessary shipping documents to enable the buyer to take possession of the goods.

The payment for the goods is typically made using a letter of credit, which is issued by the buyer’s bank and guarantees payment to the seller once the goods have been shipped and the required documents have been provided. The letter of credit may specify the FOB point of shipment, and may also include other terms and conditions related to the payment and shipment of the goods.

Example of how FOB can be used in an international trade transaction

Let’s say that a buyer in the United States has placed an order with a seller in China for a shipment of 1,000 widgets. The buyer and seller have agreed to an FOB payment arrangement, with the FOB point of shipment being the port of Shanghai. Under this arrangement, the seller is responsible for loading the widgets onto a shipping vessel at the port of Shanghai. Once the widgets are loaded, ownership of the goods is transferred to the buyer, and the buyer is responsible for any loss or damage that may occur during transit. The buyer has arranged for the shipping and transportation of the goods from Shanghai to the United States, and will bear the cost of these expenses.

The buyer has also arranged for a letter of credit to be issued by their bank, which guarantees payment to the seller once the necessary shipping documents have been provided. The letter of credit specifies the FOB point of shipment as the port of Shanghai, and includes other terms and conditions related to the payment and shipment of the goods. Once the widgets have arrived in the United States and the necessary documents have been provided to the buyer’s bank, the seller will receive payment for the goods. In this way, the FOB payment arrangement helps to ensure a smooth and secure transaction between the buyer and seller in an international trade context.

Free On Board is a term that is commonly used in shipping and logistics to refer to the transfer of ownership of goods between a buyer and a seller. In a banking context, FOB can refer to a type of payment method that is used to facilitate the transfer of funds between a buyer and a seller in an international trade transaction, typically using a letter of credit

Different abbreviations of FOB in various fields are as follows

CONCLUSION:

Dear reader in this article you get to know about FOB full from and FOB term used in various other fields, If you have any query regarding this article kindly comment below.