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LETTER OF CREDIT - LC

Definition: Letter of Credit

Letter of Credit  ( commonly referred as LC)  is used in International transactions are governed by the International chamber of Commerce with standardized rules named as  Uniform Customs and Practice for Documentary Credits. The general provisions and definitions of the International Chamber of Commerce are binding on all parties.  Letter of Credit is one for the safest and common payment method, which has a balanced risk structure for both parties. Letters of credit can balance the risks of exporters and importers because responsibility of LC operations is passed  to a third party, to the banks.  A letter from the bank assures that the buyers payment (holder of letter of credit) to the seller will be received on time until the bank receives a confirmation that the goods have been shipped.


LETTER OF CREDIT
Kuwait Visa Procedures

Letter of credit means Documentary credit in favour of both the importer and exporter involving in international trade. Letter of Credit upon the request of importer(buyer) the issuing bank agrees to undertake a payment to the seller(beneficiary) on behalf of buyer. The issuing bank advises the LC to the beneficiary is called the Advising bank which is generally in the country of the seller, the specified bank makes the payment on the basis of successful presentation of all the required documents by the seller within the specified time.

The bank is scrutinizes the documents and not the goods for making payment. The Seller gets assured that if documents are presented on time and in the way that they have been requested on the LC the payment will be made and Buyer on the other hand is assured that the bank will thoroughly examine these presented documents and ensure that they meet the terms and conditions stipulated in the LC.

 


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