BANKING AFFAIRS

Detailed explanation-1: -A Letter of Credit is an arrangement whereby Bank acting at the request of a customer (Importer / Buyer), undertakes to pay for the goods / services, to a third party (Exporter / Beneficiary) by a given date, on documents being presented in compliance with the conditions laid down.

Detailed explanation-2: -A letter of credit – a document issued by a bank, at the request of the importer, in which the bank agrees to honor a draft drawn on the importer.

Detailed explanation-3: -Documentary collection is method of trade finance in which an exporter’s bank forwards documents to an importer’s bank and collects payment for shipped goods.

Detailed explanation-4: -A letter of credit or LC is a written document issued by the importer’s bank (opening bank) on importer’s behalf. Through its issuance, the exporter is assured that the issuing bank will make a payment to the exporter for the international trade conducted between both the parties.

Detailed explanation-5: -A letter of credit, or a credit letter, is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount.