how can make letter of credit (LC)?

ramshu
By ramshu

Dear friends

Please explain to me about Letter of Credit. What is the procedure of making LC?

By mohdata• 24 Oct 2012 11:06
Rating: 5/5
mohdata

a lc is an instrument which protects both parties from risk by involving an intermediary (the bank).

1)assuming you have a corporate account, call your bank or your account manager and ask him what your options are. lc payments can frequently be avoided by negotiating with the suppliers/clients for mutually agreeable payment terms such as 50% upfront and 50% pre delivery.

2)you can also ask your bank for merely a 'payment guarantee' which mentions the amount and validity of the guarantee. This works just like a tender/performance bond and is only charged a commission as opposed to monthly interest on lc payments.

3) we don't know your exact situation so get in touch with your bank. if you don't have a corporate relationship manager who deals with your account; well get one. It is imperative for smooth banking activities and can be very helpful in times of need like these.

best of luck:-)

By acchabaccha• 24 Oct 2012 10:21
Rating: 3/5
acchabaccha

You can contact me if you wish on 44810951 after 6PM and I can give you a brief explanation of the entire process.

Ismail

By marycatherine• 24 Oct 2012 06:47
Rating: 5/5
marycatherine

You need a good banking relationship, approval (much like a loan approval) and possibly collaterol (in the form of a cash deposit) with the bank.

The bank will assist you in drafting the letter of credit according to the terms and conditions of your transaction.

This is not a cheap transaction as the bank is putting its reputation on the line by issuing the credit and they charge accordingly.

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