Documentary Letter of Credit (DLC)
A documentary letter of credit or commercial letter of credit is a payment mechanism in international trade which are issued by a bank or a financial institution. The applicant (buyer) opens an LC to the seller (beneficiary) to limit the non-payment risk and follows the payment terms as directed by the issuing bank. If the buyer defaults, the issuing bank will be liable to oblige the beneficiary’s demand with the help of advising (sellers) bank. ITF holds the credit facility with the number of traditional top-rated banks, letters of credit practices are governed by the International Chamber of Commerce (ICC) as per Uniform Customs and Practice for Documentary Credits (UCP) terms.
International trade finance (ITF) offers a letter of credit by extending its trade facility to the applicants (buyers). Sellers on the other hand stay at ease that LC issued by the ITF is asset-backed. ITF’s document collection against acceptance (D/A) and payment (D/P) has certain rules and restrictions. Talk to us know more.
At Sight letter of credit
Usance or Deferred letter of credit
Usance letter of credit with acceptance
Standby letter of credit (SBLC) - As per UCP Commercial terms.
Document against acceptance (D/A)
Document against payment (D/P)
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At sight letter of credit (LC) is a quick payment method, Once the issuing bank receives the documents from the advising bank. The buyer needs to pay the seller to release the documents to clear the shipment. This type of LC is an advantage for the seller to collect the payment immediately.
Usance or Deferred
The Usance or Deferred Payment – Letter of Credit is payable at a proposed date after the conforming documents are presented by the seller to the advising bank. This type of LC has a privilege for the buyer to extend the payment schedule to collect the documents from the issuing bank and payable before the maturity date as agreed by both parties.
Standby Letter of Credit
The Standby Letter of Credit (SBLC) is an irrevocable guarantee or a commitment issued by the bank or a financial institution. A promise to the beneficiary to pay on behalf of the applicant. SBLC’s are very much alike documentary letters of credit, their main difference is that unlike DLC’s, they only become operative in case the applicant defaults, then the beneficiary in whose favor the SBLC was issued, can draw on the SBLC and demand payment.
Document Against Acceptance (DA)/ Document Against Payment (DP). Our document collection process comes with certain restriction. As for as Letter of credit at sight is very simple, but for usance letter of credit we have to hold the documents until the LC settlement is made to supplier or else acceptance message will be delivered on case by case. Kindly check with our team to learn more.