Letter of credit

Letter of Credit - is a conventional monetary obligation assumed by the bank on behalf of a client to pay the beneficiary (seller of goods) specified in the Credit amount to provide a set of documents provided by the shipment of goods by a specified date.


Import Letter of Credit

Import letter of credit (bank’s customer is a buyer of goods / services) is bank guarantee given at the request of the client to pay the seller a sum of money upon receipt of relevant terms of the credit documents certifying that a certain product in the credit sent to the buyer.

 

Export Letter of Credits

Export letter of credit (bank’s customer is the seller of the goods / services) is a sum of money given at the request of the customer of bank to pay the seller upon receipt of relevant terms of the credit documents certifying that a certain letter of credit goods shipped to the buyer.

 

The main advantages of using of letter of credit method for the customer are:

  • Confidence that payment will be done after real  shipment of product (execution of works / services)
  • Guarantee of delivery of appropriate quality and completeness in terms stipulated in the contract
  • Ability to obtain more attractive purchasing prices
  • Thorough, professional verification banks LC documents
  • Ability to significantly reduce the size of the prepaid amount by the contract

Stages of letters of credit:

  1. Signing of contract, which mention that the parties will use the settlement of accounts by letter of credit;
  2. The Buyer submits an application for opening of letter of credit with exact indication of its condition to his bank;
  3. Opening of letter of credit by the Buyer’s bank (issuing bank, designated bank) and its transmission to the exporter (beneficiary) through the bank, as a rule servicing the beneficiary, which (the Bank) informs (advices) of the last one on opening of letter of credit;
  4. Checking of authenticity of letter of credit and notification of the Seller about opening of the letter of credit (advising) by the Seller’s Bank (advising bank);
  5. Checking by the Seller (beneficiary) of letter of credit for it compliance with conditions of Contract, and in case of confirmation, shipping of goods to the Buyer within set period of time;
  6. Obtaining of transport (and other required by the conditions of letter of credit) documents from the transporter by beneficiary;
  7. Submission of shipping documents obtained by the beneficiary from the transporter to its bank for obtaining of payment;
  8. Checking by the Exporter’s Bank of documents obtained from Beneficiary and sending to the issuing bank for the payment, acceptance (agreement for payment or guarantee of payment) or negotiation (payment);
  9. Checking by the issuing bank of obtained documents and (in case of compliance with all conditions of letter of credit) transfer of payment amount to the exporter. Obtaining of shipping documents by the Buyer from the issuing bank and taking possession of the goods.

 

* Dear clients, if you encounter illegal actions or unreasonable requests from the Bank's employees when reviewing applications or issuing loans, we ask you to report such cases to the Bank's Contact Center at 0 312 61-33-33 or WhatsApp +996 770 33 -33-69.

All such cases will be considered personally by the Bank's management.

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