What are different types of LC?

Main types of LC

  • Irrevocable LC. This LC cannot be cancelled or modified without consent of the beneficiary (Seller).
  • Revocable LC.
  • Stand-by LC.
  • Confirmed LC.
  • Unconfirmed LC.
  • Transferable LC.
  • Back-to-Back LC.
  • Payment at Sight LC.

What is export LC?

An Export Letter of Credit, which is also referred to as documentary credit, is a contractual agreement on the part of the the issuing bank, on behalf of an importer, promising to pay the beneficiary or exporter provided conditions specified in the Letter of Credit have been satisfied.

What is import LC?

An Import LC issuance is providing a letter of credit to a customer; to issue, advice or confirm a letter of credit, for a trade transaction. Your bank thus verifies the customer limit to enable the transaction.

What is LC in export?

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.

How many types of LC are there in export?

They are Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC.

Who opens LC importer or exporter?

The importer arranges for the issuing bank to open an LC in favor of the exporter. 2. The issuing bank transmits the LC to the nominated bank, which forwards it to the exporter.

What is the difference between SBLC and DLC?

The Documentary Letter of Credit (DLC) is a primary payment instrument for a transaction. The Standby Letter of Credit (SBLC) serves as a secondary payment instrument.

What is transfer LC?

A transferable LC is one where at the request of the beneficiary (‘first beneficiary’) the LC is made available in whole or in part to another beneficiary (‘second beneficiary’). This is usually done where the first beneficiary is not the actual manufacturer of the goods and is sourcing it from others.