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FACILITIES FOR IMPORTERS AND EXPORTERS
What is a Letter of Credit (LC) and what role does it play in international trade?
An LC is a written undertaking by a bank (issuing bank) on behalf of the importer to pay the exporter a specified amount upon presentation of stipulated documents. It provides payment security to the exporter and ensures document-based delivery assurance to the importer.
What is a Revolving LC and how does it function in trade?
An LC that reinstates itself after each drawing up to a fixed limit.
What is the difference between a Sight LC and a Usance LC?
A Sight LC requires the issuing bank to make payment immediately upon presentation of compliant documents, while a Usance (deferred payment) LC allows payment after a specified period (e.g., 30, 60, 90 days) from the date of shipment or presentation of documents.
What is a Performance LC and in what type of contracts is it used?
An LC guaranteeing contractual performance obligations, used in construction contracts.
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