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Product Name
Issuing of Letter of Credit
Product Description
Letter of credit is an undertaking of a bank for account of the importer to pay the exporter the value of the goods. BOC London promises to honor such undertaking provided the required documents are submitted and the terms and conditions of the credit are complied with.
Product Features
1. Improve negotiating status - issuing of letter of credit means that the importer provides the exporter with conditional payment commitment of the bank, a bank’s credit, in addition to its commercial credit. It improves credit and negotiating status of the importer, so may be able to negotiate for a low purchase price and better terms
2. Ensure goods – ensure to the extent that documents evidenced that the goods supplied are the goods ordered
3. Reduce capital occupied - if issuing an letter of credit upon given credit facility, importer need not spend self-owned capital in the stages of issuing the letter of credit in the issuing bank, exporter’s preparation of goods, and delivery
Eligible Applicants
1. Importer and exporter wish to promote the level of trade credit on each other's business activities;
2. The imported commodity is within a seller's market and the exporter insists on settlement with L/Cs;
3. Both importer and exporter want to select trade finance to improve liquidity.
Application Requirements
1. The applicant shall be approved and registered in accordance with the law, and hold a business license that has passed the annual inspection or other valid certificates which fully prove its legal operation and scope of business;
2. The applicant shall have the qualification to engage in import and export trade.
Application Procedures
1. The importer submits the “Application for Issuing Letter of Credit”, the bank issues the letter of credit upon approval against sufficient security or line of credit.
2. The exporter arranges the shipment according to the terms and conditions of the letter of credit after receipt of it.
3. The exporter prepares and presents the required documents directly or through the presenting bank to BOC London for payment or acceptance.
4. After receipt of the documents, BOC London pays or accepts when having determined the compliance of the documents.
5. BOC London to pay at maturity.
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