Letters of credit have been used for centuries to facilitate payment in international trade. Their use will continue to increase as the global economy evolves. A letter of credit is a letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.
FEATURES AND BENEFITS
- No Pre-Payment penalty.
- Eligibility on projected Turnover.
- No vintage required (Age of the firm can be less than 1 year).
- No interest charged.
- Only opening charges applicable.
- Can also be in Foreign Currency.