U.S. Wall Street Union Bank Ltd

Letter of credit is a written document issued by the bank to the exporter (seller) at the request of the importer (buyer) to guarantee the payment of goods. In a letter of credit, a bank authorizes the exporter, subject to the conditions specified in the credit, to draw on the bank or its designated bank for an amount not exceeding the specified amount, to attach shipping documents as required, and to receive the goods at the designated place on schedule.

The general procedure of payment by L/C is :(1) The import and export parties shall clearly stipulate in the sale contract that payment shall be made by L/C. (2) The importer shall apply to the local bank for a letter of credit, fill out the application, pay a certain deposit or provide other guarantees, and ask the bank (issuing bank) to issue a letter of credit to the exporter. (3) The issuing bank shall issue a letter of credit in favour of the exporter in accordance with the contents of the application, and shall advise the exporter of the letter of credit through its agent bank or correspondent bank (collectively referred to as the advising bank) in the place where the exporter is located. (4) After the exporter ships the goods and obtains the shipping documents required by the L/C, the exporter shall negotiate the payment to its local bank (which may be the advising bank or other bank) in accordance with the L/C. (5) The negotiating bank shall indicate the negotiation amount on the back of the L/C after negotiating the payment.