U.S. Wall Street Union Bank Ltd

1. First of all, a deposit is required for the application of L/C. Or it may be necessary to draw on your line of credit with the bank. 2, at the same time to submit a true and effective sales contract, letter of application, etc. 3. The domestic bank handling fee is relatively low, and the cost sharing can be explained in the letter of credit. Contact your local bank as soon as possible to determine what needs to be done.

{ArticleTitle}
No matter enterprises or individuals, they can rely on their own credit to conduct economic exchanges with others. In order to facilitate some subjects, they also apply for credit cards, international letters of credit, etc. As the processing of these documents will relate to the rights and interests of other civil subjects, the processing of international letters of credit is also related to the international image of a country. Therefore, it is necessary to strictly comply with the provisions of the international letter of credit process.

I. What is the procedure of international letter of credit?

The process of documentary credit operation is described as follows:

The buyer and seller stipulate in the trade contract that payment shall be made by documentary credit.

The buyer shall advise the local bank (issuing bank) to open a letter of credit in favour of the seller.

The issuing bank requests another bank to advise or confirm the credit.

The advising bank advised the seller that the L/C was opened.

The Seller shall ship the goods after receiving the L/C and ensuring that it can fulfill the conditions stipulated in the L/C.

The seller presents the documents to the nominated bank. The bank may be the issuing bank or the paying, accepting or negotiating bank named in the credit.

The bank examines documents according to the letter of credit. If the documents comply with the provisions of the credit, the bank will pay, accept or negotiate according to the provisions of the credit.

A bank other than the issuing bank sends documents to the issuing bank.

After verifying the correctness of the documents, the issuing bank shall reimburse the bank that has paid, accepted or negotiated in accordance with the L/C in the form agreed in advance.

The issuing bank presents documents after the buyer's payment, and then the buyer takes delivery of the goods against the documents.

Opening of letter of credit

1. Application for L/C

Once the import and export parties have agreed to pay by documentary L/C, it is the importer's duty to open the L/C. The first thing is to fill in the application form. This form establishes a legal relationship between the applicant and the issuing bank. Therefore, the application form is the most important document for opening a L/C.

2. Requirements for L/C opening

The requirements for an application for a letter of credit are clearly defined in the uniform practice and the importer must inform the bank exactly. The instructions for the letter of credit must be complete and clear. Applicants must always bear in mind that a documentary credit transaction is a document transaction, not a goods transaction. Bankers are not businessmen, so applicants cannot expect bank staff to fully understand the technical terms in every transaction. Even if he writes all the terms of the sales contract into the letter of credit, he cannot be fully protected if the beneficiary really wants to cheat. This requires banks and applicants to work together and use common sense to avoid issuing letters of credit that are burdensome to all parties. Banks should also discourage the use of previously opened credits (sets of credits) when issuing letters of credit.

3. Security of issuing card

Upon receipt of the applicant's complete instructions, the bank must immediately issue the credit in accordance with such instructions. On the other hand, the bank also has the right to require the applicant to hand over a certain amount of money or other form of his property as a guarantee that the bank will carry out his instructions.

Under current rules, foreign exchange held by Chinese localities, departments and companies generally must be deposited with Chinese banks. If some units need a documentary credit to import goods or technology, Chinese banks will freeze the funds in their accounts equivalent to the amount of the credit as the opening deposit.

If the applicant does not have an account with the issuing bank, the issuing bank is likely to require the applicant to deposit with its bank an amount equal to the full amount of the credit before issuing the credit. This guarantee can be achieved through collateral or a pledge (such as shares), but it is also possible for the bank to provide financing through the goods used for trading as security. The issuing bank should first investigate the merchantability of the goods. If the goods are easily marketable, the bank can provide a much higher amount of financing to the customer with the letter of credit than the slow-selling goods.

4. Obligations and responsibilities of the applicant and issuing bank

The applicant has three main obligations to the issuing bank:

(1) The applicant must repay the loan paid to the beneficiary on behalf of the document obtaining representative of the issuing act. Until he makes payment, the document as a document of title still belongs to the bank.

(2) If the document is in conformity with the terms of the credit and the applicant rejects the "redemption note", the deposit or funds in the account that have been frozen as security will be owned by the bank.

(3) It is the applicant's responsibility to provide the issuing bank with the full cost of the credit.

Issuing bank's responsibilities to the applicant:

First, the issuing bank has a duty to open the credit as soon as it has received detailed instructions to do so. Secondly, once an issuing bank has accepted an application for an opening, it must strictly follow the instructions of the applicant.

3. Advice of letter of credit

1. Liability of the advising bank

In most cases, the credit is not directly advised to the beneficiary by the issuing bank, but is transmitted through its correspondent bank in the beneficiary's country or region, the advising bank. The biggest advantage of notifying beneficiaries is security. It is the duty of the advising bank to examine with reasonable care the apparent authenticity of the credit it advises.

2. Mode of letter of credit delivery

Letters of credit can be sent by air mail, telegram or telex. SWIFT, based in Brussels, uses leased lines to send messages between banks in many countries. Most banks, including those in China, have joined the group.

3. Instructions for a valid credit When an issuing bank instructs an advising bank to advise a credit or an amendment to a credit by any valid means of telecommunications, the telecommunications will be deemed to be a valid credit document or a valid amendment and no further confirmation by post will be required.

The international letter of credit is in the country has the need to deal with the business subject, like other documents processing process, first need to be in accordance with the provisions, put forward a request, the acceptance agency needs to reach a conclusion within a limited time whether to accept, if not, also need to indicate the reason. We have online lawyers, if you have any doubts, you are welcome to consult at any time.