A "Letter of Credit" is used as an instrument for settlement of payment from commercial transactions like sales/purchases in national/international trade.
A Letter of Credit, is a written instrument issued by a bank at the request of its customer, the Importer (Buyer), whereby the bank promises to pay the Exporter (Beneficiary) for goods or services, provided that the Exporter presents all documents called for, exactly as specified in the Letter of Credit, and meet all other terms and conditions set out in the letter of Credit. A Letter of Credit is also commonly referred to as a Documentary Credit.
BOK issues all types of LC as per the requirement of our customers. The common types are as under:
Before issuing an LC, you will require to have approved credit limits sanctioned by the bank. Moreover, imports and exports transactions that involve foreign currencies are subject to Central Bank (NRB)'s foreign exchange regulations and other International rules like UCPDC 600, URR etc. We will require you to submit the following documents along with the LC Application form for issuing a Letter of Credit:
There are various other NRB provisions regarding import/export of goods from India and other third countries. We will help you to know these provisions so as to make you feel at ease while conducting import/export business.
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