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Domestic Documentary Letters of Credit

A payment instrument intended for entrepreneurs and companies for secure trading and minimisation of business risks.



Benefits

When using the documentary letters of credit as a buyer you have a certainty that the payment will take place once your business partner has met all of the conditions prescribed in the letter. The seller has the certainty that they will be paid for the implemented delivery provided they meet the conditions of the letter.

Other merits include:
For the purchaser

  • the advantage of formulating the conditions of the letter allows you to ensure the quality of goods and the timeliness of their delivery,
  • you have the opportunity to negotiate more advantageous price conditions, because your partner appreciates that you offer a high quality and secure payment instrument,
  • you may arrange a postponement of payment in the letter and thereby receive the goods on credit.

For the seller

  • Irrevocable obligation of the bank,
  • Protection from risk of the inability to pay on the part of the buyer,
  • The use of the letter of credit as security against subcontractors,
  • A suitable means of short-term financing,
  • Possibility of further sale of the receivable prior to maturity.

 

Get Acquainted

A documentary letter of credit is a written obligation of the bank issued on the basis of an instruction from the buyer to provide the authorised person with financial performance in the arranged amount once they have met all of the conditions of the letter of credit.

The business cases handled in this country are:

  • Supplier-customer relations,
  • The purchase and sale of immovables.

Types of documentary letters of credit:

  • Notified letter of credit - the beneficiary is merely notified by the advising bank, without the advising bank entering into any obligation
  • Confirmed letter of credit - based on a request or authorization, the advising bank confirms the letter of an issuing bank, whereby the former assumes a similar obligation as the latter has
  • Revolving letter of credit - after the amount has been used up or during a set period is automatically renewed in its original amount
  • Transferable letter of credit - can be transferred to another entity (company), which thereby assumes the right to use the letter and receive payment
  • Back-to-back letter of credit - issued on the basis of another letter which serves as security for the bank
  • Standby letter of credit - essentially a guarantee in the form of a letter of credit

 

Terms of Use

A documentary letter of credit can be used if you have a current account in our bank.
We are prepared to provide you with advisory services before the conclusion of the contract.
We will advise you on stipulating the conditions for the letter of credit and on the selection of a suitable type of letter of credit.

Following procedure:

  • fill out the order for opening a letter of credit,
  • we review and approve the scope and amount of the credit engagement,
  • we conclude a contract for opening a letter of credit.

Documentary letters of credit are governed by the Unified Customs and Regulations for Documentary Letters of Credit, 1993 Revision, which was issued by the International Chamber Of Commerce in Paris as publication no. 500.

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