Letter of credit is an undertaking of a bank for account of the importer to pay the exporter the value of the goods. KBL promises to honor such undertaking provided the required documents are submitted and the terms and conditions of the credit are complied with.
- Improve negotiating status - issuing of letter of credit means that the importer provides the exporter with conditional payment commitment of the bank, a bank’s credit, in addition to its commercial credit. It improves credit and negotiating status of the importer, so may be able to negotiate for a low purchase price and better terms
- Ensure goods – ensure to the extent that documents evidenced that the goods supplied are the goods ordered
- Reduce capital occupied - if issuing an letter of credit upon given credit facility, importer need not spend self-owned capital in the stages of issuing the letter of credit in the issuing bank, exporter’s preparation of goods, and delivery
Obtain LC limit through your branch. Contact Relationship Manager to obtain LC Limit.
(To be updated)
- The importer submits the “Application for Issuing Letter of Credit”, the bank issues the letter of credit upon approval against sufficient security or line of credit.
- The exporter arranges the shipment according to the terms and conditions of the letter of credit after receipt of it.
- The exporter prepares and presents the required documents directly or through the presenting bank to KBL for payment or acceptance.
- After receipt of the documents, KBL pays or accepts when having determined the compliance of the documents.
- KBL to pay at maturity.