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Letters of Credit
Letters of Credit
For the Ukrainian business entities who enter into business relationships with foreign partners, it is very important to be sure that their foreign counterparts in a timely and fully meet its obligations to deliver the goods (services) or the payment for goods (services) under contracts.
Due to the inherent difficulties in gathering reliable information about the reputation and ability to pay foreign contractors is necessary to use the external economic calculating tool, which would provide reliable performance of duties on both sides of the contract.
This tool is a documentary letter of credit bank.
Letter of credit - is a double bond, which is provided by the issuing bank for authorization and instructions from the applicant (importer), make a payment for a beneficiary (exporter), or accept and pay the beneficiary bills of exchange (drafts), or authorize another bank to conduct such payment, or accept and pay bills of exchange (draft), against the documents subject to the conditions of the credit.
Thus, the documentary credit is a bank obligation, and, on the one hand, allows the seller of goods or services do not depend on the solvency of the buyer, on the other hand, gives buyers the confidence that the payment will be made for the seller actually delivered the goods or services provided.
Depending on the needs of clients PJSC MEGABANK may open and maintain various types of documentary credits.
L / C payable at sight - the most common form of letters of credit, the terms of which provides for the payment of funds to the beneficiary during the presentation of the executing bank documents identified in the LC.
Letter of credit with deferred payment - credit, which provides for the payment of funds to the beneficiary after a certain period of time after the presentation of the executing bank documents that meet the conditions of the credit.
The letter of credit with postfinancing - letter of credit on which payment of funds by beneficiaries of the executing bank during the presentation of documents that meet the letter of credit. In this order issuer shall reimburse the bank paid out money after a certain period of time after the date of payment.
Confirmed letter of credit - letter of credit, which along with the issuing bank's payment obligation to themselves and to take other (confirming) bank. Thus, the beneficiary is a double assurance of timely payment instruments that meet the conditions of the credit.
Revolving credit - credit that is applied in the case of uniform shipments of goods within a certain time. The letter of credit is opened in the amount of supply of the goods of one party and is automatically renewed as the settlement for it.
Transferable letter of credit - letter of credit, which opens for the first beneficiary (the reseller), who instructs the nominated bank to transfer part of the credit for the benefit of one or more other beneficiaries (producers).
There are also other types of documentary credits.
PJSC MEGABANK has many years experience of opening and maintenance of documentary letters of credit with the participation of leading banks in the U.S., Europe, CIS and Baltic states.
Experienced specialists of the bank will provide you with qualified advice on the use of a particular type of credit in the calculation and will draw the appropriate payment terms of the external economic contract.
Operation documentary credits are subject to "Uniform Rules for Documentary Credits", the publication number 600 2007, the International Chamber of Commerce (Paris, France).
The Department of Documentary Operations and Currency Control
30 Artema, room 306, Kharkiv, 61002
tel. (057) 714-07-03, 714-33-64.
E-mail: ft@megabank.net
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