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Letters of credit
A letter of credit is a written undertaking by an issuing bank on behalf an applicant (importer of goods or services), promising to effect payment in favour of the beneficiary (exporter or seller of goods or services) up to a stated sum of money, within a prescribed time limit and against stipulated documents.
- The use of a letter of credit allows the buyer to avoid or reduce pre-payment;
- A letter of credit offers certainty that the payment will be made, only upon presentation of the documents confirming shipment of the goods;
- A letter of credit provides security to the buyer that all shipment conditions will be met as the seller must fulfill all terms of the contract, as indicated in the letter of credit (shipment of the goods, delivery terms and deadlines) in order to receive the payment.
- A letter of credit significantly reduces the risk of non-payment for goods dispatched. If the seller provides the required package of documents confirming dispatch, the bank that issued the letter of credit is obliged to pay the amount stipulated in the letter of credit;
- A letter of credit provides a guarantee that goods will be sold even when they are only starting to be manufactured;
- The buyer must raise any complaints/claims over the quality of goods supplied separately from the letter of credit and cannot influence the payment of monies under the letter of credit, which provides the seller with a significant advantage in resolving such grievances;
- A letter of credit makes it possible to expand a sales market by reducing the risk of non-payment from counterparties with whom the seller does not have a working business relationship.
- Issuing of documentary letters of credit on behalf of the clients of RCB Bank Ltd;
- Advising clients of RCB Bank Ltd of documentary letters of credit issued in their favour or amendments to those letters of credit;
- Execution of a letter of credit with payment upon presentation of documents (at sight) or with deferred payment.
When carrying out operations with documentary letters of credit the bank abides by the terms of "Uniform Customs and Practice for Documentary Credits", as amended in 2007, the publication # 600, issued by the International Chamber of Commerce (UCP 600).
|Issue of letter of credit on prepaid or cash covered basis||0,067% monthly, min. 0,2%|
|Issue of letter of credit within a credit limit||0,15% monthly, min. 0,45%|
|Extention of letter of credit on prepaid or cash covered basis||0,067% monthly|
|Extention of letter of credit within a credit limit||0,15% monthly|
|Amendment of a letter of credit||50 EUR (per amendment)|
|Cancellation of a letter of credit before approval||20 EUR|
|Letter of credit advising||0,1% min. 50 EUR, max. 100 EUR|
|Advising an amendment of letter of credit||50 EUR (per amendment)|
|Handling of documents (examination - under a letter of credit nomination)||0,25% min. 250 EUR, max. 1000 EUR|
|Discrepant documents under a letter of credit||80 EUR|