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 presentation of stipulated documents in conformity with the terms of the letter of credit.

The advantages of Letters of Credit
For a buyer (importer):
  • 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 requested;
  • A letter of credit provides security to the buyer that all shipment conditions will be met as the seller must fulfil 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.
For a seller (exporter):
  • 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, even before the goods are manufactured, a guarantee that the goods will be paid by the buyer;
  • 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.
Letter of Credit documentary operations performed by             RCB Bank Ltd
  • 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 by other banks or amendments to those letters of credit.

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).

Basic parameters of operations with Letters of Credit
IMPORT LETTERS OF CREDIT
Service Charges
Issue of Letter of Credit on prepaid or cash covered basis 0,083% per month, min. 0,25% or 50 EUR (whichever is higher)
Issue of Letter of Credit within a credit limit 0,15% per month, min. 0,45% or 50 EUR (whichever is higher)
Extension of Letter of Credit on prepaid or cash covered basis 0,083% per month
Extension of Letter of Credit within a credit limit 0,15% per month
Amendment of a Letter of Credit 50 EUR (per amendment)
Acceptance commission of Letter of Credit on prepaid or cash covered basis 0,083% per month, min. 0,25% or 50 EUR (whichever is higher)
Acceptance commission of Letter of Credit within a credit limit 0,15% per month, min. 0,45% or 50 EUR (whichever is higher)
Handling commission (not applicable when Letter of Credit under nomination) 0,25% min. 10 EUR, max. 1000 EUR
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
Payment/ reimbursement fees 50 EUR
Courier charges 35 EUR (for abroad) / 10 EUR (for local)
Postages 2 EUR (for abroad) / 1 EUR (for local)
Evaluation of complicated cases 50 EUR – 250 EUR (Ad-hoc fee)
Swift fee 10 EUR
EXPORT LETTERS OF CREDIT
Service Charges
Letter of Credit advising 0,1% min. 50 EUR, max. 100 EUR
Advising of amendment of Letter of Credit 50 EUR
Handling commission (not applicable when Letter of Credit under nomination) 0,25% min. 10 EUR, max. 1000 EUR
Handling of documents (examination - under a Letter of Credit nomination) 0,25% min. 250 EUR, max. 1000 EUR
Payment / execution commission 0,3% min. 30 EUR, max. 100 EUR
Discrepancy fees 80 EUR
Pre-checking of documents Min. 50 EUR
Reimbursement fees 50 EUR
Courier charges 35 EUR (for abroad) / 10 EUR (for local)
Postages 2 EUR (for abroad) / 1 EUR (for local)
Evaluation of complicated cases 50 EUR – 250 EUR (Ad-hoc fee)
Swift fee 10 EUR
Cancellation commission 25 EUR
Confirmation commission According to country/bank risk, min. 100 EUR