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Export documentary letter of credit

It is an irrevocable written commitment by the bank in favour of a supplier of goods or services to pay the amount defined according to the conditions of the letter of credit, provided the letter of credit beneficiary presents identical documents to those required in the letter of credit during its term. In the case of an export documentary letter of credit, the supplier/client or non-client of Raiffeisenbank is the recipient of the payment (beneficiary).

Benefits

  • There are uniform international rules for letter of credit transactions.
  • The bank that issued the letter of credit on the customer's instructions guarantees payment by the buyer.
  • If Raiffeisenbank confirms a letter of credit, this releases the supplier from the risk of non-payment by the customer’s bank, if the letter of credit conditions are met (advantageous in particular for exports to risky territories).
  • It ensures that, after the performance of all the conditions prescribed by the letter of credit, the supplier will receive payment.
  • The option of pre-financing of the letter of credit or subsequent financing of the letter of credit with a deferred due date.
  • The option of assigning the proceeds or part thereof by the supplier to a third party, usually a subcontractor.
  • The option of variable distribution of the payment of banking charges between the trading partners.
  • The option of processing an export letter of credit even for non-clients of Raiffeisenbank

A documentary letter of credit can be used in all situations where documents are expected to be presented in order to guarantee ownership of goods, to document their quantity, quality, etc.

Raiffeisenbank advises a client or non-client (beneficiary) the opening of a letter of credit after receiving it from the issuing bank.

If a letter of credit was issued by a bank from a risky territory, the beneficiary can ask Raiffeisenbank to confirm the letter of credit. Raiffeisenbank therefore guarantees payment under the letter of credit if the letter of credit conditions are met.

 

 

 


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