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FOR INDIVIDUAL

For Companies

Features

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  • Undertake to make payment to or to the order of a third party (the “Beneficiary”) or to accept and pay bills of exchange (or drafts) drawn by the beneficiary at sight or on a fixed future date.
  • Authorize another bank (normally in the exporters’ country) to effect such payment, or to accept and pay such bills of exchange on a fixed future date
  • Authorize another bank to negotiate against compliant documents
  • Standard Chartered Bank can issue sight or Usance Letters of Credit through its extensive network of Group offices and correspondent banks globally.
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  • Under a Letter of Credit, the payment risk is effectively transferred to Standard Chartered Bank as the Issuing Bank. A customer can therefore negotiate better price discounts with suppliers or request extended credit terms to help improve customer cash flow as the import payment is guaranteed by Standard Chartered Bank upon presentation of compliant documents by the beneficiary.
  • Customer is also assured that payment or acceptance will not be made unless the documents called for under the Letter of Credit and the terms and conditions of the Letter of Credit are strictly complied with
  • Customer maintains control over the transaction through the Letter of Credit mechanism. Customer can, for example, incorporate a latest date for shipment, payment terms and specific documentary requirements, all of which are irrevocable and therefore require the agreement of the Issuing Bank and the Confirming Bank (if any), and beneficiary before such can be revised
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  • A SBLC operates in the likeness of a Bank financial guarantee, with the main differentiating factor being that it is governed by the current version of UCP or ISP98.Functionally, a SBLC is a similar instrument to that of a Letter of Credit in that it serves as an obligation on the part of Standard Chartered Bank to pay a beneficiary based either on their written demand certifying non-fulfillment of contracted terms or against stipulated documents.
  • However, payment under a SBLC is typically triggered by a negative event such as non-performance, whereas payment under a Letter of Credit is typically triggered by shipment of goods. SBLC’s may be used to guarantee delivery of goods on an open account basis, repayment of trade loans, or securing payment for goods and services delivered by third parties.
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A transferable Letter of Credit is one that can be transferred in full or partially by the original beneficiary to one or more second beneficiaries. Such Letters of Credit are usually issued when the ultimate buyer needs a type of commodity or goods but can only buy them through an intermediary because the latter has a relationship or sole distributor rights with the manufacturers or producers of such goods. Under such arrangements the intermediary commits to a small amount of funds to the transaction without divulging data related to the Ultimate Buyer and Ultimate Seller.

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In a revolving Letter of Credit the credit amount can be renewed or reinstated without specific amendments to the Letter of Credit being required. A revolving Letter of Credit can revolve in relation to time or value .If it revolves by time, a Letter of Credit may be available for an agreed value against a predefined number of times – for example, USD100,000 every month for 12 months. If the LC revolves by value, the Letter of Credit amount is usually reinstated after utilization for a potentially unlimited number of times during the validity of the Letter of Credit. Typically, revolving Letters of Credit are used in situations where constant and regular shipments from the same supplier are effected over a given period although it is possible to limit customer exposure at any one time.

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A red clause Letter of Credit facilitates pre-shipment finance for the beneficiary. It is often used to assist suppliers in paying for materials and labour or perhaps an intermediary, who needs financing to conclude a transaction. It is useful in situations where the customer‟s supplier is trusted but has difficulty in sourcing the raw materials or goods unless payment is made in advance. An important point to note is that in the event the customer‟s seller does not perform under the LC, Standard Chartered Bank’s customer, as applicable, would still be liable for settlement of the advanced funds.

Letter of Credit Given by an “Issuing Bank” at the request of it's customer to pay the Beneficiary against stipulated documents.

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