Letter of Credit

1. Opening procedure

  • L/C service can be opened at the bank only after opening a corporate account with a Singaporean bank.
  • The opening procedure occurs between the importers (L/C issuers), exporters (beneficiaries), opening banks and purchasing banks
  • Contract (L/C issue agreement) - Application for opening (application submission) - Deposit of mortgage - Open (open and forward of L/C)

2. Function and effect of L/C

  • Function
    • Means of Settlement
    • Credit Facility
  • Beneficiary
    • Guaranteed collection of the price of exports with bank commitment, immediate collection of the price of exports after shipment, and benefits from the trade loan.
  • Applicant
    • Credit payment, guarantee of clear conditions, and predictions of shipments and arrival times of goods

3. Transaction Procedure

  • Conclusion of Contract
  • Application for opening L/C
  • Opening and sending L/C
  • Notice of L/V arrival
  • Shipping
  • Apply for purchase after issuing the bill of exchange
  • Payment
  • Send the bill of exchange and shipping documents
  • Notice of shipment document arrival
  • Bill of exchange payment 
  • Collect on delivery payment