Letters of Credit (LC) are most widely used financing tool for international trade allowing for effective risk management and overall reduction of transactional costs.
PASHA Bank offers its customers various types of LCs. The Bank issues LC both within its own capabilities, and with the cooperation of the world’s well known, first-class banks. Bank personnel provide complete consulting support with regard to information about LC, and the selection of the type of LC, depending on the customer’s specific needs.
LC is a Bank product ensuring payment of the amount indicated in the letter of credit, to the Seller as per the Buyer's instructions, against the shipment of goods, performance of conditions stipulated in the LC and submission of relevant documents.
Thus, upon the submission of the documents confirming the fulfillment of the LC conditions, the Bank will make the payment to the Seller's account.
Advantages of LC for the Buyer:
- Elimination of payment risk by the Seller to the Buyer
- Payments are made after fulfillment of the Seller's contractual obligations
- Transfer of ownership over shipped goods to the Buyer within the period indicated in the LC and according to other terms
- Control over dates of delivery and documents
Advantages of LC for the Seller:
- Guarantee of payment to the Seller by a party other than the Buyer
- Ability to receive the payment before the goods are handed over to the Buyer