Standby Letters of Credit are often used in international trade transactions, such as the purchase of goods from another country. The seller will ask for a Standby Letter of Credit, which can be cashed-in on demand if the buyer defaults on its obligations, or fails to make payment by the date specified in the contract.
The Standby Letter of Credit is the bank's written obligation/payment warranty, issued to the beneficiary. In the case that the applicant does not fulfill the terms under the Standby Letters of Credit, the bank will reimburse the beneficiary upon receipt of their written request.
Use of Standby Letter of Credit is an effective risk-reduction tool for the buyer, the seller and other parties involved in international trade operations.
Despite its similar structure to LC, the Standby Letter of Credit is more like a Bank Guarantee, as it is not a form of payment but a risk-management instrument.
PASHA Bank offers its customers Standby Letter of Credits both within its own capabilities and in cooperation with first-class international banks. The Bank personnel provide complete consulting support pertaining to information about Standby Letters of Credit depending on the customer’s needs.