Bank Guarantee Process

Is an Import LC Different from an Export LC? A letter of credit or LC is an affirmation or guarantee given to an exporter that he/she will be compensated fairly for the goods involved in a big transaction. LCs are a common mode of payment generally used for international transactions or foreign exchange. Even though an LC is guaranteed from the importer’s bank, it is different from a bank guarantee. The similarity between a bank guarantee and an LC is that they both are assurances of payment from a financial institution. This assurance stands as a guarantee that the importer will be paying the due amount to the exporter or the beneficiary on time, on the failure of which the financial institution will have to interfere. Here’s where the difference lies between an LC and a bank guarantee. Whereas the main purpose of the LC is to enable the transaction to keep on going ahead, the Bank Guarantee Process involves minimizing the risk if the transaction fails to go ahead as planned. An LC is an essential tool that serves the purpose of facilitating both the exporters and the importers. The role of an import letter of credit is to augment the image of the importer. On the other hand, an export letter of credit diminishes the risk of the loss of the exporter throughout the transaction. But is there really a difference between an import LC and an export LC? Actually, no! Import LC and export LC are both the same document that is used by two different parties at different points in time. When issued by the importer, the document is called the import letter of credit. Once the letter is received by the exporter, he/she completes and updates it with the required documents; it is then called the export letter of credit. So, it is one and the same letter with different perspectives. Contact Information:- Address- 71-75, Shelton Street, London, WC2H 9JQ United Kingdom Phone Number- +66 92 273 1960 (WhatsApp) Email Address- [email protected] Visit Us- https://rnrtradecorp.com/