Knowledge of letters of credit, what are the characteristics of letters of credit?

1. A letter of credit is a self-contained document. The letter of credit is not attached to the sales contract, and the bank emphasizes the certification of the letter of credit and the written form of the separation of the letter of credit from the basic ** when reviewing the documents;

2. The letter of credit is a pure document business. The letter of credit is a voucher payment, not the goods. As long as the documents match, the issuing bank should pay unconditionally;

3. The issuing bank bears the primary responsibility for paymentThe letter of credit is a kind of bank trust, which is a kind of guarantee document of the bank, and the issuing bank has the primary responsibility for payment.

There are three characteristics of a letter of credit:

1. Under the condition of L/C payment, the issuing bank is the first payer. Therefore, L/C payment is a kind of bank credit.

2. The letter of credit is a self-contained document independent of the sales contract.

3. The payment under the L/C is a kind of purchase and sale of documents: as long as the documents submitted by the exporter after delivery are consistent with the terms of the L/C, "the documents are consistent, the documents are consistent", the bank will guarantee to pay the exporter. The importer obtains a document representing the goods after payment.

L/C refers to the payment commitment issued by the bank in accordance with the application of the purchaser in the purchase and sale contract in the domestic economic activities with the documents that meet the terms of the L/C. According to the letter of credit business links involved between the buyer and the seller, it can be divided into buyer's letter of credit and seller's letter of credit.

The general procedure for payment by letter of credit is:

1. The parties to the import and export shall clearly stipulate in the sales contract that the payment shall be made by letter of credit.

2. The importer shall submit an application for issuance of the certificate to the bank where it is located, fill in the application form for the issuance of the land certificate, and pay a certain deposit or provide other guarantees, and ask the bank (issuing bank) to issue the letter of credit to the exporter.

3. The issuing bank shall issue a letter of credit with the exporter as the beneficiary according to the content of the application, and notify the exporter of the letter of credit through its ** bank or correspondent bank (collectively referred to as the advising bank) where the exporter is located.

4. After the exporter ships the goods and obtains the shipping documents required by the L/C, he shall negotiate and pay the payment to the bank where he is located (which can be the advising bank or other banks) according to the provisions of the L/C. (5) After the negotiating bank negotiates the payment, the negotiating bank shall indicate the negotiated amount on the back of the L/C.

Key service features include:

1. Domestic L/C is an off-balance sheet business, which is conducive to reducing the buyer's capital occupation.

2. The buyer can use the deferred letter of credit settlement, or can apply for the buyer's financing business such as bill billing, so as to alleviate the pressure of insufficient liquidity.

3. With the domestic L/C received, the seller can apply to the bank for domestic L/C packaging loan and other financing business to accelerate capital turnover.

L/C at sight also has L/C (L-C) and T/T claim terms respectively. The L/C means that the issuing bank or the paying bank will pay the payment immediately when it receives the money and documents that meet the requirements of the L/C, and the issuing party also needs to pay the redemption bill to the issuing bank immediately after the L/C arrives.

The credit of the telegraphic transfer claim clause means that the issuing bank gives the right to pay for the document to the negotiating bank, and if the negotiating bank examines the document correctly, when paying for the goods to the beneficiary, it will make a claim by telegram or telex to the issuing bank or the payment bank designated for the sale of the difficulty, and the issuing bank or the designated payment bank will immediately repay the payment to the negotiating bank by wire transfer after receiving the information. Its characteristic is that it is faster than the ordinary L/C at sight, generally only two to three days, and the payment may be received on the same day when it is good.

Characteristics of L/C at sight:

1. It is characterized by the safe and rapid collection of foreign exchange by the beneficiary, which is conducive to the remittance of funds;

2. That is, the letter of credit stipulates that the beneficiary issues the L/C at sight. In addition, the L/C stipulates that the beneficiary is exempted from the right to issue a bill of exchange, and the L/C can request immediate payment from the bank on the basis of the shipping documents, which is also a L/C at sight;

3. The payment time of L/C at sight is: within 5 working days after the bank receives the documents.

The validity period of the letter of credit needs to be negotiated with the issuer. Generally speaking, the validity period of the letter of credit is between 1-3 months, but depending on the time required to prepare the goods, most issuers (buyers) will not issue letters of credit with a validity period of too long. Generally, the payer of the letter of credit will pay about 5 days after the bank receives the certificate, and the validity period of the L/C at sight is generally 1-3 months, and the time for the other party's bank to remit to the company's book is generally 2-3 working days.

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The characteristics of the letter of credit are as follows:

The letter of credit is issued by the bank, so the bank uses its own credit as a guarantee; That is to say, after the bank issues the L/C, the actual payer is the bank.

Although a letter of credit is issued on the basis of a contract, it is an independent contract outside the contract and is therefore not bound by the contract. A letter of credit is a document for sale, regardless of the state of the goods; In other words, the letter of credit is only responsible for the documents, and does not care about anything else.

Types of letters of credit

1. Documentary credit: It is a letter of credit that pays with a documentary draft or only a document. The vast majority of letters of credit used in international** settlements are documentary credits.

2. Bill of credit: It is a letter of credit for payment by bill of exchange without accompanying documents.

3. Revocable letter of credit (revocablecredit): refers to the letter of credit that the issuing bank has the right to revoke at any time without the consent of the beneficiary.

4. Irrevocable letter of credit: refers to the letter of credit that cannot be unilaterally modified or revoked by the issuing bank without the consent of all parties involved in the letter of credit within the validity period once the letter of credit is issued. This type of letter of credit is by no means the most used in the world.

(1) A letter of credit is a type of bank credit. L/C payment is a kind of bank credit, which is guaranteed by the issuing bank to make a commitment with its own credit.

2) A letter of credit is a document business. Under the letter of credit, the principle of payment by 10 vouchers is implemented.

3) L/C 10 is a self-contained legal document independent of other contracts.

1. The letter of credit is a self-contained document. The letter of credit is not attached to the sales contract, and the bank emphasizes the written certification of the separation of the letter of credit and the basic ** when reexamining the document;

2. The letter of credit is a simple document business. The letter of credit is a voucher payment, not the goods. As long as the documents match, the issuing bank should pay unconditionally;

3. The issuing bank shall be responsible for the primary payment. A letter of credit is a kind of bank credit, it is a kind of guarantee document of the bank, and the issuing bank has the primary responsibility for payment.