It is a document / written undertaking given by the issuing bank to a beneficiary/seller at the request of the applicant/buyer to pay a stated sum of money against stipulated documents and in compliance with the terms and conditions within a prescribed time limit. It is one of the methods of payment in international trade. The LC-i may be issued under the contract of Wakalah or Murabahah.

Features

• Can be issued either to a local or foreign supplier
• Governed by UCP 600 which is formulated by the International Chamber of Commerce, accepted and recognized worldwide
• Marine Takaful for the LC-i is available if required

Benefits

To the buyer / applicant

• Ability to stipulate the type of documents required as per terms agreed upon sales contract
• Obtain financing to pay the beneficiary
• Fulfill sales contract requirement and maintain good status
• Ability to negotiate favorable terms from the seller
• Issued under UCP 600 which is the internationally recognized rules governing LC-i operations
• Documents presented will be examined by experienced banking personnel
• Payment made upon receipt of compliant documents
• Minimizes language barriers with the foreign seller as the whole transaction will be routed through and handled by the bank

To the seller / beneficiary

• Guaranteed payment upon presentation of compliant documents
• Option to have the bank to confirm the LC-i as an additional security
• Ability to request pre-shipment financing from the bank to purchase or process the goods before shipment
• Option to request the bank to transfer the LC-i to the actual supplier, i.e. trading companies
• Ability to reduce exchange risk
• Ability to reduce or eliminate commercial risks as payment is assured by the bank
• LC-i is issued under UCP 600 which is the internationally recognized rules governing LC-i operations