The PJSCB «Ravnaq bank» issues the documentary letters of credit for foreign trade contracts with the purpose of minimization of risks on nonfulfillment of obligations by foreign partners on supply of goods and/or implementation of works (services).
What is the Letter of credit?
Letter of credit is an obligation of the bank that provided the Letter of credit (Bank-issuer) on behalf of Purchaser to pay to the Vendor the agreed amount providing the submission of documents mentioned in the Letter of credit by the Vendor. The Bank issues the Letter of credit based on the Purchaser’s procedures (importer) developed in compliance with the conditions under the agreement. Both the importer and exporter shall take into consideration, that the Letters of credit represent a deal, separate from the Purchase-Sale Contract or other agreements, they were based on.
Advantages of making settlements by Documentary Letters of Credits:
- Documentary Letter of Credit helps Importer significantly to decline the risk of non-fulfillment of obligations on supply by the Vendor.
- Letter of credit ensures the payment will be made only after submission of documents certifying the shipment of goods.
- Availability of Letter of credit allows completely or partially to avoid the prepayment.
- Payment warranty upon the submission of documents, specified in Letter of credit.
- Decrease of production risk, first of all, in regard to those, when the Vendor cancels or changes the order.
- Opportunity of making the schedule of supply taking into account its own interests.
- The Vendor may not refuse the payment in case of any claims towards to the good.