Documentary business and guarantees

Letter of credit

The documentary letter of credit is an instrument of payment and collateral. In banking practice, the documentary letter of credit is the most frequently used banking product in international transactions.

By issuing a letter of credit, the issuing bank accepts, upon the order of its client, the irrevocable obligation to pay – negotiate the submitted documents to the benefit of the user of the letter of credit, on condition the submitted documents regarding the export performed are in accordance with the foreseen terms previously laid out in the text of the letter of credit.

This instrument provides security for both the buyer of the goods and/or services, as well as for the seller.

Benefits for the buyer: receipt of goods as contracted, free of risk to pay for something in advance which was not even seen.

Benefits for the seller: that the delivered goods will be paid if the instructions and terms of the letter of credit are followed through. This instrument is subject to the most widely accepted rules and practices (Rules UCP 600, established by the International Chamber of Commerce in Paris and verified by almost all the countries in the world).

Documentary Business and Guarantees Department

+381 11 220 77 85
+381 11 220 77 87
+381 11 220 77 83

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