A letter of credit
is written for and on behalf of the
Bank's customer (the buyer of goods) to the seller of goods (the Beneficiary), confirming to the Beneficiary that a sum of money will be payable against submission of specified documents evidencing supply of goods. Letters of credit are issued either with or without confirmation by our foreign correspondent Banks. In either case, the Bank's liability is similar.
Letter of Guarantee
offered by the Bank is an irrevocable obligation by the Bank to pay a sum of money in the event of non-performance of a contract by a third party. Under the terms of the guarantee the Bank has to pay on first demand provided that the conditions contained in the guarantee are fulfilled. Guarantees are, as a rule, subject to the laws of the country of the issuing Bank unless specified otherwise. Various types of guarantees issued by the Bank are as under:
- Tender bond/bid bond
- Performance bond (or performance guarantee)
- Advance payment guarantee
- Financial guarantee
- Payment guarantee
- Risk participation guarantee
A form of credit whereby the
Bank undertakes to pay against a bill of exchange a certain sum of money at a certain future date. At the maturity of an acceptance, the party that has accepted the acceptance will be obliged to have funds in its account to cover the payment
This extension of credit takes the form of discounting a cheque drawn in favour of the Bank's client, either as payee or holder if the cheque has been so endorsed (Beneficiary), and lodged for collection with the Bank against a suitable letter of request.
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