Letter of Credit Issuance Process - A Global Trade Finance Instrument

A letter of credit is a guarantee issued by a bank to the buyer to pay exporters on time if the buyer is unable to do so. Find how to apply for it with Emerio Banque.

Looking for a letter of credit? This guide covers what an LC is, how it works & its process. Read on to know in detail.

What Is A Letter Of Credit?

To put it simply, a letter of credit is a piece of document issued in an international transaction by an importer’s bank to guarantee an on-time payment to the exporter. Also known as Documentary credit, here the issuing bank promises to pay the exporter in the event the importer fails to pay or perform the Terms & Conditions of an LC agreement.

It acts as proof of the buyer’s creditworthiness to the exporter.

It assures exporters that they would get paid even if the buyer is incapable.

It transfers the risk of payment to the bank.

The issuing bank can deny the payment if anything suspicious is found in the data provided by the buyer.