Letter of credit
Letter of credit is – double bond issued by the bank by the order of customer to pay to the beneficiary (seller of the good) an amount set in the letter of credit upon submission of provided pack of documents on goods dispatch by set term.
Stages of settlement of account by letter of credit.
- Signing of contract, which mention that the parties will use the settlement of accounts by letter of credit;
- The Buyer submits an application for opening of letter of credit with exact indication of its condition to his bank;
- Opening of letter of credit by the Buyer’s bank (issuing bank, designated bank) and its transmission to the exporter (beneficiary) through the bank, as a rule servicing the beneficiary, which (the Bank) informs (advices) of the last one on opening of letter of credit;
- Checking of authenticity of letter of credit and notification of the Seller about opening of the letter of credit (advising) by the Seller’s Bank (advising bank);
- Checking by the Seller (beneficiary) of letter of credit for it compliance with conditions of Contract, and in case of confirmation, shipping of goods to the Buyer within set period of time;
- Obtaining of transport (and other required by the conditions of letter of credit) documents from the transporter by beneficiary;
- Submission of shipping documents obtained by the beneficiary from the transporter to its bank for obtaining of payment;
- Checking by the Exporter’s Bank of documents obtained from Beneficiary and sending to the issuing bank for the payment, acceptance (agreement for payment or guarantee of payment) or negotiation (payment);
- Checking by the issuing bank of obtained documents and (in case of compliance with all conditions of letter of credit) transfer of payment amount to the exporter. Obtaining of shipping documents by the Buyer from the issuing bank and taking possession of the goods.
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1 |
Import letter of credit |
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Name of service |
Amount of fee |
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1.1. |
Commission of opening of letter of credit (% of amount of letter of credit) |
In case of provision of 100% cash cover |
0.5% of amount, minimum fee – 100$, maximum – by agreement |
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In case of provision of other guarantee |
2% of amount, minimum fee – 200$, maximum – by agreement |
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1.2 |
Acceptance of letter of credit |
Bye agreement, minimum - 100$ |
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1.3 |
Changing the conditions of letter of credit |
USD 100 per each change |
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1.4 |
Acceptance, checking and sending the documents |
100$ |
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1.5 |
Fee for differences revealed in checking of pack of documents |
USD 100 |
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1.6 |
Fee for making payment for covered letter of credit |
0.5% of amount, minimum fee – 100$ |
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1.7 |
Fee for making payment for not covered letter of credit from the Bank’s funds (by decision of Bank) |
1% of amount, minimum fee – 100$ |
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1.8 |
Acceptance of bill of exchange |
By agreement |
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1.9 |
Making requests related to import letter of credit |
USD 50 |
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2 |
Export letter of credit |
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2.1 |
Preliminary advising |
25 долларов США |
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2.2 |
Advising of export letter of credit |
0,1% of amount, minimum fee - 100$, maximum - 500$ |
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2.3 |
Advising of amendments to letter of credit |
50$ for each change |
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2.4 |
Confirmation/Acceptance of bill of exchange/Negotiation of bills |
By agreement |
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2.5 |
Fee for checking and preparation of documents for sending to designated bank |
100$ + actual postabge expenses |
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2.6 |
Return of documents provided with differences or request to the bank of order maker for letter of credit for agreement to accept such documents |
USD 100 |
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2.7 |
Making requests related to export letter of credit |
USD 50 |
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* Minimum amount of the fee is applied only iif nominal amount of fee is less than minimum amount of fee |
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