Documentary letter of credit
Documentary letters of credit are the most reliable way to settle in international trade for both importers and exporters of goods.
A documentary letter of credit is the obligation of the bank that opened the letter of credit (the issuing bank) on behalf of the buyer to pay the agreed amount to the seller, subject to the provision of the documents specified in the letter of credit to the seller.
The bank opens a letter of credit on the basis of instructions from the buyer (importer), drawn up in accordance with the terms of the contract. It is important for both the importer and the exporter of the goods to consider that letters of credit are a transaction separate from the sales contract or other agreements on which they are based. The obligations of the bank to execute the letter of credit are recorded in the text of the letter of credit itself.
The principle of operation of the documentary letter of credit
- The exporter and the importer of the goods enter into an agreement.
- The importer of goods applies for opening a letter of credit to the issuing bank.
- The issuing bank issues a letter of credit for the advising bank. The advising bank makes an advising letter of credit for the exporter.
- The exporter sends the goods to the importer, and the documents to the advising bank.
- The advising bank sends the documents to the issuing bank.
- The issuing bank makes the payment to the advising bank. The advising bank makes the payment to the exporter.
- The issuing bank sends the documents to the customer - the importer of the goods.
|Import letters of credit|
|Preliminary advice of a letter of credit||210,000 sum|
|Opening of a letter of credit||0.5% of the amount, minimum 420,000 sums, maximum 8,500,000 sums|
|Increasing the amount of the letter of credit||0.25% of the amount of the increase, minimum 420,000 soums, maximum 2,100,000 sums|
|Other changes in the terms of the letter of credit||210,000 sums|
|Verification of documents under letter of credit||210,000 sums|
|Payment under a letter of credit (charged if, in accordance with the terms of the letter of credit, PJSCB Orient Finans is a performing bank)||0.25% of the amount, minimum 80,000 soums, maximum 4,200,000 soums|
|Commission for discrepancies in the documents||50 USD (charged from the representing party) for each document|
|Conducting additional correspondence with foreign banks on the initiative and according to the client's request.||84,000 sums are charged for each request + commission of a foreign bank|
|With the provision of coverage in the currency of the letter of credit||0.25% of the amount, a minimum of 125,000 soums, a maximum of 4,200,000 sums|
|Export Letters of Credit|
|Preliminary advising a letter of credit||125,000 sums|
|Advising a letter of credit||250,000 sums|
|Advising of changes in terms of a letter of credit||105,000 sums|
|Confirmation of the letter of credit|
|With coverage||0.5% of the amount, a minimum of 315,000 sums, a maximum of 2,100,000 sums|
|Payment under a letter of credit (charged if, in accordance with the terms of the letter of credit, PJSCB Orient Finans is a performing bank)||0.1% of the amount, a minimum of 105,000 soums, a maximum of 420,000 sums|
|Commission for discrepancies in documents (charged if, in accordance with the terms of the letter of credit, Oriental Finans PJSCB is the executing bank)||90,000 sums|
|Verification of documents under letter of credit|
|If Orient Finans PJSCB is a performing bank||125,000 sums|
If Orient Finans PJSCB is not a performing bank
|Negotiation and discounting on request||By agreement|
|Conducting additional correspondence with foreign banks on the initiative and according to the client's request||85,000 soums are charged for each request + commission of a foreign bank|
|Issuance of documents against payment and / or acceptance of a bill||105,000 sums|
|Payment for collection||0.2% of the amount, minimum 40,000 sums, maximum 4,200,000 sums|
|Return of unpaid documents||80,000 sums|
|Change of conditions or cancellation of collection||80,000 sums|