Documentary Letter of Credit 

The Bank's obligation to pay the seller of goods or services a certain amount of money in the timely submission of documents 

Documentary Letter of Credit 

Documentary Letter of Credit

Documentary Letter Of Credit (L/C, DLC) is the Bank's obligation to pay the seller of goods or services a certain amount of money in the timely submission of documents confirming shipment of goods or performance of contractual services.

 

Documentary Letter Of Credit is one of the most important means of financing in the international trade, as the letter of credit is a tool that removes most of risks as from the buyer (importer) and from the seller (exporter).

 

Documentary Letter Of Credit is very flexible and convenient tool of calculations, which have the widest recognition and acceptance in the world.

 

There are the following forms of letter of credit:

  • Revocable Letters of Credit, which can be changed or canceled by the issuing bank without prior notice to the recipient of funds. Revoke of letter of credit does not create any obligation of the issuing bank to the payee. Nominated bank is obligated to make a payment or other operations on a revocable letter of credit, if at the time of their commission they have not received notice of the change of conditions or canceling credit. A letter of credit is revocable if its text does not explicitly state otherwise.
  • Irrevocable letter of credit is a firm obligation of the issuing bank to pay money in order and the terms defined by the conditions of the letter of credit, if the documents provided for by it, submitted to the bank specified in the credit. Irrevocable letter of credit guarantees that the exporter will make payment to the performance of its obligations, even if an importer wants to abandon the deal. Therefore, exporter, performing a special order, for which most likely will not be another buyer, chooses exactly this kind of letter of credit.
  • Irrevocable unconfirmed letter of credit. When making an unconfirmed letter of credit issuing bank, providing a letter of credit, is only party that is responsible for the disbursement to seller. Nominated bank has to pay only after receiving the money from the issuing bank. Nominated bank simply acts on behalf of the bank providing credit, so it does not take any risk.
  • Irrevocable confirmed letter of credit - the obligation of the issuing bank is confirmed by another bank. Confirmation is an additional guarantee of payment from another bank (Bank of the exporter or prime bank).

Bank, confirming letter of credit is committed to pay for documents according to the conditions of the letter of credit if the issuing bank fails to make the payment.

Process & Payment

Below is the normal procedure for the submission and issuance of a Documentary Letter of Credit.

 

Step 1:

Application is made to Bank for opening of a DLC including but not limited to the following:

  1. DLC application form. (Provided by Departament compliance  upon request)
  2. Performa Invoice of Transaction.
  3. Desired verbiage of DLC (If none provided Bank will provide its normal DLC verbiage).
  4. SWIFT code and address of beneficiary bank.
  5. Departament of Compliance doc including but not limited to:
  • Passport copy of applicant
  • Articles of incorporation of applicant company
  • brief summary and / or business plan of underlying transaction

 

Step 2:

  1. Departament of Compliance reviews all documents presented and evaluates acceptability of documents.
  2. Departament compliance  then either approves application or denies and shall inform the applicant of such decision.

 

Step 3:

  1. Departament of Compliance prepares draft of the DLC as it is comfortable to issue and forwards to client for approval.
  2. All drafts shall be in lined with rules and regulations governing the issuance of DLC.

 

Step 4:

  1. The client approves the draft and:
  • Signs a contract agreeing to the terms and conditions of issuance and issuance charges as negotiated.
  • Departament compliance  issues the invoice for the agreed upon charges.

 

Step 5:

  1. Client makes payment of charges as per agreed upon payment structure.
  • Client shall provide TT / Wire copy of payment made to Departamentof Ccompliance   account.
  • Departament of Compliance shall confirm to client credit of funds upon receipt of funds to Bank designated account.

 

Step 6:

  1. The Bank uploads draft to SWIFT system and provides copy to applicant for final approval of message.
  2. Upon approval given by applicant Bank, then releases the SWIFT to beneficiary bank coordinates.

 

Step 7:

  1. Copies of released SWIFT are then forwarded to the client via email or hard copy as requested.
  2. In case the client is represented by an advisor, then it is forwarded to the advisor only.

 

Step 8:

  1. Any amendments to DLC are subject to approval of Bank
  2. The following is the procedure for payment schedule (general terms):
  • Fees are paid before the issuance of each SWIFT message.
  • Departament of Compliance does not engage in JV payment structures and will not issue any message for zero monies paid upfront.
  • The Bank will not accept payment via ICBPO.
  • If Bank fails to deliver the instrument as agreed upon, the Bank shall return the fees paid for that issuance.

All fees shall be agreed upon and stated in a formalized contract.

Important Notice

There are cases where others have pretended to represent and issue instruments in the name of Platinum Invests.

 

Platinum Invests is not responsible for these issuances and bears no responsibility for those that are not authorized directly from Platinum Invests. Clients are urged to verify the authenticity of any documentation before paying fees/commissions. Platinum Invests is not responsible for any fees/commissions not paid directly to Platinum Invests. If you suspect fraudulent activity please contact us immediately.

Direct Communication

 

+34 961318773

project-financing@platinum-invests.eu

compliance@platinum-invests.eu

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