What Is Standby Letter Of Credit And Its Various Benefits

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Standby Letter Of Credit What Is It? And Its
Benefits
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• The SBLC is a bank guarantee that it is used by
  exporters to secure the execution of a contract.
• It is mainly used when making international
  transactions. It is a term widely used to secure
  payments in national and international trade.
• It has lot of advantages and some of them as
  listed below
• Standby letter of credit gives the issuing bank
  to stay independent from any kind of obligations
  and disputes arising between the partners.

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• In order to pay the full amount the issuing bank
  only need to check if the documents submitted by
  the beneficiary meet with the terms and
  conditions specified in the standby letter of
  credit.
• SBLC letter of credit is very beneficial to
  seller as in case of any disputes between the
  trading parties the seller can withdraw the fund
  according to the terms and conditions of letter
  of credit and goes to court later to resolve
  their dispute.

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• The letter of credit can be quickly executed. To
  receive the full payment from the bank, the
  seller has to present the proof of material type
  and quantity along with the shipping documents
  which support claim of shipping the good.
• And after the issuing bank verified all of these
  documents, the seller will receive the payment
  instantly.
• A standby letter of credit gives guarantee to the
  seller of receiving the full payment in a certain
  time.

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• Another advantage of standby letter of credit is
  it gives ability to customize from one
  transaction to another. It is highly
  customizable.
• In the letter of credit both of the trading
  partner can put their required terms and
  condition and make it a mutually exclusive list
  of clauses.
• Establishing a new trade relationship or transact
  with unknown partners become easy With the help
  of SBLC letter of credit. It also provides huge
  help to expand ones business to new area quickly.

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• The standby letter of credit is a very safe way
  for seller to receive payment if there is a
  chance of buyer going bankrupt.
• In other words a standby letter of credit makes
  the seller insulates from the buyers business
  risk.

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