All You Need To Know About Bank Comfort Letter

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All You Need To Know About Bank Comfort Letter
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• During trading sometimes there comes a situation
  where your capability to complete the deal must
  be proved to the vendor. This is mainly to reduce
  any risks in the trading valuable products. You
  cant prove this on your own to the business
  partner. At this time, you can get help from the
  bank. One of the banking services includes bank
  comfort letter. You can easily get this letter
  from the bank to help you with the trading.A
  comfort letter is the letter of confirmation that
  is issued by the bank on behalf of their client
  or customer. It serves as an assurance that their
  client has sufficient fund to complete the
  business deal. It is generally provided when a
  huge amount of money is involved in trading or
  business. Mostly the buyer proceeds with the
  trading after getting this assurance. But this
  doesnt imply that the bank assures that the
  payment will be done. This statement will be
  given based on the financial capability of the
  client.

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• How does the bank comfort letter work?As
  already said the comfort letter also known as
  confirmation letter is used to assure the third
  party. Generally, the seller has a doubt whether
  the buyer will have sufficient fund for
  completing the transaction. The bank comfort
  letter assures that the buyer has the financial
  resource to make the payment for this trading.
  Generally, the customer must apply for the letter
  in the bank and wait until it is approved. In the
  bank confirmation letter, the signature of the
  representatives of the bank who are authorized to
  issue it will be present.

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• The letter of confirmation will be issued based
  on the particular transaction only. Hence it cant
  be used for another transaction or project. If
  you wish to start a new purchase or trading then
  you must again apply for the letter of
  confirmation. Since the old letter of comfort
  will be valid for that particular trade only. If
  you are doing international trading, then the
  letter will contain a specific purpose mostly
  since the rules and regulations will vary from
  one country to another.
• When you apply for the letter of confirmation,
  then the bank will perform a proper analysis.
  They will get complete information about the deal
  between the buyer and the seller. If it is
  approved the parties will be informed about it.
  Otherwise, if the letter is rejected then it will
  also be rejected.

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• The buyer needs to submit proper documents to the
  bank if they wish to get this bank comfort
  letter. The letter will be structured in such a
  way that all the legal formalities and the risks
  are added in it. A detailed credit service about
  the client will be included so that the seller
  will be assured that the buyer can meet the
  financial needs.It is again worth to know that
  the letter will not assure the payment but it
  guarantees the stability of the buyer to the
  seller. Next time you get involved in the
  purchase of large commodities, then get this
  confirmation letter to prove your financial
  obligations.

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