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Yield 4 Finance > Our Services > Stand By Letter Of Credit

Standby Letter Of Credit

A guarantee issued by a bank or a financial institution to pay a beneficiary on a client’s behalf in a situation where the applicant defaults, is known as a standby letter of credit. This instrument was developed due to legal limitations imposed by US regulators on the bank’s authority to issue guarantees.

A standby letter of credit is considered highly suitable for a wide range of secure payments, making it highly a flexible tool. Most commonly, it is used for international trade purposes to provide assurance to the beneficiary that payment will be made regardless of circumstances. however, there are quite a few complexities involved in a standby letter of credit. Standby letter of credit, making it advisable to consult with an expert in case complete information is not available regarding the procedure.

 

There are certain types of a standby letter of credit which are mentioned below:

  • A direct-pay standby
  • A performance standby
  • A bid-bond or tender-bond standby
  • An advance-payment standby
  • A financial standby
  • A counter standby
  • A commercial standby
  • An insurance standby

Issuers for SBLC

  • BANCO Micro Capital
  • Acumen Bank
  • United Trust Bank
  • UOB Global Capital Finance

Procedure

Issuance Procedure:

We need the following documents/ information for finalising the draft –

  1. Filled in application form
  2. Verbiage required in the instrument for SBLC & BG / Pro-Forma Invoice for DLC
  3. Trade license of your company
  4. Share Holders List
  5. Passport copy of main applicant
  6. Last Three years audited balance sheet
  7. Last Six months latest bank statements

 

Step-wise

  1. After acquiring all the pertinent documents and information, we will select the issuing bank or financial institution and provide a draft for your review.
  2. Upon receiving the draft of the instrument, you must thoroughly review it with all concerned parties. if any amendments are needed, we can revise it accordingly, subject to the issuing bank’s policy. Once the draft is approved, send us a copy of the draft with your signature and approval stamp.
  3. we will then raise the invoice for the agreed charges and you will make the payment against the invoice.
  4. As soon as we receive the payment for the invoice, the issuer will issue and relay the instrument after the documentation is completed.
  5. Simultaneously, we will send you the issued copy via email for your reference and records.

Note: The charges will depend on the value of the Financial Instrument, Tenure, and Issuing Bank / Financial Institution.

Application Form

Sr. No. Title Download
1. SBLC Application Form

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