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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 was developed as a consequence of legal limitation put by the US regulator on the bank’s authority for issuing guarantees.

A standby letter of credit is considered quite suitable for a wide range of secure payments making it quite a flexible tool. Most commonly, it is used for international trade purposes for providing assurance to the party that it will receive the payment whatever the case it. Having said this, there are quite a few complexities involved in a standby letter of credit. This suggests that it is necessary to have a consultation 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

  • Sigma Financial Solutions
  • Micro Capitals Bank
  • Acumen Bank
  • United Trust Bank

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 above documents / information, we will select the issuing bank / financial institution and finalise the draft for your review.
  2. Upon receiving the draft copy of the instrument, you must thoroughly review the draft for any corrections, additions or removal of information. Should there be any amendments, we can amend the draft accordingly to match your preferences. Once the draft is approved, you will need to send us a copy of the draft with sign and stamp on it as your approval.
  3. We will raise the invoice for the agreed charges (charges include margin money, processing fee and professional charges) and you will make the remittance against the invoice.
  4. Only after we receive the payment for the raised invoice, the Issuing Bank / Financial Institution will issue and relay the instrument through swift within 48-96 hours after remittance.
  5. Simultaneously we will send you the issued copy through email for your reference and record.

 

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

Application Form

Sr. No. Title Download
1. SBLC Application Form

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