SBLC/LC Trade Services

Trade
Services

Raag InfoTech has partnered with many reputed Banks and NBFCs
(Non – Banking Financial Companies) in the UK to offer the solutions to our customers in need for the LCs / SBLCs discounting. We offer the services at a very competitive pricing and provide the facility in conjunction with the requirements of due diligence by our partners.

How do we help ?

Letter of Credit Discounting Facility is available to authentic beneficiaries to complete their business in terms of order received along with letter of credit. The LC should be “FREELY NEGOTIABLE” to be discounted.The depth and breadth of our Trade Finance solutions coupled with adoption of international best practices, highest standards of service quality and operational excellence helps in servicing the changing needs of our clients across the world.

What is Letter of Credit:

A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase. Due to the nature of international dealings, including factors such as distance, differing laws in each country, and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade.

Discounting of Letter of credit:

It often happens that a seller is in need to seek the payment in advance and the buyer is not able to offer the same. Hence to work around a solution, facilitator offers the facility to negotiate the amount to the seller at a discounted price or in simple terms giving the option of payment in advance to the Seller. This helps both the Seller and the buyer to fulfil their agreed needs.

What is a ‘Standby Letter of Credit – SBLC

A standby letter of credit (SBLC) is a guarantee of payment issued by a bank on behalf of a client that is used as “payment of last resort” should the client fail to fulfil a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions and are proof of a buyer’s credit quality and repayment abilities. The bank issuing the SBLC performs brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then sends notification to the bank of the party requesting the letter of credit (typically a seller or creditor).

Discounting / Lending against SBLC:

The SBLC can be discounted or the funds can be lent against the guarantee issued by the bank in the form of SBLC to the concerned party for the specified tenure as described on the SBLC.

LC discounting is helpful to all the parties in the trade.

  • the seller gets immediate payment for his sale;
  • the buyer receives the goods along with the credit period to pay
  • the bank receives a premium from the buyer when he makes the payment to the bank.

Documents RequiredThe Documents required for discounting Letter of Credit

  • Bills, drawn under irrevocable LC. (Generally, bills backed by revocable LCs are not discounted)
  • Bills drawn should strictly conform to the terms mentioned in Letter of Credit.
  • The bills of exchange need to be related to bonafide trade transactions.
  • Group Company structure
  • Nature of business
  • Transaction snapshot  
  • Last 3 Years company Accounts  
  • Directors and Shareholders profiles
  • Any Document or business plan summarising company profile
  • Previous LC copy (IF any)