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Literature Review
Documentary Credit
Documentary Credit or Letter of Credit can be defined as an ‘undertaking’ whereby the buyer’s bank is
committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under
some agreed conditions. Since the agreed conditions include, amongst other things, the presentation of
some specified documents, the letter of credit is called Documentary Letter of Credit. The Uniform
Customs and Practices for Documentary Credit (UCPDC) published by International Chamber of
Commerce (2007) Revision; Publication No. 600 defines Documentary Credit.
“Credit means any arrangement, however named or described, that is irrevocable and thereby
constitute a definite undertaking of the issuing bank to honor a complying presentation.”
Complying presentation means a presentation that is in accordance with the terms and conditions of the
credit ( ISBP-2007 ), the applicable provisions of these rules ( UCP-600) and international standard
banking practice. According to the definition of ‘Credit’, when an issuing bank determines that a
presentation is complying, it must honor.
Honor means,
to pay at sight, if the credit is available by sight payment,
to incur a deferred payment undertaking and pay at maturity if the credit is available by
deferred payment,
to accept a bill of exchange ( draft ) drawn by the beneficiary and pay at maturity if the credit is
available by acceptance.
Import Procedure :
rerequisition
from the Factory
Documentary Credit
Documentary Credit or Letter of Credit can be defined as an ‘undertaking’ whereby the buyer’s bank is
committed (on behalf of the buyer) to place an agreed amount of money at the seller’s disposal under
some agreed conditions. Since the agreed conditions include, amongst other things, the presentation of
some specified documents, the letter of credit is called Documentary Letter of Credit. The Uniform
Customs and Practices for Documentary Credit (UCPDC) published by International Chamber of
Commerce (2007) Revision; Publication No. 600 defines Documentary Credit.
“Credit means any arrangement, however named or described, that is irrevocable and thereby
constitute a definite undertaking of the issuing bank to honor a complying presentation.”
Complying presentation means a presentation that is in accordance with the terms and conditions of the
credit ( ISBP-2007 ), the applicable provisions of these rules ( UCP-600) and international standard
banking practice. According to the definition of ‘Credit’, when an issuing bank determines that a
presentation is complying, it must honor.
Honor means,
to pay at sight, if the credit is available by sight payment,
to incur a deferred payment undertaking and pay at maturity if the credit is available by
deferred payment,
to accept a bill of exchange ( draft ) drawn by the beneficiary and pay at maturity if the credit is
available by acceptance.
Import Procedure :
rerequisition
from the Factory
