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Import Letter of Credit
Import Letter of Credit
An Import Letter of Credit is a bank-issued financial tool for importers ensuring accurate receipt of goods and exporter payment upon compliance. It outlines regulations for fulfillment, including shipping criteria and payment conditions. This instrument involves banks, importers, and exporters, providing security and trust in international trade transactions.
Components include:
- Issuer Bank: The bank guaranteeing payment.
- Importer: The buyer of goods.
- Exporter: The seller of goods.
- Beneficiary: The exporter being paid.
- Terms: Conditions for payment, shipment specifics, and documentation.
When the exporter fulfills the terms, the issuer bank releases funds to the exporter. Key documents include the bill of lading, commercial invoice, and packing list. This ensures compliance and reduces risk in global trade logistics.