Letters of credit

You need to check reliability of your new partner and gain its confidence? You do not want to take the risk of pre-payment, but your partner does not want to ship you goods before their payment? The right solution to assure security of both parties is the letter of credit.

A letter of credit is the bank’s commitment to pay a certain money amount to your exporter (seller) against the documents complying with terms and conditions of the letter of credit. A letters of credit gives your partner a payment guarantee, while you receive the guarantee that the seller will comply with all provisions under your deal.

Letters of credit are particularly important if:

IMPORT LETTER CREDIT OF CREDIT 

If you are a buyer and you need any guarantees of quality and timely supply, we will provide the seller with the Import letter of credit on your behalf. This will include an obligation to make payments within the agreed timescales against the documents which comply with the terms and conditions of the Letter of credit.

	An Import letter of credit will enable you to prove your paying capacity and help you with establishing new trade relations;
	You can be confident that the seller will be paid only after the goods or service is received and documents confirming the deal meet the requirements of the letter of credit.
	We can open for you a letter of credit without a cash cover, applying various types of collateral and more competitive interest rates than in case of usual lending;
	You can get delay of payments under the Letter of credit;
	Since the Letter of credit is a really safe and fast method of obtaining payment, you can negotiate with the Exporter for more favourable terms and conditions of the transaction, e.g., price reduction of goods to be supplied.

How can you get an Import letter of credit?

1.	We will first discuss the prospective deal and assist you in filling in the application form.
2.	You will transfer the amount of the letter of credit (payment for goods) to a special letter of credit account or we will provide you a loan to secure the letter of credit.
3.	After verification of documents and opening of the letter of credit, we will advise the Seller’s bank of the opening.
4.	After expiration of the agreed period we will receive documents from the Seller’s bank confirming shipment of goods according to the contract and check the actual conformity of these documents with the terms and conditions of the letter of credit.
5.	After precision check of the documents you will receive the documents from the Seller’s bank together with a covering letter.

EXPORT LETTER OF CREDIT

If you are a seller and want to get paid for the goods on the spot, we suggest that you use an Export letter of credit.

Export letters of credit have the following advantages:

	You do not have to worry about fulfillment of payment obligations on the part of your buyers – after you have submitted all documents according to the terms and conditions of the letters of credit, we will assume all payment obligations;
	You may achieve more flexible terms of trading operations if you offer the importer the option of delay in payment within the limits of the letter of credit;
	You are able to require the letter of credit confirmation from the exporter’s bank or a third bank, thus receiving extra payment guarantee;
	Within the letter of credit limits you can apply for an advance payment, well as pre- and post-export financing.

Export letter of credit – how to get it?

1.	Your partner-buyer will open a letter of credit in its bank.
2.	Upon receipt of the letter of credit from the Seller’s bank we will notify you of it.
3.	If you agree with the terms and conditions of the letter of credit, you will have to submit shipping documents to the bank within the agreed time period and these documents will comply with the letter of credit terms agreed with the Buyer.
4.	We will thoroughly check the documents for non-conformity or mistakes. The documents should confirm that the goods have been shipped according to the terms and conditions of the letter of credit, they have to be consistent and produced according to the International Chamber of Commerce Regulations "ICC Uniform Customs and Practice for Documentary Credits", Revision 2007, No. 600.
5.	The documents and the covering letter will be delivered to the bank by courier mail (postal expenses are charged according to the Price list).
6.	Within the agreed time period the amount specified in the letter of credit will be credited to the correspondent account of TKB and this amount thereafter will be transferred to your account

There are many forms of letters of credit which are issued depending on the payment type and terms of operation to be funded. To choose the form which would suit you best we should first meet and negotiate your specific deal. We will offer the most effective tool for funding your business.