Back to Back to Lc

Actually Back to Back LCs is issued on behalf of a customer against the security of Export LCs for procurement of raw materials either locally or from abroad and makes timely shipments. The customer is entitled to open BTB LC 75% to 100% of the FOB value of the Export LC. More than one BTB import LC can be issued against one or more export LCs. 

The Government of Bangladesh has advised a special procedure under which the export oriented garment units are allowed to import their raw materials free of duty under the bonded warehouse arrangement. Back-to-Back letter of credit, in essence, is used to import the inputs generally on credit terms up to 180 days on the strength of the foreign LC received from the overseas buyers.

How Many Type of LC

Types of Letter of Credit (LC) ... They are Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC.

Revocable Lc:

A revocable letter of credit is uncommon because it can be changed or cancelled by the bank that issued it at any time and for any reason. Irrevocable. Anirrevocable letter of credit cannot be changed or cancelled unless everyone involved agrees. Irrevocable letters of credit provide more security than revocable ones.

Irrevocable Lc:

An irrevocable letter of credit is a financial instrument used by banks to guarantee a buyer's obligations to a seller. It is irrevocable because the letter of credit cannot be modified unless all parties agree to the modifications.

Stand By Lc:

A standby letter of credit (SLOC or SBLC), also known as a standby or LOC, is a lender's guarantee of payment to an interested third-party in the event the client defaults on an agreement.

Confirmed Lc:

When an LC is issued, the Issuing Bank may request the Advising Bank to add its confirmation on the LC. By agreeing to add the confirmation, the Advising Bank will become the Confirming Bank and undertakes to pay the beneficiary (seller) if all the terms and conditions of the LC are complied with.

Unconfirmed Lc:

Unconfirmed Letter of Credit. A letter of credit which has not been guaranteed or confirmed by any bank other than the bank that opened it. The advising bank merely informs the beneficiary of the letter of credit terms and conditions.

Revolving lc:

A revolving letter of credit is a special letter of credit type which is structured in a way so that it revolves either in value or in time covering multiple-shipments over a long period of time under single letter of credit.

Red Clause Lc :

A Red Clause Letter of Credit is a specific type of letter of credit in which a buyer extends an unsecured loan to a seller. Red Clause Letters of Credit permit documentary credit beneficiaries to receive funds for any merchandise outlined in the letter of credit.

Sight Lc :

A sight LC causes payment to be made immediately to the beneficiary/seller/exporter upon presentation of the correct documents. A time or date LC specifies when payment is to be made at a future date and upon presentation of the required documents.

Differed payment of lc:

With a regular letter of credit, the seller can request and receive paymentimmediately upon receipt of the required shipping documents. A deferred letter of credit allows the buyer some extra time before payment is required from the importer's bank.