What is LC Mergin

Letter of Credit without Full Margin

First of all we try to know what is meaning of "Lc Margin". Actually where letter credit opener will be taken some credit facilities from bank. This criteria method is LC opener keep minimum or maximum bank reserve fund against letter of credit which called "LC Margin". What ever this percentage less than 5% to 100%

The Issuing of Letter of Credit without Full Margin is a type of trade finance service where ABC issues letters of credit without margin or with reduced margin at the request of customers. This service is designed for ABC customers that have been granted credit facilities and entitled to make import and export provided that all goods imported comply with relevant national policies and regulations.

Benefits

This product reduces the occupation of corporate funds and allows for more trade opportunities.

Margin Procedures

1. The customer submits the Application for Irrevocable Letters of Credit/Commitment of the Applicant for Letters of Credit, the import contract, or purchase order, the import approval documents (if required), the approval documents for payment in foreign exchange for import, and filing forms (if required), the agency agreement (if required) and other documents required by ABC. 

2. After reviewing and approving the application, ABC signs with the customer the Contract on Issuing Letters of Credit without Full Margin and issues the letter of credit. 

3. ABC informs the customer of payment/acceptance/payment commitment after reviewing the documents under the letter of credit received. 

4. ABC sends the message of payment/acceptance/payment commitment to the exporter's bank, and the customer pays the amounts due under the letter of credit to ABC upon maturity.

Tips

1. Customers are required to have sufficient outstanding line of credit and good record of contract performance, and to provide sufficient margin and collateral as appropriate. 

2. If the trade contract bears the terms of overage and/or shortage in shipment, customers shall provide sufficient collateral against the upward floating amount. 

3. The payment term shall conform to the sales cycle or processing cycle of the imported goods.

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