A letter of credit is a written document issued by a bank (issuing bank) according to the requirements and instructions of the applicant, or on its own initiative, in accordance with the terms of the letter of credit, on the basis of the stipulated documents to the third party (Beneficiary) or its nominated party. That is, a letter of credit is a written document issued by a bank with a conditional promise of payment.
(1) the applicant shall fill in the application in accordance with the contract and pay the deposit or provide other guarantees.
(2) the issuing bank, according to the content of the application, opens a letter of credit to the beneficiary and sends it to the notification Bank of the place where the exporter is located.
(3) the bank of notice shall submit the credit to the beneficiary after the verification of the seal is unmistakable.
(4) the beneficiary agrees that the contents of the letter of credit are in conformity with the contract stipulations, and that they will ship the goods, prepare the documents and draw the bill of exchange according to the stipulations of the credit, and send it to the negotiating bank for negotiation during the validity period of the letter of credit.
(5) the negotiating bank will pay the money to the beneficiary after the documents are checked in accordance with the terms of the letter of credit.
(6) the negotiation of a bill of exchange and a shipping document are sent to the Bank of the certificate or its particular payment line.
(7) after the issuing bank has checked the documents, the payment shall be paid to the negotiating bank.
(8) the issuing bank notifies the applicant of payment for the documents.