Standby Letter of Credit

What is Standby Letter of Credit?

A standby Letter of Credit (SBLC) is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in

which the bank fulfills payment obligations by the end of the contract if their client cannot.
The standby Letter of Credit is never meant to be used, but prevents contracts from going unfulfilled in the event your company closes down, declares bankruptcy, or is unable to pay for goods or services provided. Standby letters of credit help prove a business’ credit quality and repayment abilities

Types of Standby Letters of Credit

    Performance SBLC
  • Performance standby letters of credit ensure the non-financial contractual obligations (quality of work,
  • amount of work, time, cost, etc.) are performed in a timely and satisfactory manner. If these obligations are not met, the bank will pay the third party in full.
    Financial SBLC
  • Financial standby letters of credit ensure financial contractual obligations are fulfilled. Most SBLCare financial..
  • Financial SBLCare often required when performing international trade or other large purchase contracts under which other forms of payment protections (such as litigation in the event of non-payment) can be difficult to obtain

Who are the parties to the standby Letter of Credit

  • Applicant
  • Issuing bank
  • Advising bankk
  • Confirming bank
  • Beneficiary

How does the standby Letter of Credit works

The standby basically fulfills the same purpose as a bank guarantee, it is payable upon first demand and without

objections or defenses on the basis of the underlying transaction between the applicant and the beneficiary. It is up to the beneficiary to decide whether he may accept a standby.

We offer under standby Letter of Credit

  • Reviewing Standby Letter of Credit terms & conditions as per International Standby Practices (ISP98) and/or Uniform customs practice UCP 600.
  • Providing technical support to advice Standby Letter of Credit.
  • Providing Draft Standby Letter of Credit based on the client requirement of underlying agreement/contract.
  • Removing/ incorporating necessary clauses under Standby Letter of Credit terms & condition which is protecting in getting default of payment/ performance.
  • Preparation of any Beneficiary documents under event of claims
  • Checking documents against Standby Letter of Credit terms and conditions under the case of default of payment/ performance.
  • ACS handles critical step in removing discrepancies appropriately to assist the customers in getting payment on time from the opening bank in case of default.

ACS work flow of Standby Letter of Credit

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