Letters Of Credit (LC) / Documentary Credits

LCs are written undertaking issued by NIB Ltd, on behalf of a buyer, to the seller, to pay for goods or services. The seller must present documents which comply with the terms and conditions of the LC to the bank for payments.

  • LC can either be Import or Export LC.
  • LC guarantees payment from buyer to seller.
  • It is mostly irrevocable.
  • It is an insurance contract for both parties involved to eliminate credit risk.
  • It also clears up payment delays.
  • Provision of Legal Protection under Uniform Customs and Practice (UCP) 600.
  • It assures expert examination of documents.
  • Title documents are controlled by the bank.
  • LC is expensive compared to the other methods.
    • There is the risk that the buyer’s bank may be obliged to pay on due date upon presentation of documentation which may misrepresent the actual nature of the goods shipped.
  • Offer degree of safety when importer or exporter are in untested business relationship.
  • Quick and more secure means of payment for seller.
  • Customers have access to foreign currency at very competitive rates.
  • The customer/buyer lowers the risk of paying for substandard goods.
  • Facilitating Financing.
    • The buyer also relies on the LC to place discipline on the supplier for timely shipment and appropriate documentation.
    • Importers
    • Exporters
    • Customer’s request/Complete our LC forms.
    • Attach your Proforma Invoice and Import Declaration Form (IDF).
    • NB: Customs Clearing Documents (Bill of Entry) to be submitted after goods cleared.
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