STAND BY LETTER OF CREDIT

STAND BY LETTER OF CREDIT

STAND BY LETTER OF CREDIT
The Stand-By Letter of Credit is a signed agreement whereby MCB Credit & Securities Limited guarantees the payment of a commercial invoice on behalf of its customer vis-à-vis a foreign supplier.

Which companies are concerned?

Whether you are a Sole Proprietorship Company, Common Interest Group or Economic Interest Group, you can be granted this facility.

Principle

Stand-By Letters of Credit are created as a sign of good faith in business transactions. They testify the buyer’s credibility and ability to fulfil any financial engagements vis-à-vis the seller. It guarantees the claims of a creditor vis-à-vis a debtor in an event of contractual noncompliance with regard to delivery of goods, service provision, or payment on an agreed date or repayment of a loan on a due date.

Duration 

The duration of a Stand-By Letters of Credit depends on the purpose of the guarantee though it generally runs for 1 year renewable.

How to obtain this facility

Advantages
A Stand By Letters of Credit is a guarantee against defaults by business partners:

  • To the exporter: It guarantees the payment for his business operations
  • To the importer: It enables him collect goods without necessarily paying for them immediately.