Letter of Credit (L/C)
Name
Letter of Credit (L/C)
Introduction
A Letter of Credit (L/C) is a payment commitment from Bank of China (Thai) Public Company Limited (BOCT) to the foreign importer. BOCT will fulfill its payment obligation when the conditions specified in the L/C are met.
Features
- Opening an L/C can improve your bargaining position in a negotiation by providing a conditional payment commitment in addition to commercial credit, allowing you to negotiate better prices for your goods.
- Using an L/C provides a warranty for your cargo as bank credit enhances commercial credit through the documents and terms.
- Importers using L/C with credit limits can minimize fund occupation between L/C issuance and payment, reducing costs.
Charges
Please refer to standard rates released by BOCT via: https://www.bankofchina.co.th/en-th/service/information/service-rates-and-tariffs/service-charges-for-import.html
Our services are suitable for:
- Importers and exporters who want to enhance their trade credit by mutually appointing each other's business activities.
- Importers dealing with commodities in a seller's market, where exporters insist on L/C settlement.
Required Documents:
- Application for irrevocable documentary credit
- Supporting Document (Sale contract, Purchase Oder, Performa Invoice)
Process
1. Importer's Credit Line: In order to conduct business with BOCT, you must have a credit line established and open an account with the bank.
2. L/C Application and Supporting Documents: The importer submits an application along with the required supporting documents to BOCT. The bank then examines and approves the Letter of Credit (L/C) based on the importer's margin or credit line before issuing the L/C.
3. The exporter prepares and ships the goods: in accordance with the relevant L/C clauses after being advised of the L/C.
4. The exporter presents the documents required by the L/C, and the presenting bank mails the documents to BOCT to request payment or acceptance.
5. Receipt of documents under L/C: Upon receipt of the full set of complying original documents, BOCT makes the payment / acceptance.