Letter of credit

Letter of credit is a buyer’s bank obligation to pay the beneficiary at the expense of the applicant the amount in agreed currency on the assumption of the beneficiary’s grant of papers at a stated time, which correspond with the LCs conditions, and execution of other conditions specified in the LCs.

LCs use in foreign-trade activity is recommended in case of:

• lack of information about a partners’ reputation when advanced payments, open account payments or collections seem to be too risky for one of the counterparties; 
• need in additional sureties in the form of a third party (bank) involvement; 
• an unstable economic and/or political situation in the buyer’s country and FX risk and other risks in the seller’s country.

When is an LC needed?

• new supplier or buyer;
• prepayment for delivery items is necessary;
• high risk of buyer's insolvency;
• high risk of seller’s non-fulfilment of obligations;
• maintenance of established conditions regarding quality, terms and similar requirements.

Please pay attention that LC is a complex product, so we do not recommend to use it for small deals.

Advantages of Priorbank’s LCs:

• long term experience of working with the product;
• well-known name in the international banking and financial sphere as well as RZB-Group’s experience;
• wide network of bank’s branches as well as a competitive price of the product;
• experienced and competent staff;
• covering of LC may be used as a deposit with an interest calculation.