"Issuing letter of credit process" What are the steps in the process of international letter of credit operation？
1. Conclusion of a contract。The buyer and seller stipulate in the trade contract that payment shall be made by documentary credit。
The applicant applies for the opening of the card。If the import and export parties stipulate in the trade contract that payment shall be made by L/C, the importer shall apply to the local bank for L/C within the time limit stipulated in the contract as the applicant for L/C。
The issuing bank shall open and pay the letter of credit。Before issuing a L/C, the issuing bank shall investigate the credit standing of the applicant and examine the application for L/C submitted by the applicant。After approval, a letter of credit may be issued to the beneficiary。
4. The advising Bank notifies the beneficiary。The advising bank should check the letter of credit as soon as it receives itLetter of creditSignature, seal or confidentiality, and review the terms of the credit。If the terms of the letter of credit are complete and clear, the letter of credit shall be promptly delivered to the beneficiary in addition to keeping a copy or photocopy。
5. The beneficiary shall review and amend the letter of credit, stock, transport and presentation documents。Upon receipt of the letter of credit, the beneficiary shall examine it carefully, primarily to see if the terms set forth in the credit are in conformity with those set forth in the sales contract。If any unacceptable content is found, the issuer shall be promptly notified and requested to amend the credit。The beneficiary shall immediately deliver the goods in accordance with the provisions of the letter of credit after the goods have been shipped and all documents stipulated in the letter of credit shall be obtained after the goods have been shipped。The draft and invoice, together with the letter of credit (and if amended, the amendment advice) shall be submitted to the bank specified in the credit or to other banks associated with the credit within the presentation period or validity period specified in the credit。
Vi. The advising bank or negotiating bank examines the documents for negotiation and sends the claim to the issuing bank。Upon receipt of the documents, the negotiating bank shall immediately review the documents in accordance with the provisions of the credit and determine whether the documents are consistent within a maximum of five banking working days on the day after receipt of the documents。The bank examines the documents solely on the basis of the documents themselves to determine whether they constitute a consistent presentation on their face。After negotiation by the negotiating bank, the holder of the bill becomes a bona fide holder。The negotiating bank may send the documents to the issuing bank in accordance with the provisions of the terms of the credit relating to the invoice and claim against the issuing bank or its nominated reimbursing bank。
7. The issuing bank examines the documents for payment and the issuing applicant for payment for redemption。Reimbursement refers to the act of issuing bank or appointing paying bank to pay to negotiating bank。After receiving the documents sent by the negotiating bank, the issuing bank shall repay the negotiable amount to the negotiating bank if it finds that the documents constitute a consistent presentation upon inspection。
Upon payment to the negotiating bank, the issuing bank shall immediately notify the applicant of payment of the redemption note。After receiving the notice, the issuing bank shall check the documents at the issuing bank immediately, and if it is found to be correct, it shall pay the full amount of the payment and related charges to the bank in one lump sum and withdraw the documents。The bank returns the deposit and collateral paid by the issuer at the time of application for collection。At this time, due to the opening of the letter of credit, the creditor and debt relationship between the applicant and the issuing bank will come to an end。