Letter of Credit

1. Product Definition

The import L/C is a kind of payment commitment that Bank of Shaoxing makes to a foreign exporter upon the application of an importer and with which the Bank promises to perform the payment obligation to the exporter if all terms and conditions specified in the L/C are met.

2. Service Advantages

1. Improving your negotiation position. To open a L/C, it is equivalent to provide a conditional payment commitment to the exporter in addition to commercial credit. With your credit enhanced, you can bargain a more reasonable price for the goods concerned based on the L/C;
2. Reducing your trade risks. Changing commercial credit into bank credit gives more guarantee to the trading activities.

3. Applicable Scope.

1. The exporter requires settlement by way of L/C;
2. Both the importer and exporter hope to take the bank credit as the credit intermediary for commercial transactions;
3. Both the importer and exporter hope to solve the problem of capital tie-up with the trade financing offered by a bank by way of L/C settlement.

4. Business Procedures

1. Presenting of documents. The customer presents relevant documents to the Bank;
2. Examination and delivery of documents. After checking relevant documents against the “Liaison Sheet for Documents Presentation by the Customer” and ensuring that they are correct, the Bank will, according to the collection instruction of the exporter, deliver the documents to the designated collecting bank, which will then advice the importer to make payment and acceptance to take such documents;
3. Receipt and transfer of exchange. After receiving the exchange, Bank of Shaoxing will transfer the funds into the relevant account specified by the exporter and go through relevant formalities for verification and writing-off of export proceeds.