letter of credit

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letter of credit:

see credit, letter ofcredit, letter of,
commercial instrument through which a bank or other financial institution instructs a correspondent institution to advance a specified sum of money to the bearer.
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credit, letter of,

commercial instrument through which a bank or other financial institution instructs a correspondent institution to advance a specified sum of money to the bearer. The document is called a circular letter of credit when it is not addressed to any particular correspondent. In effect, a letter of credit is a draftdraft,
in banking, order by one party to another party to pay a stated sum to the person or firm in whose favor the draft is made. It is similar in form to the ordinary bank check. Often the drawer and the drawee of a draft are the same person.
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, save that the amount is merely stated as a maximum not to be exceeded. Letters of credit, mainly used by travelers, greatly simplify nonlocal business transactions. Those who issue such letters are usually so well known that any bank will honor the letter upon proper identification. Travelers' checks are a modified form of a letter of credit. They are issued in coupons, upon whose face a value is usually expressed in terms of the currency of a particular country. In the United States they are issued by express companies and banks. Circular letters of credit require that each payment, as it is made, be endorsed by the firm making payment so that other banks may know how much of the total credit has been used.
References in periodicals archive ?
A documentary credit is a bank's commitment to pay the supplier as long as the specified terms and conditions are met.
In fairness, cyberpayments are not as widely used as documentary credits in international trade transactions, but the enormous future potential of cyberpayments should warrant more than one chapter on the subject, which seems like an afterthought.
International Standard Banking Practice for the examination of documents under documentary credits (ISBP) (2007)
The same sources said that commercial banks have been keeping large numbers of documentary credits for several months because they couldn't find a correspondent bank to accept them amid government reticence and search for solutions.
Summary: The External Bank of Algeria (BEA) proposes to raw materials importers, deferred-payment documentary credits and interim credits, under the complementary finance act 2009, the bank CEO Mohamed Loukal told APS on Wednesday.
A United Nations Commission on International Trade Law (UNCITRAL) has endorsed the uniform customs and practice for documentary credits (UCP 600), it has been announced.
He will lead the New York-based creditors' rights team that represents leading financial institutions in a range of concerns, including litigation, loan workouts, bankruptcies, restructurings, debt portfolio acquisitions, international documentary credits, multinational insolvencies, and Foreign Sovereign Immunity Act cases.
They should be familiar not only with the methods for making payments but also understand the practicalities of bills of exchange and documentary credits.
This course highlights major changes being made to the Uniform Customs and Practice for Documentary Credits, International Chamber of Commerce Publication No.
It will extend the reach of ICC banking rules and related services including ICC rules and guidelines on documentary credits, UCP 600 - the most successful privately drafted rules for trade ever developed - and forthcoming Bank Payment Obligation rules on supply chain finance.
Jane Fonda also presented the IDA Career Achievement Award to Haskell Wexler, ASC, an Oscar-winning narrative film cinematographer, who has also compiled some 30-plus documentary credits.