letter of credit

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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.

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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References in periodicals archive ?
The book begins with a useful explanation of why documentary credits are used in international business.
Documentary Credits: Law and Practice is an authoritative text dealing with the law relating to documentary credits in both an English and international context.
Mr O Brien said: The 2013 ISBP is an essential tool for day-to-day documentary credit operations, not only of importance to bankers but also to trading companies.
Services include account and deposit services, loans and advances, bill acceptance and discounting, documentary credit and bank guarantees, remittance and settlement, foreign exchange, derivative products, debit cards and credit cards, and overseas investment services for local residents and enterprises.
These include foreign currency loans and advances, foreign currency guarantees, trade financing, documentary credit & collection, foreign currency deposits and project financing.
In a statement to the Tadawul, the company said 15 per cent of the facilities shall be utilised under Murabaha(funded) and 85 per cent are for multi bonds, documentary credit and cost of finance hedging till expiry of the credit agreement which may be renewed after 31 March 2013.
He is a Contributing Editor to Documentary Credit World and the international banking advisor to the U.
It was organised into four main sessions covering the following issues; Practical Background and Legal Context, Documentary Credit Operational Issues and Challenges, Disagreements and Official Opinions and Forensic Legal Reviews.
Credit facilities comprise of 65 per cent Tawarroq and Murabaha and 35 per cent multi bonds and documentary credit
Balmoral provides private entrepreneurs and public companies M&A, Bank Guarantees, Documentary Credit, International Promissory Notes, and European and Middle East contact financing services by a sister company BCHI in the British Virgin Islands and IR services in Ohio.