Letter of credit is a written commitment

Letter of credit is a written commitment issued by a bank (called the source) at the request of the buyer (applicant or command) in favor of the seller (beneficiary). The Bank is committed to meeting in which a specified amount during a certain period when the seller gave Doc Item conform to the Help accreditation requirements. It may be the Bank's commitment to fulfill in cash or accept a bill of exchange.
Secondly: the importance of the documentary credit
And use the letter of credit in financing foreign trade, which represents in our time frame has been accepted by the other parties to entrants in the field of international trade and preserves the interests of these parties are all exporters and importers.
For the source, have a warranty - by letter of credit - that he would be arrested the value of goods which have been contracted for export and that upon the filing of documents and goods are shipped to the bank, which has let him think that the receipt of credit.
For the importer, it also ensures that the light of the adoption of the Bank will not pay the value of the goods contracted to be imported only with the shipment of the goods and documents are updated to the conditions contained in the letter of credit open to him.
Third: the parties to a documentary credit
Participate in the documentary credit four parties, namely:
Buyer: who is required to open the credit, and have to rely in the form of a contract between him and the issuing bank. Includes all the points requested by the importer from the source.
The issuing bank: The bank that provides the buyer's request to open adoption, where the study request. In the case of approval and the buyer's consent to the terms of the Bank, the opening of credit and sends it either directly to the beneficiary in the case of simple dependence, or one of its correspondents in the country of the seller in the case of post-Thani in the process of bank letter of credit.