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Letter of credit is an assurance given by the buyers bank to remit the amount to the seller through sellers bank on maturity, as per the terms and conditions of document based on the contractual agreement between buyer and seller. Now in simple words, If LC opened on your name, you will receive amount though the buyers bank on the agreed time. All Letter of Credits for export import trade is handled under the guidelines of Uniform Customs and Pracice of Documentary Credit of International Chamber of Commerce (UCP 600).
In other word's A letter from a bank guaranteeing that a buyer's payment to a seller will
be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
5. Make shorter the period for shipment of goods. 6. Increase the amount of the cover or percentage for which insurance cover must be effected. 7. Substitute the name of the applicant (the middleman) for that of the first beneficiary (the buyer).