Buyer/Seller - Details

    What is Foreign LC discounting

    LC Discounting is a short-term credit facility offered by a bank to an exporter in exchange for an accepted letter of credit (LC). Upon due diligence, the seller/exporter bank purchase the letter of credit and discounts 90-100 percent of the amount, the discounting happens on the limit available with the LC issuing bank. Due to the low cost of this product, it can be borne by either the exporter or the importer, depending on the terms and circumstances agreed upon in the letter of credit.

    How Does it Work?


    1. Buyer Applies for LC
    2. Buyer Bank issues LC
    3. Seller Bank Advises the LC
    4. Exporter Dispatches Goods to Importer
    5. Exporter submits the transportation documents to the discounting bank through his bank.
    6. Importer accepts documents and notification gets sent to seller’s bank by Importers bank.
    7. LC gets discounted, and funds get credited upon acceptance.