Standby Letter Of Credit
A “STANDBY LETTER OF CREDIT (SLOC OR SBLC) is a legal document that guarantees a bank’s commitment of payment to a seller in the event that the buyer–or the bank’s client–defaults on the agreement. A SBLC helps facilitate international trade between companies that don’t know each other and have different laws and regulations. Although the buyer is certain to receive the goods and the seller certain to receive payment. A standby letter of credit can also be abbreviated SBLC.

How a Standby Letter of Credit Works
A SBLC is most often sought by a business to help it obtain a contract as the bank will have to pay only in a worst-case scenario. Although an SBLC guarantees payment to a seller, the agreement must be followed exactly. For example, a delay in shipping or a misspelling a company’s name can lead to the bank refusing to make the payment.

There are two main types of standby letters of credit:
• A financial SBLC guarantees payment for goods or services as specified by an agreement.

• The performance SBLC, which is less common, guarantees that the client will complete the project outlined in a contract. The bank agrees to reimburse the third party in the event that its client fails to complete the project.

“My Rupee Mantra” experts advise you in drafting, Issuance and execution of SBLC so as to protect the interests of both the parties under International Laws. The experts find the best suited Bank for the client for issuance of letter of credit at competitive terms and conditions. The recipient of a standby letter of credit is assured that it is doing business with an individual or company that is capable of paying the bill or finishing the project.