Letter of Credit
This is usually an undertaking issued by FNB Botswana on behalf of the importer/exporter to pay the beneficiary the value of the letter of credit - provided that the terms and conditions have been fulfilled. Letter of Credit is also known as Documentary Credit.
Why you need this
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It's secure
Offers the exporter and importer maximum security
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It's insured
Includes insurance - both the exporter and the importer are covered
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It's binding
It's a binding undertaking by the bank to pay a sum of money on behalf of the importer/exporter. The payment is conditional on compliance of documents from the exporter through their bankers.
What you can do with this
Eliminate foreseeable risk
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Assure the importer
The importer is assured that the correct goods are shipped.
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Ensure delivery
The exporter is sure of payment upon receipt of goods by the importer, provided the terms and conditions are fulfilled.
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Reduce the risk
It removes many of the financial risks from Trade & Working Capital Division - the only remaining risk is that of the financial standing of the bank and the stability of the country where the bank resides.
What it costs
Working for you
- An advising fee will be charged by the bank informing you that an LC was received in your favour.
- Payment commission: charged by the bank for checking that your documents comply with the terms and conditions of the LC.