A documentary letter of credit represents an obligation
of the Bank in the sense that it will carry out, as ordered by its
customer (an importer), a payment to a beneficiary,
with presenting documents proving the fulfilling
of prerequisites
foreseen by the letter of credit. By using documentary
letters of credit, interests of all parties, beneficiaries of a letter of credit,
are protected. The
exporter is sure that he will collect the goods imported, by using a letter of
credit, upon presentation of all orderly documents foreseen
by it. On the other
hand, the buyer is sure that a bank will make a payment only
upon presenting orderly documents, as foreseen with a
letter of credit conditions. Otherwise, the payment will be
carried out only with the buyer's consent.
Most frequent documents appearing in letter of
credit operations:
- A commercial invoice,
- Transport documents (certified by third
parties),
- An insurance policy,
- A packing list
- Various certificates,
- Other documents
Letter of credit types by ways
of payment:
- On sight; is paid out immediately (at most, up to
5 days) upon presentation of all orderly documents
fulfilling letter of credit conditions,
- With differed payment, payment is deferred in advance
on time as defined by the letter of credit itself, and
following a presentation of orderly documents.
Presenting requests for opening letters of credit:
At presenting a request for opening a letter of credit
(Order 15), the buyer must deposit coverage equalling the sum
of the letter of credit, pay fees for credit opening according
to the Bank's Decision of Tariffs as well as enclose a copy of
a contract
or a pro- forma invoice being the subject of the letter of
credit. Upon buyers' requests , Jadranska banka may grant a
deferral of coverage depositing until the maturity day
of credit payments on conditions as agreed upon in
a special contract.