Guarantees / letters of credit - Documentary credits

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:

1. A commercial invoice,
2. Transport documents  (certified by third parties),
3. An insurance policy,
4. A packing list
5. Various certificates,
6. Other documents

Letter of credit types by ways of payment:

1. On sight; is paid out immediately (at most, up to 5 days) upon presentation of all orderly documents fulfilling letter of credit conditions,
2. 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 equaling 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.