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SME Toolkit Jordan

Ahli Bank’s LCs and LGs

What are LCs and LGs?

A letter of credit is a document issued mostly by a financial institution which usually provides an irrevocable payment undertaking (it can also be revocable, confirmed, unconfirmed, transferable or others e.g. back to back: revolving but is most commonly irrevocable/confirmed) to a beneficiary against complying documents as stated in the Letter of Credit. Letter of Credit is abbreviated as an LC or L/C, and often is referred to as a documentary credit. Once the beneficiary or a presenting bank acting on its behalf, makes a presentation to the issuing bank or confirming bank, if any, within the expiry date of the LC, comprising documents complying with the terms and conditions of the LC, the issuing bank or confirming bank, if any, is obliged to honor irrespective of any instructions from the applicant to the contrary.

Letter of Guarantee (LG) is an irrevocable commitment by a bank to pay to beneficiary a specific amount in case a third party fails to perform a certain task, or honor a contract. This third party is usually the one that orders the letter of guarantee, a client for whom the bank undertakes this task, and is usually someone who seeks to assure the beneficiary that the task will be performed according to the contract. An LG may be issued domestically, or in favor of a beneficiary, and it may be partially or totally covered by the customers. The bank is only allowed to charge a commission to cover its costs.

When to use LCs and LGs?

LC: If you are a merchant that exports or imports goods on regular basis, LCs are your choice to ensure secure delivery, payment, and to be saved against fraud.

LG: If you are to embark on a certain project, and you are obliged to submit a guarantee from third party (usually a bank) to assure the beneficiary that the task will be performed according to the contract.

What are the benefits of using Ahli Bank’s LCs and LGs?

Ahli Bank can issue various types of LGs such as Tender guarantee, Performance guarantee, Advance Payment guarantee, and maintenance guarantee.

Ahli bank also supports all kinds of LCs including on-site and delayed payment.

Ahli Bank also gives competitive pricing for the issuance LCs and LGs.

Ahli bank also can finance the payment of LCs.

Minimum cash margin.

Express approval within a few working days.

Flexibility of usage in different trade products.

Simple Credit and Trade documentation.

Customize the product according to your working capital terms and pricing needs.

Leverage on our extensive International network across the world.

For more information

For more information, please call our Call Center (toll free line 080022777 or + 9626-500-7777) and our Customer Service Representatives will be happy to assist you 24/7 throughout the week days.

In addition please feel free to visit any of our branches in Jordan or abroad, and one of our Customer Service Representatives will be glad to assist you. Please click on tell me more to locate the branch nearest to you. We look forward to serving you in the best way possible.