Ahli Bank’s L/C’s and L/G’s

• What are L/C’s and L/G’s?
• When to use L/C’s and L/G’s?
• What are the benefits of using Ahli Bank’s L/C’s and L/G’s?
• What are the Documentary Collections?

What are L/C’s and L/G’s?
The Letter of Credit (L/C) is widely regarded as the main trade finance instrument of payment. It offers a secure method of payment guaranteed by a bank provided that the beneficiary complies with unambiguous terms and conditions.

The buyer derives comfort from the knowledge that his bank would only pay upon submission by the seller of the required documents, within the timeframes stipulated in the letter of credit. On the other hand the seller guarantees being paid by the issuing bank upon his compliance with the terms of the L/C.

Ahli Bank has a wealth of experience in this product that can flourish the success of your business.

The Letter of Guarantee (L/G) or a demand guarantee may be defined as an undertaking, given for payment of a stated sum of money on presentation to the party giving the undertaking of a demand for payment (almost invariably required to be in writing) and such other documents if any as may be specified in the guarantee within the period and in conformity with the other conditions of the guarantee.

The majority of demand guarantees are payable on first written demand without any additional documents. However, it is not uncommon for the demand to be accompanied by a statement of breach of contractual agreement.

Ahli Bank provides you with this service combined with personal assistance in vetting of texts of guarantees and counter-guarantees.

When to use a L/Cs and L/G’s?
If you are a merchant that exports and imports goods on regular basis, L/C’s are your choice to insure that the goods supplied are the goods ordered, whereas the documentary credit is used to ensure that the supplier is paid. Letters of Guarantee are intended to safeguard the buyer against non-performance.

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• Expert opinion on L/C terms and conditions, including interpretation of specific clauses of Letters of Credit and suggestions for necessary modifications.

• Assistance in preparation of the required documentation.

• Checking of documents within a short time frame for special circumstances.

• Personalized attention at all times to ensure the success of the transaction.

What are Documents for Collection?

Inward Documents for Collection (Import D/C).

Refers to inward documents received by the bank on behalf of a buyer on collection basis. The bank will adhere strictly to the instructions stated in the covering schedule. Import D/C safeguards the seller's title to goods until either payment is received (Documents Against Payment) or the buyer accepts a draft to pay at a maturity date (Documents Against Acceptance).

* Outward Documents for Collection (Export D/C).

Refers to outward documents sent to the buyer by the bank on behalf of a seller on a collection basis. Export D/C safeguards the seller's title to goods until either payment is received (Documents Against Payment) or the buyer accepts a draft to pay at a maturity date (Documents Against Acceptance).

All Collections we handle are subject to the Uniform Rules for Collections (1995 revision) Int’l Chamber of Commerce, Publication No. 522.