L/C concept

LC (letter of credit) is also known as a letter of

credit. A type of letter created by the bank at the
request of the importer. To commit to paying a
certain amount at a specific time to the exporter
(beneficiary). If the exporter can present to the bank
a set of payment documents by the terms and
conditions stated in the letter of credit.

3. process of opening L/C

In import and export activities, the LC payment

process is as follows:
• The parties sign the sale and purchase contract.
• Buyer will make an application for opening LC and
submit necessary documents to the bank. If required,
the buyer will make an escrow so that the bank can
issue the LC to the seller.
• According to the request for opening LC, the bank
will issue the LC upon request. The LC will then be
transferred to its correspondent bank in the country
of shipment.
• The Bank will notify the seller to transfer the LC to
the seller to evaluate its ability to pay the LC.
• The seller will have to deliver the goods by the
terms of the LC.
• The seller will make a set of documents by the
LC's regulations. Besides, it is necessary to attach
amendment documents to submit to the bank within
the agreed time limit.
 
• The correspondent bank is responsible for
receiving and checking the validity of the
documents, then just transferring them to the paying
bank.
• The LC Issuing Bank will check the LC payment
documents. In case the dossier does not meet the
requirements of the LC, the bank has the right to
refuse payment and return the dossier to the seller. If
the dossier meets the terms of the LC, the payment
will be made.
• The exporter will receive the payment for his
shipment.
• The LC Issuing Bank will hand over the documents
to the buyer. Simultaneously issue an order to
demand payment from the buyer.

Link: https://lecvietnam.com/hoat-dong/tin-tuc/lc-la-
gi-nhung-dieu-kien-de-mo-lc-130.html
https://truongphatlogistics.com/lc-la-gi-trong-xuat-
nhap-khau/