Huge Step Taken By The Banks To Make Dealings Successful

By Author: Frances Linda
Total Articles: 7
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SBLC or Standby Letter of Credit is a much known term for people involved with any kind of huge transactions of money. When any business grows large and importing and exporting becomes a must for them, this Standby Letter of Credit becomes a part of their business. The SBLC or Standby Letter of Credit acts as an assurance to that company during any type of huge money transaction. If by any chance, the other company it is dealing with fails to pay them, the Standby Letter of Credit helps them to execute or complete the total transaction. Similar to the proof of funds letter, this Standby Letter of Credit is a bank guarantee which helps the companies a secured execution of a contract. The Standby Letter of Credit or SBLC is pretty easy to implement and use and used at large extent during the transaction cases; it ensures a safe transaction of money and helps the companies using it to prevent any kind of monetary problems with its commercial partners.

When any huge transaction of money involves both the exporter and the importer, the Standby Letter of Credit acts as a mental satisfaction for both the companies. The buyer, ...
... who is going to pay the money, guarantees its commitment to the seller through this Standby Letter of Credit. Moreover, this process does not also involve much paper works; the exporter shows proper documentation regarding the transaction to the buyer and when both parties agree with the statements, they proceed with the transfer of the money. Unlike the other processes that regarding the money transfer processes, the Standby letter of credit costs almost nothing. It is very cheap and effective; and due to these most companies use this. The Standby letter of credit or SBLC is also risk free; it ascertains both the parties about the safe transaction of money and gives them mental satisfaction and allows them solve the problems, if any shows up. A good quality of the Standby letter of credit is that it can be cashed by the holder as soon as the expiration date passes.

The Standby letter of credit or SBLC are generally provided by the banks on behalf of the parties; the bank acts as a guarantor of the total transaction. When the importer goes in any sort of dealing with the importer, the bank pays the total amount to the exporter if it is satisfied with the documents provided by the importer and the importer has to pay the bank back within the mentioned time. It works as a complete safety for the seller; the seller receives the total money even if the buyer fails to provide the money within date. The SBLC also provides immense support to the buyer; if the seller provides cheap quality materials at huge costs, the bank does not pay the exporter a dime. From this, we can see that the bank acts as an intermediary between the buyer and the seller. It provides assurance to both the parties and helps them to sort out if any problems show up.