Types of L/C

According to the degree of security given to the beneficiary;

– Revocable L/C
         L/C can be amended/cancelled by only importer’s concent.
n– Irrevocable L/C
         L/C can only be ammended/cancelled by the concent from both Importer and Exporter.
n– (Irrevocable ) Confirm L/C
        This is the situation whereby the advising bank or sometimes a third bank promises/guarantees the payment upon presentation of documents complying with L/C terms. Therefore in Confirm L/C the beneficiary has an additional promises/guarantees of payment in addition to the opening bank. This can be done on request of the opening bank or on request of the beneficiary (silent confirmation).

n– Sight L/C 
     This L/C request immediate payment of the L/C by the importer provide the documents comply with the terms.
n– Usance L/C
     This L/C requires payment by the importer only on the due date provide that the Bill Of Exchange has been accepted either documents comply with the L/C terms or the importer has accepted any discrepancy.
n– Red Clause L/C
     This L/C authorises the advising bank to advance a part of credit amount to the seller to finance the production period against presentation of a simple receipt even before the presentation of required documents. The clause was writte in red ink that is the reason for the name Red Clause.

n– Revolving L/C
   The characteristics of the L/C is that after certain amount of the credit is being utilised automatically the credit amount will be restored to its’ original amount until a certain total amount or a certain ‘maturity date’ is reached.


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