The Standby Letter of Credit is classified as a letter of credit, also called documentary letter of credit. It is a term widely used to secure payments in national and international trade. The document is issued by a financial institution, at the request of the buyer. The buyer also provides instructions for preparing the document. Being that an SBLC is a letter of credit makes it also a negotiable bank instrument. This allows the instrument to be rated and valued and exchanged for consideration. In other words, being a bank instrument not unlike a bank guarantee, the standby letter can then be monetized for bank lending.
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July 8, 2011
Standby Letter Of Credit: What Is It? And How Can It Be Used For Project Financing?
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