Outward Letter of Credit (OLC-i) is a written undertaking by BMMB, given to the beneficiary (seller) at the request and on the instructions of the applicant (BMMB client), to pay at sight or at a determinable future date, up to a stated sum of money within a prescribed time limit and against stipulated documents which are in compliance with the terms and conditions of the credit and subject to current Uniform Customs and Practice for Documentary Credits (Current rules is UCP600).
The OLC-i can be issued under 3 contracts:
Wakalah refers to a contract where a party authorises another party to act on behalf.
Murabahah refers to the sale of good at a price, which includes cost- plus profit as agreed by both seller and the buyer. This is a contract where the commodity exchanged for is delivered immediately and the price is paid in lump sum at a later date.
Musyarakah is defined as a joint venture on profit / loss sharing between a bank and its client whereby the client has to contribute part of the capital in a joint venture project. The profit derived from the project shall be distributed at a profit ratio as agreed between the bank and its client.