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Letter of Credit-i (LC-i/DC)

LC-i / DC is similar to the conventional letter of credit. It is written undertaking given by the Bank at the request of the buyer to pay a seller (the beneficiary) to the effect that the Bank which issues the credit will pay the seller (beneficiary) a certain sum of money, as stipulated in the letter of credit provided the seller complies with the terms and conditions of the Letter of Credit.

The LC-i / DC can be issued under 2 contracts:

Al-Wakalah refers to any agency relationship where a Bank acts as an agent on behalf of a company or individual.

Benefits
  • Revolving in nature;
  • The Bank at its discretion may grant Ibra´ or rebate on any financing amount unutilized.
Features
  • The customer pays in advance the DC value (100% deposit);
  • Undertaking of payment by the Bank;
  • The Bank acts as an agent of the customer. There is no financing from the Bank.

Al-Murabahah refers to the sale of good at a price, which includes cost plus 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.

Benefits
  • Purchase goods on credit and enjoy the cash price from the supplier;
  • Obtain financing from the Bank;
  • Pays the bank on deferred term;
Features
  • Undertaking to pay by the Bank;
  • The Bank appoints the customer as purchasing agent;
  • Upon arrival of the complied documents, the Bank pays the negotiating bank by utilizing its own funds;
  • The bank sells the goods to the customer (purchasing agent) at a selling price comprising its cost and profit margin.
    Settlement by customer on deferred payment;
  • Bank provides financing.

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Foreign/Domestic Bill of Exchange Purchase-i (Documentary)
Foreign/Domestic Bill of Exchange Purchase-i (Authority to Purchase)
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2024-02-27 08:21:06