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Import Letters of Credit

An import letter of credit (LC) is the written undertaking, or obligation, of a bank, made at the request of its customer (Buyer), to honor a Seller's draft or other demand for payment upon compliance with conditions specified in the letter of credit. A letter of credit is, essentially, an agreement between the Seller and the Buyer's bank, who is acting on its customer's (the Buyer's) instructions. This is a method of financing for the importation of goods whether internationally or domestically.

 

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