Eligibility Criteria for Letters of Credit

Certificate of Credit The eligibility criteria are determined by a variety of elements such as the individual's age, payback history, business sales/turnover, total work experience, and creditworthiness, among others.

• Applicants must be over the age of 24 and under the age of 65.
• Any company involved in import and export commerce is eligible to apply.
• A valid import/export trading license
• The applicant must have an origin and inspection certificate.
• The promoter's background should be solid in terms of financial track record and playback history.

How does the letter of credit system work?

In general, a letter of credit issued by a bank is a type of paper that assures the buyer that if the seller is unable to make payment within a certain period, the bank will be responsible for making payment on the buyer's behalf.

LC is obtained by pledging any collateral/security, and before issuing LC, the bank or financial institution charges a fee based on the type of LC purchased and business invoices.

There are nearly eight different types of letters of credit, as listed below: - Credit on Sight- Beneficiaries use credit on sight to receive paid-for exporting items by submitting required documentation to interested institutions. It is widely recognized as the most effective method of obtaining a quick letter of credit.

Standby Letter of Credit : A Standby Letter of Credit (SBLC) allows an importer to get payment in foreign currency simply by issuing an SBLC to an overseas bank.

Back-to-Back LC : It is known as a negotiable instrument. A back-to-back LC is initiated by the buyer in favor of the seller, and once issued, the LC is instantly shared with the intermediate broker, who quotes the request to share the same with the seller.

Confirmed LC : This occurs in rare cases where the seller is dissatisfied with the buyer's creditworthiness, even with the issuing bank, and is left with the optimal alternative of obtaining confirmed LC from a secondary bank.

Unconfirmed LC : An unconfirmed LC is confirmed exclusively by the issuing bank, with no other bank providing confirmation or guarantee to the beneficiary for payment.

Transferable Credit : Although this sort of LC is specifically specified as transferable credit, it does not let second beneficiaries transfer with third beneficiaries in accordance.

Revocable LC : Revocable LC is a risky LC for exporters because the issuing bank can terminate the LC at any time without prior notice to the recipient.

Irrevocable LC : Because of the presence of an irrevocable LC, both the importer and the exporter are completely stress-free. The exporter is well certain of his/her payment guarantee, and the importer receives the exact items with the respective quality and quantity as mentioned in the agreement terms.

How is a letter of credit issued?

LC is widely used by international traders to ensure transaction confidentiality, regardless of industry, such as textiles, manufacturing, autos, and many others.

• Request a buyer quote from the issuing bank to totter credit in favor of the exporter.
• After receiving the letter of credit application form, buyers must complete the form with the right value and attach supporting documents to be validated by the granting bank.
• Once the issuing bank check application and related documentation have been reviewed, the collateral must meet specific standards for to contract amount.
• If everything appears to be in order, only the issuing bank will charge a fee for issuing the LC, which is entirely based on the commercial invoice and the type of LC chosen.
• The total procedure concludes when the issuing bank issues the letter of credit and shares it with the importer for approval; if the importer is pleased with the conditions of the agreement, the letters of credit draught are finalized.

Documents Required

Individual

• Two Photographs
• Pan Card Copy
• Aadhar Card + Passport
• Address Proof If Rented Also Required Permanent Address Proof
• Last 3 Years Form -16, With Computation Of Income If File
• Last 1 Year Bank Statement - Salary Account
• Loan Schedule & Sanction Letter (If Running)
• Complete Property Papers With Chain & Map +ATS
• Processing Fee Cheque In Favour Of the Bank
• Last 3 Months Salary Slip + Appointment Letter

Prop Firm

• Photograph Both
• Pan Card Clear Copy Proprietor
• Address Proof (Pass Port, Voter Id Card) Proprietor
• Office Address Proof Latest (Electricity Bill, Telephone Bill)
• Firm Registration Certificates & GST Registration Copy
• Last 1 Year GST Return Copy
• Firm 3 Years ITR Computation, Profit Loss A/C, Balance-Sheet, Tax Audit
• Report, All Scheduled & Annexure
• Provisional Financial Ay 2023-24
• Bank Accounts (Current Account, Cc Account, Od Account Last 1 Year Updated Bank Accounts) 6 Month Saving Account Statement Updated (Proprietor)
• If Running Any Loan Please Provide a Sanction Letter And Repayment Scheduled
• Agreement To Sell Copy
• Property Papers With Chain Sanction Map

Partnership Firm

• Photograph Partners
• Pan Card - Company, All Partners
• Address Proof - All Partners (Pass Port, Voter I Card,Pan , Adhaar)
• Firm Address Proof- Latest Any Utility Bill/li>
• Partnership Deed Copy
• GST Certificate
• GST Return Last1 Years
• 3 Year Company ITR COI/L A/C Balance sheet + Audit Report 3cb 3cd, all annexures, Scheduled With C.A. Certified
• Provisional Financial Ay 2023-24
• 3 Year all Partner Individuals ITR + Computation
• Firm All A/C Bank Statement 1 Year Updated
• All Partner Saving A/C Statement 6 Month
• If Running Any Loan – Latest Sanction Letter + Track Records Or Repayment Scheduled
• Agreement To Sell Copy
• Property Papers Complete Chain With Map

PVT LTD

• All Director’s Photograph
• Clear Pan Card - Company And All Directors
• Address Proof – Company And Directors
• List of Director & Share Holder With Ca Certified As On Date
• Memorandum Order In Hand And Complete Copy (If Applicable)
• GST, Sale, Vat, And Ssi Registration Certificate
• 1 Year GST Returns
• All Directors Individuals ITR & Computation Last 3 Years
• Last 3 Years Complete Financial With Tax Audit Report And Annexure
• Provisional Financial Fy 2023-24 Or Month Wise Sale Figure Last 1 Year
• Company All Bank Account Statement 1 Year Updated
• All Directors Saving A/C Statement 6 Month
• If Running Any Loan – The latest Sanction Letter And Repayment Scheduled
• Agreement To Sell Copy
• Property Papers Complete Chain With Sanction Map