DOCUMENTARY CREDIT MANAGEMENT

Documentary credit is the most used means of payment in international transactions; it implies for the exporter a greater level of security in the collection of his sales. Being a given order by the importer to the issuing bank, which executes the payment against the documents required within the credit´s terms and conditions.

Letters of Credit Types

Irrevocable Letter of Credit: it cannot be modified or cancelled without the consent of every part involved.

The “Uniform Rules and Usages of Documentary Credits” Revision of 2007, publication 600 of International Commerce Chamber stipulates that credits are irrevocable unless implicitly indicated that are revocable.

Transferable Letter of Credit: it´s a credit, by virtue of which the beneficiary (the 1st beneficiary) may request from the authorized bank doing the payment, to engage in a deferred payment, to accept or negotiate, or to put the credit totally or partially to the disposal of one or more beneficiaries.

Unconfirmed Letter of Credit: can be both at sight or by term

  • Letter of Credit at Sight: it requests the immediate payment.
  • Letter of Credit by Term: it´s a payment on future date according to terms established in the Letter of Credit.

Commercial Financing Modality: it´s granted by the exporter – the beneficiary is the importer (the issuer).

Bank financing Modality: under signed agreements among banks, Banco Nacional de Cuba executes the payment according to terms and conditions of the agreement.

Please Open Modality: For the opening of this Letter of Credit is not necessary the presentation of the Requesting model of Letter of Credit or Amendment, but the reception of a Swift MT-700 and MT-707 coming from a bank of the National System, which is directly rooted by the Operation Management area towards a specific machine in the Emission Management area.

Stand by Letter of Credit: It acts as a reimbursement guarantee or a secondary means of payment. The difference in its application is that commercial documentary credit is executed by the beneficiary “compliance”, while the “stand by” credit provides guarantees to the beneficiary in case of “non-compliance”.

Banco Nacional de Cuba processes the commercial Letters of Credit requesting in a term of no more than 7 working days from the date the request is received.

The request for issuing a Letter of Credit shall be presented over-the-counter by the importer or buyer, further on the client or issuer, in the official form established by Banco Nacional de Cuba, complying with “Rules and Uniform Uses of Documentary Credits”, Revision 2007, Publication 600, of the International Chamber of Commerce. Additionally the client must present:

  • An authorization giving him the right to open a documentary credit or guarantee by the correspondent organism for the operation payment.
  • A check of payment of commission for issuance established in the Terms and Conditions of Banco Nacional de Cuba, or transfer evidence.
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