A Letter of Credit (LC) is a document that guarantees the buyer’s payment to the sellers. It is issued by a bank and ensures timely and full payment to the seller. If the buyer is unable to make such a payment, the bank covers the full or the remaining amount on behalf of the buyer. A letter of credit is issued against a pledge of securities or cash. Banks typically collect a fee, ie, a percentage of the size/amount of the letter of credit. LC stands for letter of credit, a written document issued by the importer's bank to guarantee payment to the exporter for international trade. Learn about the characteristics, parties, fees, and steps involved in an LC arrangement with a practical example. Explore what letters of credit are, their types, costs, and real-world examples to understand their role in facilitating secure international trade. Guide to what is Full Form Of LC. We explain its features, types, example, elements, importance, advantages & disadvantages.
