Letter of Credit (LC)
Features
A letter of credit is a document issued by bank that guarantees payment for goods or services when the seller provides acceptable documentation. A letter of credit generally has three participants. First, the beneficiary, the person or company who will be paid. Next, the buyer or applicant of the goods or services. Finally, the issuing bank, the institution issuing the letter of credit.
Eligibility
- All Corporates having turnover of Rs.500 Crores and above.
- Guarantees issued on behalf of Joint stock companies should be supported by appropriate resolution of the Board of the directors of the company.
Security
- Hypothecation / extension of Hypothecation charge over the underlying current assets.
- Second charge on fixed assets and or hypothecation of machinery / assets.
- Additional tangible security such as immovable properties / bank deposits etc.
- Cash margin by way of Fixed deposits
- Personal guarantee of proprietors / partners / promoters
- Corporate guarantee
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