RANU FINANCIAL SERVISES offers a range of Financial services to help your business win contracts abroad, and to identify and manage the risks associated with international trade. We have a highly experienced support team who will work with you to understand your requirements, and discuss the features of the various products available for you.
Trading internationally without established relationships might seem like an impossible feat. That’s why we offer Letters of credit (LC), bank guarantees (BG) and standby letters of credit (SBLC), so both parties can trade with more safety and less risk. With a wide range of guarantees available, we can provide you with added support and security to meet your trading, investment, import and export needs.
Documentary Letter of Credit (DLC) • Letter of Credit (LC): one of the most important financial tools for international trade, the documentary Letter of Credit is an effective solution that helps eliminate risks for both the buyer/importer and the seller/exporter.
Most Letters of Credit are governed by rules known as Uniform Customs and Practice for Documentary Credits, which are set by the International Chamber of Commerce. There are a number of benefits to using a Letter of Credit:
- The buyer is able to buy the goods and pay for them after shipment of goods.
- There is no financial risk to the buyer if the goods are not shipped after the order is placed.
- The issuing bank extends its credit to the buyer which helps him to buy from new vendors.
- No funds are blocked until documents are received after the shipment, thus improving cash flow.
- The buyer is assured that goods are shipped on time, failing which there is no liability to pay.
- The seller does not run the risk of cancellation of the order as the Letter of Credit is irrevocable.
- Payment is assured after shipment on submission of documents complying with the terms of the Letter of Credit and other conditions, so he does not run the risk of non- payment after the shipment.
- It helps to raise finance for production of goods thereby meeting
Bank Guarantee & Standby Letter of Credit: A Bank Guarantee Commonly known as (BG), is a type of guarantee from a lending institution. The bank guarantee means a lending institution ensures that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A Bank Guarantee enables the customer, or debtor, to acquire goods, buy equipments or draw down a loan.
Standby Letter of Credit Commonly known as (SBLC), is a type of warranty for financial contracts. Performing essentially a backstopping function, the written obligations of an issuing bank to pay a sum of money to a beneficiary on behalf of their customer in the event that the customer does not pay the beneficiary.
Benefits of using an BG/SBLC include:
- Quick, flexible, simple, and affordable.
- Allows the importer to establish a credit history with the exporter.
- Save considerable time and financial resources with repeat business because the importer only needs to cover the maximum exposure risk of the exporter at any one time with one SBLC covering an entire year.
- Ensures the delivery of goods or service in accordance with the terms of the trade contract.
- Provides ease of payment as the bank only needs to establish default of payment or performance from a few documents.
- Payment from the importer is faster because once documents have reached the airport or port, only 5-7 days are required to review the documents and finalize the acceptance of the goods.