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What is a letter of credit?
What is a letter of credit?
What is a letter of credit?

A letter of credit is an irrevocable undertaking issued by a bank (issuing bank) on behalf of the buyer (applicant) to the seller (beneficiary), to pay for goods and/or services, provided that the seller presents documents which comply fully with the terms and conditions of the credit. It is commonly referred to as a letter of credit or documentary credit.

A letter of credit is issued in an irrevocable format, which means that payment is guaranteed provided its terms and conditions are complied with. It also means that it cannot be cancelled or amended unless all parties agree. All letters of credit are issued subject to universally accepted rules and regulations issued by the International Chamber of Commerce in Paris. These rules are referred to as the UCP600, ISBP745E, ISP98 and URR725. 

 

 

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Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking and investment services in terms of the Banking Act (Cap. 371 of the Laws of Malta) and the Investment Services Act (Cap.370. of the Laws of Malta).