Letter of Credit (LC) - is a an agreement between the client and the bank, where the bank will, upon instructions of the client (buyer), upon submission of documents and performance of other terms and conditions of the LC, make a payment to the seller. Legal provisions related to documentary LCs are contained in the Uniform Customs and Practice (UCP) for Documentary Credits ICC Publication 600 (2007 Revision).
Clients of «Bank of Baku» can use the services of the Bank to transact with all types of LC available in an international trade practice.
Benefits of use of LCs in trade transactions:
- Minimum risk associated failure to perform obligations in relation to delivery of goods or services or making of the payment
- opportunity to be insured against the following risks
a. in local transactions :
- commercial risks
- shipment risks
b. in international transactions :
- laws, customs rules and regulations
- currency risks
- distance, delay
- country specific risk
- transfer risks
- LC are less costly in comparison with obtaining of financing
- If that is your first transaction with a counter party, and you have not yet got commercial experience with that party, it is very useful to arrange the payment for sale and purchase via LC
- You may boost your international reputation by engaging the services of a reliable bank;
- Through your partner bank you can settle your trade related problems faster and with fewer losses, etc.
Please take a note of our charges related to LC services:
| Type of the service | Rate of charge (Note: rate is fixed irrespective of the currency of the transaction) |
|---|---|
| For import LCs | |
| Opening of the LC | 0.2 % min. 100 AZN |
| Review of documents (per package) | 0.1 % min. 50 AZN |
| Inquiry to overseas bank for discrepancy | 20 AZN |
| Transfer of funds under LC (per transfer) | 0.1 % min. 20 AZN max. 300 AZN |
| Increase of amount (from the amount of increase) | 0.2 % min. 50 AZN |
| Change or cancellation of LC (except for increasing of the amount) | 50 AZN |
| For export LCs | |
| Availing of the LC (without confirmation of the Bank) | 0.1% min. 50 AZN |
| Availing of the LC (with confirmation of the Bank) | 1.5 % per annum min AZN 50 (for full or incomplete quarter) |
| Review of documents (per package) | 0.1% min 50 AZN |
| Inquiry to overseas bank for discrepancy | 20 AZN |
| Transfer of LC | 0.1% min. 50 AZN |
| Increasing the amount of LC (without approval of the Bank) | 0.1% min. 50 AZN |
| Increasing the amount of LC (with approval of the Bank) | 1.5 % per annum min AZN 50 (for full or incomplete quarter) |
| Change or cancellation of LC (except for increasing of the amount) (*) * Where simultaneously a number of amendments is required on documentary transaction, commission for changes will be paid only once. | 50 AZN |
Entrepreneurs and companies willing to use out LC services for their trading, will have a chance at any stage of the project to consult our professional specialists with respect to the best solution of various issues arising in course of the operation. For further information, please contact our Head Office or Central Branch Office of the Bank.
