Monday, November 21, 2011

Meaning of Applicant in Letter of Credit (L.C)


Meaning of Applicant in Letter of Credit (L.C)


A bank must issue a letter of credit on behalf of a person, called the Applicant.
Applicant is the buyer of the goods or services supplied by the seller. Letter of credit is opened by the issuing bank as per applicant's request. However, applicant does not belong one of the parties to a letter of credit transaction. This is because of the fact that letters of credit are separate transactions from the sale or other contract on which they may be based. 
All the charges for issuance of Letter of Credit, negotiation of documents, reimbursements and other charges like courier are to the account of applicant or as per the terms and conditions of the Letter of credit.If the letter of credit is silent on charges, then they are to the account of the Applicant.

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