MEANING The International Chamber of Commerce (ICC) in the Uniform C u s t o m a n d P r a c t i c e f o r D o c u m e n t a r y C r e d i t ( U C P D C ) defines L/C as:"An arrangement, however named or described,

whereby a bank(the Issuing bank) acting at the request and on the instructionsof a customer (the Applicant) or on its own behalf : I s t o m a k e a p a y m e n t t o o r t o t h e o r d e r t h i r d p a r t y ( t h e beneficiary ) or is to accept bills of exchange (drafts) drawn bythe beneficiary. Authorised another bank to effect such payments or to acceptand pay such bills of exchange (draft). A u t h o r i s e d a n o t h e r b a n k t o n e g o t i a t e a g a i n s t s t i p u l a t e d documents provided that the terms are complied with. The International Chamber of Commerce (ICC) in the UniformC u s t o m a n d P r a c t i c e f o r D o c u m e n t a r y C r e d i t ( U C P D C ) defines L/C as:"An arrangement, however named or described, whereby a bank(the Issuing bank) acting at the request and on the instructionsof a customer (the Applicant) or on its own behalf : I s t o m a k e a p a y m e n t t o o r t o t h e o r d e r t h i r d p a r t y ( t h e beneficiary ) or is to accept bills of exchange (drafts) drawn bythe beneficiary. Authorised another bank to effect such payments or to acceptand pay such bills of exchange (draft). A u t h o r i s e d a n o t h e r b a n k t o n e g o t i a t e a g a i n s t s t i p u l a t e d documents provided that the terms are complied with. Parties to loc
Applicant (Opener): Applicant which is also referred to asaccount party is normally a buyer or customer of the goods, whohas to make payment to beneficiary. Issuing Bank (Opening Bank) : The issuing bank is the onewhich create a letter of credit and takes the responsibility to makethe payments on receipt of the documents from the beneficiary orthrough their banker. The payments has to be made to thebeneficiary within seven working days from the date of receipt of documents at their end, provided the documents are in accordancewith the terms and conditions of the letter of credit Beneficiary : Beneficiary is normally stands for a seller of thegoods, who has to receive payment from the applicant. A credit isissued in his favour to enable him or his agent to obtain paymenton surrender of stipulated document and comply with the termand conditions of the L /c. Advivising Bank : An Advising Bank provides advice to thebeneficiary and takes the responsibility for sending thedocuments to the issuing bank and is normally located in thecountry of the beneficiary. Confirming Bank : Confirming bank adds its guarantee to thecredit opened by another bank, thereby undertaking theresponsibility of payment/negotiation acceptance under thecredit, in additional to that of the issuing bank