letter of credit definition

  • noun:
    • A letter given by a bank authorizing the bearer to draw a stated amount of cash through the issuing lender, its branches, or any other connected banks or companies.
    • A document, made use of primarily in trade finance and granted generally by a financial establishment, where organization promises to pay debts to a particular limitation is acquired because of the beneficiary against distribution of papers specified when you look at the page.
    • a letter or notification dealt with by a banker to their correspondent, informing him your person known as therein is eligible for draw a specific sum of cash; when dealt with to several different correspondents, or as soon as the cash may be used fractional sums in many various locations, it is called a circular page of credit.
    • a document issued by a bank that guarantees the payment of a customer's draft; substitutes the financial institution's credit when it comes to consumer's credit

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