Discounting of Letter of Credit (LC) is a short-term credit facility provided by the bank. In the Letter of Credit discounting process, the bank purchases the documents or bills of the exporter and in return make him the payment for a security or a fee. LC discounting is actually a term used for ease in place of ‘LC Bill Discounting’, which means discounting of a bill backed by LC.
For businesses that export or import, letters of credit are the financial security of international trade. A letter of credit allows an importer to make sure that an order is filled and shipped before payment is made and the exporter is guaranteed that money will paid for the goods shipped overseas. The discounting of letters of credit allows exporters to get their money faster.
When using Letter of Credit, the client can choose various ways of payment, including the delayed payment option. In this case the client receives the payment with a slight delay that can create difficulties in financial flow, therefore we offer an option to discount the Letter of Credit.