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Business Trade Finance FAQs
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1. What is L/C (Letter of Credit)?
2. What is L/C issuing Bank?
3. What is L/C advising Bank?
4. I generally open letters of credit through my bank. How is Shinhan Bank America's letters of credit different than my financial institution?
5. Can I cancel my letter of credit after it has been opened?
6. What is the charge for opening a letter of credit?
7. What is difference between D/P and D/A?
8. What is Bill of Exchange?


1. What is L/C (Letter of Credit)?

: L/C (Letter of Credit) is a binding document a buyer can request from his/her bank in order to guarantee that the payment for goods will be transferred to the seller. Essentially, a letter of credit gives the seller reassurance that he/she will receive the payment for the goods. In order for the payment to occur, the seller must present to the Bank the necessary shipping documents that confirm the delivery of goods within a given time frame. It is often used in international trade to eliminate risks such as unfamiliarity with the foreign country’s customs or political instability.

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2. What is L/C issuing bank?

Issuing Bank means the bank that issues a credit at the request of an applicant or on its own behalf.

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What is L/C advising bank?

Advising bank means the bank that advises the credit at the request of the issuing bank

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4. I generally open letters of credit through my bank. How is Shinhan Bank America's letters of credit different than my financial institution?

The letters of credit we open are different since Shinhan Bank America open L/C’s using our bank accounts as the prime banking institutions. When you open the letter of credit through your bank, they use your own credit line. When you open a letter of credit through us, you use our credit lines.

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5. Can I cancel my letter of credit after it has been opened?

All of the instruments that we issue are irrevocable and cannot be canceled. However, it can only be canceled with the consent of the beneficiary.

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6. What is the charge for opening a letter of credit?

The letter of credit charge depends on a number of factors. Our specialists can provide you with an updated Fee schedule.

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7. What are differences between D/P and D/A?

D/P is a procedure to collect payment for an exported shipment. The exporter ships the goods and then gives the documents to his/her bank, which will then be forwarded to a bank in the buyer’s country, along with instruction(s) on how to collect the money from the buyer. Once these foreign banks receive these documents, they will contact the buyer and the import document(s) will be released to the drawee upon payment.

D/A --- Document against Acceptance D/A is a procedure to collect payment for an exported shipment. The exporter ships the goods and then gives the documents to his/her bank, which will then be forwarded to a bank in the buyer’s country, along with instruction(s) on how and when to collect the money from the buyer. Once these foreign banks receive these documents, they will contact the buyer and the import document(s) will be released to the drawee upon his/her promise of payment. The payment will be made on the maturity date.

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8. What is Bill of Exchange?

Bill of Exchange is often used in international transactions and is commonly referred to as the Draft or the Bill. It is an unconditional order in writing, which is signed and addressed by the drawer to the drawee, requiring the drawee to pay the drawer a certain sum of money at sight or at a fixed or determinable future. On the Bill of Exchange (draft or bill), the unconditional order in writing, drawee, draft pay date (indicates whether the draft will be payable at ‘’sight’’ or if the payment is due by a specific time after the buyer accepts the time draft), place of payment, payee, date of issue, and the drawer’s signature are necessary. Bill of exchange usually presents two sets. However, if one makes a settlement, the other automatically loses its liability.

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