LC

U̳n̳d̳e̳r̳s̳t̳a̳n̳d̳i̳n̳g̳ ̳L̳e̳t̳t̳e̳r̳ ̳o̳f̳ ̳C̳r̳e̳d̳i̳t̳ ̳f̳o̳r̳ ̳I̳n̳t̳e̳r̳n̳a̳t̳i̳o̳n̳a̳l̳ ̳T̳r̳a̳d̳e̳ ⚖️ In global trade, trust is essential — but distance and unfamiliar partners create risk. That’s where a Letter of Credit (LC) plays a vital role. A Letter of Credit is a bank guarantee that ensures: ✅ The exporter gets paid once documents meet the agreed terms ✅ The importer pays only when shipment conditions are fulfilled Key principle: Banks deal with documents, not goods. 💡 Why LCs matter: * Reduces payment risk for seller they have fixed in their PO Terms * Builds trust between trading partners * Enables smoother cross-border transactions Risks and Limitations * Strict compliance required — small document errors can delay payment. * Bank fees can be high. * Does not guarantee actual product quality. * Banker will review only the document ,not in quality of goods.