Opening sight L/Cs for Import of Goods
A letter of credit (L/C) is a document issued by a financial institution or a similarly accredited professional party. The letter assures payment to a seller of goods or services provided certain documents have been presented to the bank.
The letter of credit serves as a guarantee to the seller that it will be paid regardless of whether buyer ultimately does pay or not. In this way, the risk that the buyer will fail to pay is transferred from the seller to the LC issuer.LC can also be used to ensure that all agreed standards and required terms and conditions are met by the seller provided that these requirements are reflected in the documents described in the letter of credit contents.
• The applicant (buyer) must refer to the relevant ministry (ies) and obtain the necessary import permission of goods or services.
• The applicant must refer to the Ministry of Industry, Mine and Trade and obtain registration No.
• The applicant should have an account at least in local currency with one of the Middle East bank’s branches.
• Credit Department examines the customer’s creditability and issues the related letter of approval and determines the bank’s terms and conditions for issuance of L/C.
• International Department sends the request for allocating foreign currency to C.B.I
• International Department opens L/C through Swift message format after allocation of currency as well as collection of its charges and commissions as per banking internal tariffs.
• International Department receives and checks the shipping documents presented under such L/C and pays for the credit conform documents to the correspondent bank or beneficiary in hand on L/C.
• The applicant must settle the shipping documents’ value with MEB, and by this way the documents will be released for customs clearance purposes.
• After above procedures completion the customs clearance certificate should be presented by the applicant to MEB.