The process of a documentary credit

• Importer and exporter conclude a contract, payment by letter of credit
• Principal instructs his bank to open a letter of credit in favour of the beneficiary
• Importer’s bank issues and presents the letter of credit to correspondent (exporter’ s) bank
• Exporter’s bank advises the beneficiary about the opening of the credit
• Exporter checks the terms of the credit and makes goods ready for shipment
• Exporter collects documents stipulated in the documentary credit
• Exporter presents the documents to the nominated bank
• Advising bank makes payment, accept or negotiate after checking the documents
• Advising bank sends documents to opening bank
• Opening bank reimburse advising bank after examination of the documents
• Opening bank sends documents to importer
• Issuing bank obtains reimbursement from the importer in the pre-agreed manner
• Importer forwards documents to the carrier for delivery of the goods

The General Scheme