What is a Standby Letter of Credit(SBLC)?

What is a Standby Letter of Credit(SBLC)?

A Standby Letter of Credit (SBLC) can be considered as equivalent to a demand guarantee from the point of view of its function and aim. It is payable on first demand against presentation of a declaration from the beneficiary stating that the applicant is in default of his obligations under the underlying transaction.
An SBLC is an independent undertaking on the part of the bank and is separate from the underlying transaction or contract.
Like any other bank guarantee, the Standby Letter of Credit may have multiple purposes:

  • Tender SBLC
  • Advance payment SBLC
  • Performance SBLC
  • Retention money SBLC
  • Warranty SBLC
  • Payment SBLC

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