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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