Definition
A written undertaking by a bank, issued on behalf of a buyer, to pay the seller a stated amount provided the seller presents compliant shipping and commercial documents. It substitutes the bank's creditworthiness for the buyer's and is governed internationally by the ICC's UCP 600 rules. South African importers arrange letters of credit through their commercial banks, with the transaction reported to the South African Reserve Bank under exchange control rules.
Frequently asked questions
What is Letter of Credit (LC)?
A written undertaking by a bank, issued on behalf of a buyer, to pay the seller a stated amount provided the seller presents compliant shipping and commercial documents. It substitutes the bank's creditworthiness for the buyer's and is governed internationally by the ICC's UCP 600 rules. South African importers arrange letters of credit through their commercial banks, with the transaction reported to the South African Reserve Bank under exchange control rules.
Which glossary terms are related to Letter of Credit (LC)?
Letter of Credit (LC) is a procurement term in the South African import/export industry. Related terms in the same area include Advance Payment, Bank Guarantee, CSD (Central Supplier Database), Designated Sectors, Documentary Collection — each has its own plain-English definition in the TradeCaravan glossary.