Letter
of Credit

Insights

A Letter of Credit allows importers and exporters to exchange goods for payments. Generally, Letters of Credit can be referred to as Import or Export Letters of Credit depending on whether the customer viewing the Letter of Credit is the Importer or the Exporter.

In other words, in an Import Letter of Credit the Importer will open a Letter of Credit through which it will pay the exporter; in an Export Letter of Credit the exporter will get paid through the Letter of Credit opened on its behalf. Nevertheless, Import and Export Letters of Credit are the same instrument with the particularity that they are viewed from opposite sides.

• The Import Commercial Letter of Credit: is nothing more or less than a letter, which can be as simple or as complicated as the buyer (importer) and his bank is willing to issue or as simple or complicated as the beneficiary (seller) is willing to accept. Issued primarily for the purpose of financing transactions involving the shipment of goods across borders.

At Access Bank, we offer different types of letters of Credit ranging from Unconfirmed to Confirmed and Zero Cash Collaterised to full Cash Covered Letters Of Credit.

• Export Letters of Credit Confirmations: allow Exporters to mitigate both the country risk of the importer and the issuing-bank commercial credit risk. In Export Letters of Credit, Access Bank confirms Letter of Credit in favor of the Exporter, where Access Bank adds its irrevocable commitment to honor drafts and documents presented in conformity with the term of the Letter of Credit.