What Types of Export Services Offered by Banks

Opening Back to Back Letter of Credit: It is secondary Letter of Credit opened by the advising bank in favor of a domestic and foreign supplier on behalf of the beneficiary original foreign Letter of Credit. As the original letter of credit of bank by import letter, it is called back to back  Letter of Credit. The second  Letter of Credit is opened on the strength of the original  Letter of Credit for a smaller amount i.e. maximum 75% is shipped under Lien and 10% under packaging credit. There are three types of  Back to Back Letter of Credit opened by commercial banks.

Back to Back Letter of Credit (Foreign): When the  Back to Back Letter of Credit is opened in a foreign country supplier it is called  Back to Back Letter of Credit (Foreign). It is generally payable within 120 days at sight.

Foreign Documentary Bill for Collection: Exporters can collect the bill through negotiating bank on the basis collection Exporter in this case will submit all the documents to the negotiating bank for collection of bill from inspector. The exporter will get money only when the issuing bank gives payment. In this connection bank will scrutinize all the documents as per terms and conditions mentioned in Letter of Credit.

Foreign Documentary Bill for Purchase: When exporter sale all the export documents to the negotiating bank then it is known as foreign documentary bill for purchase. In this case the exporter will submit all the documents to the bank. The bank gives 60%-80% amount to the exporter against total  Letter of Credit  value.