A Standby Letter of Credit (SBLC) is an instrument that will be used to serve as a guarantee to the beneficiary. If the importer of the product is unable to make payment promptly, then the issuing bank of the SBLC will disperse the payment to the beneficiary.
The scenario below will depict the use of SBLC.
Zack Co. Ltd., is a reputable exporter of gas steel pipe from Vietnam. Zack Co. Ltd., received an order from Calvin Pty. Ltd., the importer, an Australian company, to supply 100 pcs of 30 meters steel pipe. Zack Co. Ltd. and Calvin Pty. Ltd. negotiated the price factors. Calvin Pty. Ltd. issued a Purchase Order to Zack Co. Ltd. However, Zack Co. Ltd. wants an assurance from Calvin Pty. Ltd. that it will make prompt payment. Calvin Pty. Ltd., successfully engaged Westpac Bank to issue a Standby Letter of Credit (SBLC) in favor of Zack Co. Ltd. Due to unexpected circumstances, Calvin Pty. Ltd. has defaulted the payment. Thus, Zack Co. Ltd. shall claim the credit payment through Standby Letter of Credit from Westpac Bank.
Bankgroup is a pioneer in providing SBLC services with a minimum of VND 40,000,000 processing fee. However, the processing fee is subject to changes in relation with the consignment value.
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