Letters of Credit
A Letter of Credit (LC) is a bank-issued instrument that guarantees payment to an exporter (beneficiary) on behalf of an importer (applicant), provided the exporter presents compliant documents within the stipulated terms. LCs are governed by ICC Uniform Customs and Practice for Documentary Credits (UCP 600).
Trust Receipts
A Trust Receipt (TR) is a short-term trade finance facility that allows a bank's customer (importer/trader) to take possession of goods or shipping documents before payment is made to the bank. The customer holds the goods in trust for the bank and is obligated to sell the goods and repay the TR upon maturity.
Bank Guarantees
A Bank Guarantee (BG) is an irrevocable undertaking by a bank to pay a specified sum to a beneficiary if the bank's customer (the principal/applicant) fails to fulfil a contractual obligation. BGs are contingent liabilities — the bank only pays if a valid demand is made.