Revolving LC cumulative without order release

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amri3139
Posts: 1
Joined: Thu Oct 14, 2021 11:45 pm
First Name: Mohamed
Last Name: Amri
Organization: Golf trading
Filter: Two Plus Two =: 4
Location: Tunisia

Revolving LC cumulative without order release

Post by amri3139 »

Please 🙏 I need the expert advise for the following:
I was asked my bank for guarantee bank , under form revolving LC Cumulative 50 Million Dollars montly , for the total of 500 millions dollars yearly.
Indeed , I will not used the fund LC at all , I will pay the buyer directly , for that LC revolving cumulative will remain untouched.
My question , how I can approach the bank , to convince them that I will use this LC just as document guarantee , and the bank will make any order release on it .

Thanks
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picant
Posts: 1962
Joined: Wed Aug 20, 2008 1:49 pm

Re: Revolving LC cumulative without order release

Post by picant »

Hi Pal,

I am assuming that yiu need to guarante your supplier for an outstanding amount between delivery of goods and payment.
So do you have to calculate the maximum credit you need by the supplier, i.e. :
First delivery January paid in April
Second delivery February paid in May
Third delivery March paid in June
Fourth delivery April paid in July, but paid the January delivery too
etc so the maximum amount of bank guarantee will be three times the delivery value.
Nnaturally the above scenario must be adjusted to your requirement.
Other comments appreciated
Ciao
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