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Would like to know if we can use the Standby Letter of Credit as a collateral to open Letter of credit?

my dear friend.
SBLC is a guarantee of payment against non performance whereas LC guarantees payment against performance. LC cannot be opened against SBLCs. to open LC you required accepted purchase order from seller.

Dear Bhaskar 1979,

Can you please give some examples of the collaterals for the LC? Is the collateral regulated? I cannot find any information about it in the ICC's issues. Thanks so much.

Hi Pals,

collateral means to give real guarantee to the bank that issue the l/c, if you have no credit line for such transaction.
It could be a blocked deposit of money or securities, government bonds, stocks etc. This deposit will be used only to debit l/c presentations.
It is not covered by ICC Rules but General Banking Rules valid in your Country Banks.
Other comments appreciated
Ciao

Dear,
usually we opened commercial letter of credit on behalf of applicant [loosely mentioned]. now question is who are the issuer of the SBLC is the main factor here and applicable law [as picant said].
hence more explanation required.
nesar

Hi Pals and Nesarul,

I dont understand your question, no difference, IMHO, between a guarantee issued with or without collateral. The applicant has not a credit facility with issuing bank and will deposit a collateral to "guarantee" the issuance . If the applicant has credit facility with its own bank, it will availed the credit line, at disposal, for the amount of the guarantee. Credit line or facility is not regulated by ICC, but by the Issuing Bank's Policy, following General Banking Rules, i.e. Basel II or Basel III.
Could you repeat your question?
Thanks
Ciao