Plz help: Whats LC refinance exactly ? and why use it instead of import LC facility

[imAhmed]

Excuse my noob question, I'm a recent grad and I've been in my job for like 3 weeks.

Let's say I have a an LC facility line with a bank, do I still need to use LC refinance ? when to use import LC and when to use LC refinance ?

If I use an LC facility and bank pays for the shipment, is it only in a matter of days, or a matter of months does bank deduct funds from buyer to cover the full order ? as a business norm, and in most cases I mean.

Or does the bank automatically deducts the funds from buyer's account even if he has a LC facility line.


YOUR HELP IS HIGHLY APPRECIATED. THIS LC THING REALLY CAUSED ME HEADACHE TRYING TO UNDERSTAND IT IN THE PAST 2 WEEKS

[TaiOanlan]

First of all, what do you mean by “LC refinance”?
I assume that your position is buyer(applicant).
If a bank has a LC opening(issuing) facility provided to you, you can ask the bank to issue a LC.
Normally, the bank will deduct all fees prior to credit your account.

[dinesh2476]

Dear,

Generally speaking financing come into picture when applicant does not have sufficient funds to cover for the shipment received or forecasting time delay in handing shipment to sell it in the local markets.

as far as i know - payments under LC cover by applicant debit authority or cash collateral from applicant to IB

1. Indicate in the LC that IB would make payment at sight despite the LC condition usance- Internal agreements between applicant and IB to be sought as to how to handle these finance(basis the credit facility with applicant, IB create finance and communicate the amount with interest to be payable at maturity)

LC can make a statement allowing presenting bank to make a payment at sight and claim it with principle and interest from IB if charges appears low compared to financing at IB end.

2. With out indication in the LC - IB makes payment at sight as per LC and create advance against applicant as per internal agreements.

Thanks & Regards
Dinesh Kumar