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ROMÂNĂ / ENGLISH

Stand-by Letter of Credit

Stand-by Letter of Credit - Slider

Stand-by Letter of Credit

It renders the transactions with business partners more secure
Reliable and safe services thanks to the BRD team of professionals and its extended network of bank correspondents in over 80 countries
A product subjected to international regulatory standards

Stand-by Letter of Credit is the ideal solution for your business if...

you are an importer:
The Stand-by Letter of Credit for returning the down payment ensures the return of the down payment by the exporter, in the case of a failure to meet contract obligations.

you are an exporter:
The payment Stand-by Letter of Credit guarantees the payment of the equivalent value of the delivered merchandise/provided services if the importer fails to pay.

What is the Stand-by Letter of Credit?

The Stand-by Letter of Credit is a bank bond issued as a Letter of Credit to guarantee the performance of a contract obligation.

The issuing bank undertakes to financially compensate the beneficiary if the releasing party fails to meet the obligations thereof under the contract.

How does the Stand-by Letter of Credit work?

Step 1. The partners agree on the terms of the operation under the contract and choose the Stand-by Letter of Credit as a method of payment.

Step 2. Upon the request of the releasing party, the bank thereof (the issuing bank) accredits the Stand-by Letter of Credit in favour of the business partner thereof (the beneficiary) in accordance with the terms of the contract with the latter. The issuing bank sends the text of the Stand-by Letter of Credit to the correspondent bank in the exporter’s country (the beneficiary’s bank).

Step 3. The correspondent bank notifies the beneficiary on the accrediting of the Stand-by Letter of Credit in favour thereof.

Step 4. If the releasing party fails to meet the contract obligations thereof, the beneficiary presents the correspondent bank with all the documents stipulated in the Stand-by Letter of Credit accrediting and requests the performance of the payment. After the checking of the documents, the correspondent bank sends them to the issuing bank for payment. The issuing bank makes the payment and debits the account of the releasing party.

Types of Stand-by Letters of Credit

The Letters of Credit offered by the bank are:

Irrevocable Letter of Credit – ensuring the coverage of business risks.
Irrevocable confirmed Letter of Credit – ensuring the coverage of the insolvency risk of the issuing bank and the country – political and transfer – risks in addition to the coverage of business risks if the correspondent bank is in a different country than that of the issuing bank.

Is there a list of correspondent banks?

Yes, you may find below the list of correspondent banks, as well as certain documents that are useful for the company’s international relationships.

Correpondent banks list
Anti-money laundering questionnaire
Patriot Act

Advice and guides

Credit calculator

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