SBLC (Standby Letter of Credit), also known as guaranteed letter of credit, refers to a letter of credit opened for loan financing or guaranteed debt repayment, not for the purpose of paying off the transaction price of commodities. Multifunctional financial products, which integrate guarantee, financing, payment and related services, are widely used in international business because of their wide use and flexible operation.
The issuing bank guarantees that when the applicant fails to perform his obligations, the issuing bank can pay as long as the beneficiary draws a draft on the issuing bank in accordance with the provisions of the standby letter of credit and attaches a statement or supporting documents of the applicant's failure to perform his obligations. Standby letter of credit is only applicable to some clauses of the Uniform Customs and Practice for Documentary Credits (No.500), namely UCP600 clause.
nature
1, irrevocable. Unless otherwise stipulated in the standby letter or agreed by the other party, the issuer shall not modify or cancel its obligations under the standby letter.
2. independence. The performance of the issuer's obligations under the standby letter of credit does not depend on the issuer's right and ability to obtain payment from the applicant. The beneficiary's right to receive payment from the applicant. A reference in a standby to any repayment agreement or underlying transaction. Is the issuer aware of the performance or default of any repayment agreement or underlying transaction?
3. Documentary. The obligation of the issuer depends on the presentation of documents and the superficial examination of the required documents.
4. Mandatory. The standby letter of credit is binding after it is issued, and it is mandatory for the issuing bank whether the applicant authorizes the issuance of the letter of credit, whether the issuer charges fees, and whether the beneficiary receives or takes actions because of trusting the standby letter of credit or amending the standby letter of credit.