1, with different functions. Under the documentary commercial letter of credit, the beneficiary obtains a series of documents related to the shipment of goods after delivery according to the agreement of the underlying contract, and then requests the issuing bank to pay or negotiate according to the stipulated documents. The function of standby letter of credit is just the opposite of that of documentary commercial letter of credit. Under the standby letter of credit, its function mainly depends on the applicant's performance.
2, the scope of use is different. Documentary letter of credit is mainly applicable to the field of international trade in goods; Standby letters of credit can be used not only for international trade in goods, but also for domestic trade in goods.
The difference between standby letter of credit and ordinary letter of credit is as follows:
1. Letter of Credit After the beneficiary completes the conditions stipulated in the letter of credit, the issuing bank guarantees to pay the beneficiary; Standby letter of credit means that if the applicant fails to fulfill the payment responsibility, the issuing bank is responsible for paying the beneficiary;
2. The letter of credit shall be paid by the issuing bank after the beneficiary completes the conditions stipulated in the letter of credit, while the standby letter of credit shall be paid by the issuing bank on behalf of the applicant who fails to complete the payment obligation;
3. The letter of credit is the active payment of the issuing bank, while the standby letter of credit is the passive payment of the issuing bank;
The letter of credit must be used by the beneficiary, and the standby letter of credit is generally used as a standby letter of credit, that is, the standby letter of credit is used as a bank guarantee, and the applicant will take the initiative to pay. Therefore, under normal circumstances, the standby letter of credit will not really be used for claims.
Standby letter of credit and the meaning of letter of credit
1 standby letter of credit
The abbreviation of SBLC (standby letter of credit), also known as guaranteed letter of credit, refers to a letter of credit opened for loan financing or debt repayment, rather than to pay the price of commodity transactions.
The issuing bank guarantees that when the applicant fails to fulfill his obligations, the issuing bank can reimburse him as long as the beneficiary draws a draft on the issuing bank according to the provisions of the standby letter of credit and attaches a statement or supporting documents of the applicant's failure to fulfill his obligations. Standby letter of credit is only applicable to some clauses of the Uniform Customs and Practice for Documentary Credits (No.500), and now it is a part of UCP600.
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.
2. Letter of credit
Letter of credit refers to the written guarantee document issued by the issuing bank to the beneficiary at the request of the applicant (buyer) and in accordance with its instructions, which contains a certain amount and is paid by the documents that meet the requirements within a certain period of time. Letter of credit is the most important and commonly used payment method in international trade.
To sum up, accurately grasping the difference between the two will help you understand the letter of credit and standby letter of credit in depth. Standby letters of credit mainly provide credit guarantee, and letters of credit can prove their credit status. Everyone should treat them differently and make rational use of them to give full play to their role.
Legal basis:
Article 195 of the criminal law
Whoever commits fraud by letter of credit under any of the following circumstances shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and fined not less than 20,000 yuan but not more than 200,000 yuan; If the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall also be fined not less than 50,000 yuan but not more than 500,000 yuan; If the amount is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment, and shall also be fined not less than 50,000 yuan but not more than 500,000 yuan or confiscated property:
(1) Using forged or altered letters of credit or accompanying documents and documents;
(2) Using an invalid letter of credit.
(3) fraudulently obtaining letters of credit;
(4) fraudulent activities of letters of credit by other means.
Article 200 Penalties for Crimes of Financial Fraud in Units Where a unit commits the crimes specified in Articles 194 and 195 of this section, it shall be fined, and the persons who are directly in charge and other persons who are directly responsible shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and shall also be fined; If the amount is huge or there are other serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years and shall also be fined; If the amount is especially huge or there are other especially serious circumstances, he shall be sentenced to fixed-term imprisonment of not less than 10 years or life imprisonment and shall also be fined.