Letter of Credit brief and the process:

Exporter’s Bank (SABANA Enterprises) - State Bank of India

Importer’s bank (Mr. Yong chin) - Deutsche Bank, Malaysia

Receiving bank- Deutsche Bank, India , Corporate headquarters.

Letter of credit is a promissory note made by the importer’s bank to exporter’s bank asking State
Bank of India to pay exporter the sum of money as mentioned in the Letter of Credit, provided that
he fulfils terms and conditions mentioned in the Letter of Credit.

Now, what will happen:-

First, SABANA Enterprises and Mr. Yong Chin will finalize the terms and conditions of the contract;
we will make the contract later, now I am only briefing what all will come under L/c and how the
process goes.

As soon as the goods leave the Indian port after verification of all the documents and the
requirements, the documents required under L/c are as follows:-

 Invoice
 Packing list
 Bill of Lading
 Third part inspection report ( done by importer for inspecting exporter’s good)
 Certificate of origin ( Issued by Chamber of Commerce)
 Bill of Exchange

Now, Mr. Yong chin will go to Deutsche bank of Malaysia asking to draw a Letter of Credit, in this
case we have taken a USANCE L/c of 30 days, where the payment will be given post 30 days of
shipment of goods. As soon as the importer’s bank draws a Letter of Credit, on the notification of Mr
Yong Chin, Deutsche bank will make a Letter of credit and issue it to the receiving bank of the
deutsche bank subsidiary in India and as soon as they receive it, the letter of credit will be
transferred to State Bank of India.

Post 30 days and meeting of the terms of contract, the amount will be debited from Mr. Yong chin’s
account and credited to SABANA Enterprises.
 Letter of Credit

MUST BE ON BANK’S LETTER HEAD

IRREVOCABLE LETTER OF CREDIT

Issue Date:- ……………………………. Irrevocable letter of credit #..........................

Beneficiary Applicant:
SABANA Enterprises Mr. Yong Chin
Plot no. 109 6325/85 Block A, Singo Road
Laxmi bhawan Malaysia
Sion Expiration Date:- 01 year after receiving letter

Amount:- $3259

We hereby issue an irrevocable letter of credit which is available by the payment of draft after 30
days drawn on State Bank of India bearing the clause ‘drawn under letter of credit’ no 1, issued by
Deutsche bank, Malaysia.

Presentation of Letter of Credit for payment maybe made at the office of State bank India, 31//c,
Laxmi /napoo road, Matunga (C), by causing same to be delivered by recognized national carrier
without necessity of the physical presence of a representative of the beneficiary. The user and the
beneficiary agree that any litigation with this regard to Letter of Credit shall be held before a court of
Appropriate jurisdiction in Mumbai City, high court, India.

The Letter of Credit #1, is valid for one calendar year from (date of issue), and it automatically
renewable for additional one year periods without any efforts on the part of Mr. Yong Chin until the
aforesaid development contact is satisfied in full.

Should State bank of India decide not to renew the letter of credit # 1 , SBI agrees to notify Mr. Yong
Chin in written nearly 90 days prior to the expiration date, certified mail return receipt requested at
which Mr. Yong Chin can draw up to the full face value of Letter of credit #1.
Addresses of corresponding banks:

State bank of India- 31//c, Laxmi /napoo road, Matunga (C), Mumbai

Deutsche Bank Malaysia- Menara Imc, Level 18-20, 8, Jalan Sultan Ismail, Kuala Lumpur, 50250 Kuala
Lumpur, Federal Territory of Kuala Lumpur, Malaysia.

Deutsche Bank of India- Deutsche Bank AG

Corporate Headquarters in India
Deutsche Bank House, Hazarimal Somani Marg
Fort, Mumbai 400 001
INDIA