1.Importer applies for a Letter of Credit (LC) at the importer’s bank. 2.Importer’s bank reviews all submitted documents and evaluates importer’s credit standing. 3. Importer’s bank approves the application, issues LC and forwards it to the exporter’s bank (advising bank). 4. Exporter’s bank receives the LC from his bank and reviews all the terms and conditions. 5.Exporter receives notification of the LC. 6. - Exporter notify the acceptance of LC to exporter’s bank. - The exporter reviews the terms and conditions. If the exporter believes that the importer can meet all terms and conditions, the goods are dispatched. The exporter then sends the shipping documents to the exporter’s bank. 7. - The exporter’s bank receives acceptance of LC from exporter and checks the shipping documents against the LC. - Exporter’s bank received shipping docs from exporter and reviews the shipping docs. 8. - If the documents meet the terms and conditions of the LC, the bank sends the shipping documents to the importer’s bank. - The exporter’s bank gives notification of acceptance to importer’s bank. 9.Importer’s bank receives shipping documents. 10. - Importer’s bank receives and examines the shipping documents. If the documents meet the conditions of the LC, they are released to the importer. - Importer’s bank receives acceptance of the Letter of Credit. 11. - The importer’s bank makes the payment to the exporter’s bank (credit). - The importer provides the shipping documents to the importer. 12. Exporter’s bank receives payment (credit) notification from importer’s bank. 13. Exporter’s bank transfers the payment to the exporter. 14.The exporter receives the payment from his bank.
