SBLC Providers in Dubai | SBLC MT760 | Standby Letter of Credit (2024)

FAQs

Is MT760 the same as SBLc? ›

A Standby Letter of Credit (SBLC) is a payment guarantee that is issued by a bank or financial institution by a SWIFT MT760 message, and is used as payment for a client in the case that the applicant defaults. A SBLC can be utilized within a wide range of financial and commercial transactions.

Only banks or qualified financial institutions such as Asiasec Financial Limited have the authority to issue an SBLC. 3. The Real Process of Securing an SBLC To get an SBLC, a company typically needs to provide collateral to the issuing bank.

What are the fees for Standby Letters of Credit? It is standard for a fee to be between 1-10% of the SBLC value. In the event that the business meets the contractual obligations prior to the due date, it is possible for an SBLC to be ended with no further charges.

In most cases, your bank will charge 1-2% of the value being blocked for this service.

These Bank Instruments (BG/SBLC) are issued through top AAA rated banks such as Citibank New York, Chase Bank, Welsfargo Bank, Bank of America, HSBC Hong Kong or HSBC London, Barclays bank London, Standard Chartered Bank London, Dubai or Hong Kong, UBS or Credit Suisse in Switzerland, Deusche Bank AG Germany etc.

The process of obtaining an SBLC is similar to a loan application process. The process starts when the buyer applies for an SBLC at a commercial bank. The bank will perform its due diligence on the buyer to assess its creditworthiness, based on past credit history and the most recent credit report.

The buyer will request their bank to open a SBLC in favour of the seller. The seller will then ship the goods to the buyer. If the buyer pays the seller, the SBLC is cancelled and returned to the issuing bank. If the buyer fails to pay, the seller will claim the sum owed against the Standby Letter of Credit.

It is an irrevocable written undertaking issued by a bank on behalf of buyers to give payment assurance to the seller. Further, this LC ensures the seller that they will receive the payment, once they submit the documents to their bank as per the LC terms.

Commercial, Export/Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC are the different types.

Who can provide SBLC? ›

Standby letters of credit are typically offered by commercial banks and lenders. The bank will assess the creditworthiness of the applicant much like a loan application.

Any bank or non-banking financial companies can issue SBLC if they have validated the applicant's creditworthiness based on their credit history and reports.

1-6-6- Disadvantages of the standby letter of credit

Low protection in the event of default. Time constraints. Utilized for a shorter duration. Less frequently used as the documentary credit, thus it can be prone to errors.

MT 760 is another type of SWIFT message sent from an issuing bank to an advising bank, with details of the SBLC or bank guarantee. Generally, the MT 799 is subject to the rules of the following: URDG (Uniform Rules for Demand Guarantees)

If you need to convert an MT760 to cash, you can do so by monetizing the instrument through a reputable and trustworthy monetization provider.

Often the MT700 is available in the banks “LC system” and the MT760 is available in the banks “Guarantee system.” Since a Standby LC it is in reality a guarantee; fees must be calculated as any other guarantee – i.e. in the banks guarantee system – which would not allow the use of a MT700.

The main risks of MT760 is Identity theft. The global swift system is used by more than eight thousand financial institutions in sending and receiving various financial statements and letters. The most prominent letter used in this system is the MT760 swift and the MT799 swift.