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Standby Letter of Credit International SettlementChapter 6
6 Standby Letter of Credit
目录CONTENTS6.76.8Differences between Standby Letter of Credit and Documentary Letter of CreditThe International Customs and Practices for Standby Letter of Credit Overview and Definition of Standby Letter of Credit6.1Characteristics of Standby Letter of Credit6.2Parties to Standby Letter of Credit6.3Main Contents of Standby Letter of Credit6.4Procedure of Standby Letter of Credit6.5Types of Standby Letter of Credit6.6
6.1Overview and Definition of Standby Letter of Credit
Emergence:The emergence of the standby letter of credit comes from the National Bank Act of the United States. As per the regulation of this act, commercial banks are prohibited from undertaking obligations under guarantees and only insurance and bond companies are allowed to issue bonds (guarantees). As the customer in a commercial bank has the demand to issue bonds, the standby letter of credit is a financial innovation conducted by American commercial banks to bypass this regulation.6.1 Overview and Definition of Standby Letter of Credit
Development:Up to now, the restriction that banks are prohibited to issue bond has already been cancelled, as the standby letter of credit bears the characteristics of independent, documentary and demand payment, compared with guarantee. It is more widely acceptable by banks, importers and exporters. It is now not only adopted in America, but also worldwidely.6.1 Overview and Definition of Standby Letter of Credit
Definition:The ICC Publication No.515 International Chamber of Commerce Documentary Letter of Credit Guideline defines standby letter of credit as any documentary credit or similar arrangement, however named or described, which represents an obligation to the beneficiary on the part of the issuer:(1) To repay money borrowed by the applicant, or advanced to or for the account of the applicant or;(2) To make payment on account of any indebtedness undert
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