Documentary credit helps minimise commercial risk and is ideal for protecting interests of both importers and exporters. This is a unique format that combines settlement and guarantee functions.
Import/Export Letter of Credit
A documentary credit is a form of a non-cash settlement between the seller and the buyer in which the buyer’s bank (issuer) takes responsibility for paying the beneficiary upon the provision of the documents required by the credit conditions and on confirmation that the goods and/or services have been delivered/provided.
VTB Bank offers the following documentary credit services:
- Opens documentary credit for its clients, with confirmation from foreign banks if necessary, in Russian or foreign currency for their foreign trade operations. VTB Bank offers all types of letters of credit. The credit can be covered by the client’s own funds or by a credit line that VTB Bank provides for this purpose. Clients requesting a letter of credit are also entitled to a discounted loan, using VTB Bank funds or foreign banks' resources.
- Advises clients on letters of credit opened in their favour or on changes in those letters, with or without VTB Bank confirmation;
- Performs a full range of transactions involving letters of credit, such as making changes to the conditions of the letters of credit already opened, verifying documents, making payments upon demand, or demanding payments under advised letters of credit, and remitting export revenues;
- Assigns the proceeds of letters of credit;
- Performs the transfer of letters of credit;
- Upon the request of clients, analyses the conditions of letters of credit advised by VTB Bank, offers consultations on contractual payment terms, and also provides assistance in preparing documents.
Letters of credit are used in accordance with international banking practice, such as ICC Uniform Customs and Practice for Documentary Credits, ICC Uniform Rules for Bank-to-Bank Reimbursements and other ICC documents, as well as VTB Bank regulations and requirements for effective monetary legislation. For more information on transactions involving letters of credit, please contact VTB Bank.
L/C Application Form
Recommendations as to filling out an L/C Application
Letters of credit used in Russia
Frequently, Russian suppliers and buyers do not have complete information regarding each other’s credit records, financial status, and creditworthiness. Using letters of credit in such a situation minimises the risks of both parties to a contract:
- the goods supplier receives the bank’s payment obligation;
- the buyer receives a guarantee that the payment will only be made if the supplier fulfils its side of the contract.
- VTB Bank opens the following types of ruble-denominated documentary credit for clients:
- covered letters of credit: credit opened against client cash coverage as of the opening date;
- uncovered letters of credit: credit opened without client cash coverage as of the opening date.
Transactions involving uncovered letters of credit in rubles are performed at VTB Bank branches. Our extensive branch network and regional offices give VTB Bank a competitive advantage.
The use of ruble-denominated letters of credit for settlements between Russian residents is regulated by Bank of Russia Regulation No 383-P “On Money Transfers” dated 19 June 2012.
For more information on transactions involving letters of credit between Russian residents, please contact VTB Bank.
Letters of credit used in foreign trade contracts with China
VTB Bank is the only Russian bank with a Chinese banking licence. Our branch in Shanghai enables us to offer clients competitive documentary services with low risk. VTB Bank performs settlements in hard currency, as well as in the Russian and Chinese national currencies. VTB Bank offers its clients the opportunity to perform transactions in Chinese yuan.