Electronic Letter of credit Transaction Process Ahmedabad | Thane

Electronic letter of credit can be defined as a letter of credit transaction which is carried our entirely on electronic means of communication and issued according to the rules such as eUCP allowing electronic presentations.

How electronic letters of credit works? 

All letter of credit parties such as beneficiary, applicant, issuing bank, advising bank and confirming bank must connect to the same secure online platform which enables electronic presentations and electronic document examinations. Global Trade Corporation and The Bolero Ecosystem are top two companies throughout the world offering these kinds of secure multi-bank platforms.

Step By Step Electronic Letter of Credit Transaction Process

• Electronic letter of credit transaction starts with the signature of the sales contract between the exporter and the importer through secure online platform.
• Applicant (importer) applies to the issuing bank for opening an electronic letter of credit which should be subject to latest version of eUCP rules.
• Issuing bank issues its electronic letter of credit and sends the credit to the advising bank through multitask platform.
• Beneficiary (exporter) of the electronic letter of credit receives the authenticated copy of the e-credit through the secure online multitask platform.
• At the same time applicant (importer) applies to the transport company that he needs an electronic bill of lading for the particular letter of credit transaction to make sure that the carrier issues an electronic bill of lading instead of a regular paper based bill of lading.
• Beneficiary makes the electronic presentation to the advising bank. Electronic presentation contains electronic documents including digitally signed e-bill of lading.
• Advising bank checks the documents. If documents require no correction then advising bank make the electronic presentation to the issuing bank.
• Issuing bank checks the documents. If documents are found to be complying then issuing banks issuing bank honors its letter of credit.

Works on Electronic Letter of Credit Infrastructure:

In order to make international letters of credit more compatible to this challenging electronic business environment the ICC Banking Commission started to work on electronic letters of credit rules in year 2000. The aim of the ICC Banking Commission Working Group which consisting of experts in the UCP, electronic trade, legal issues and related industries, such as transport was to carry out the documentary credits rules into electronic environments where electronic presentations are possible without the need of any paper based documents.