17 Different Types of
Letters Of Credit
Definition and Guide
Types of Letter of Credit - Documentary Letter of
Credit in short called as DLC Or LC.
Depending on the type of business
transaction and the trade
requirement, the present banking
system under UPC600 regulation,
here are various types of letter of
1) Irrevocable Letter of Credit Means it is a type of documentary credit which
can not be cancelled or amended by the issuing bank without the agreement of
the parties of the letter of credit transaction.
4) Letter of Credit at Sight Means That
At Sight Letter of Credit is a letter of
credit that is payable once the
exporter/seller meets all of the
requirements of the letter of credit.
5) Stand-By Letter of Credit Means A standby letter of credit, abbreviated as
SBLC , refers to a legal document where a bank guarantees the payment of
a specific amount of money to a seller if the buyer defaults on the
6) Confirmed Letter of Credit Means A
confirmed letter of credit is a letter of
credit on which at least two banks
namely the issuing bank and the
confirming bank are obliged to make
9) Transferable Letter of Credit Means A Transferable
That means a documentary credit under
which the Beneficiary may request the bank
specifically authorized in the credit to
transfer the credit, available in whole or
part, to one or more secondary
The Document Collection is a compromise between letters of credit
and invoice payments 13) Red Clause Letter of Credit Means A red
clause DLC that facilitates pre-shipment finance for the beneficiary.
14) Green Clause Letter of Credit Means it is a
normal documentary letter of credit or DLC,
which provides a secured form of credit in that
exporters can draw an agreed percentage of the
value of the goods to be shipped against
presentation of warehouse receipts as collateral.
16) Usance Letter of Credit Means A Usance or a Deferred
Letter of Credit; is also known as a time or term LC.
This will be a letter of credit that