What is Bank Letter of Credit Policy (BLCP)?

• Do you export on LC Terms?
• Are you concerned on the country risks?
• Do the country risks bother you?
• Is the Issuing Bank known to you?
• Do you want to get paid under LC without recourse to you?

If YES, ask your bank to negotiate your ILC through EXIM’s Bank Letter of Credit Policy (BLCP).

This policy covers banks that negotiate Irrevocable Letter of Credits (ILC) issued by foreign issuing banks against their failure to reimburse payment to the beneficiaries (i.e. Malaysian exporters) under the ILC.

Why Take up BLCP?

BLCP helps the banks / exporters by: -

• Providing relief against the country risks
• Providing relief against the issuing bank’s risks
• Encouraging exporters to sell in non-traditional and emerging markets
• Promoting increased participation of banks in trade finance

What are the eligible letters of credit?

Only an Irrevocable Letter of Credit (ILC) with a tenor of not exceeding 720 days, and approved by EXIM Bank as per the Notice of Approval, shall be covered under the policy.

What are the Typical Risks of Non-Payment?

The policy covers any loss arising from failure of the issuing Bank to reimburse the bank any sum due to it under the ILC. The risks of non-payment may result from any of the following: -

• Insolvency of the Issuing Bank
• Protracted default of Issuing Bank
• War, civil commotion, transfer delays
• Any action by the government that prevent remittance by the Issuing Bank.

What is the Extent of Indemnity?

The policy provides indemnity to banks for up to 95% of the face value of the ILC or the gross invoice value of the shipment made, whichever is lower.

Premium Rates

To be quoted upon application and depends on: -

• Tenor of LC
• Buyer country
• Foreign issuing bank
• Information on buyer & exporter

Claims Waiting Period

The claims' waiting period is not earlier than 4 months from the due date of the ILC.