Bank Letter of Credit Policy
- export on LC terms;
- are concerned with the costing risk; and
- want to secure payment of your export under LC without recourse to you
Bank Letter of Credit Policy (BLCP) will assist in securing payment of the Irrevocable Letter of Credit (ILC) to your bank. BLCP covers participating banks that negotiate ILC issued by foreign banks against the foreign issuing bank's failure to reimburse payment to the beneficiaries (i.e. Malaysian exporters) under the ILC.
Detailed information can be referred to Product Disclosure Sheet.
BANK LETTER OF CREDIT POLICY
BLCP helps the banks/exporters by:
- Providing cover against the country risks
- Providing cover against the Issuing Bank's risks
- Encouraging exporters to sell in non-traditional and emerging markets
- Promoting increased participation of banks in trade finance
The policy covers any loss arising from failure of the Issuing Bank to reimburse the Negotiating Malaysian 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 prevents remittance by the Issuing Bank
Only ILC with a tenure of not exceeding 180 days , and approved by EXIM Bank as per the Notice of Approval, shall be covered under the policy.
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.
To be quoted upon application and depends on but not limited to:
- Tenure of LC
- Buyer country risk
- Foreign issuing bank risk
- Information on buyer & exporter
Cover only commences when shipment has been made and other terms and conditions of BLCP and individual offer on the cover are complied with.
The claims waiting period is not earlier than 4 months from the due date of the ILC.