How does Bill of Lading work in Sight LC
Posted on
08 April 2023 Category : Bill of Lading
How does Bill of Lading work in Sight LC
How does Bill of Lading function in Sight Letter of Credit?
In this article let us discuss about the mechanism of Bill of Lading under Sight LC. How does Bill of Lading work under sight LC? How does bank handle Bill of Lading under LC at sight?
Letter of credit at sight is one of the payment terms in international trade. Once after completion of export formalities at customs, exporter collects original Bill of Lading from carrier of goods. The said original bill of lading along with other shipping documents are submitted along with Letter of Credit with his bank for negotiation. After satisfying with the terms and conditions of letter of credit, the authorized bank negotiate documents and sends the documents to overseas buyers bank. The buyer’s bank notifies buyer and instructs him to accept documents. The buyer accepts documents and arrange for import customs clearance to take delivery of goods. He surrenders original bill of lading with the carrier and takes delivery of goods.
Here the point is, without original bill of lading, the buyer can not take delivery of goods. As per sight LC conditions, LC opening bank has to remit amount of shipment to beneficiary bank, on acceptance of documents by buyer. So, buyers bank (LC opening bank) delivers original bill of lading only after receiving the export proceeds (value of goods shipped). In short, without remitting the amount as per letter of credit, the buyer can not take delivery of goods.
As per agreed terms with supplier, if buyer agreed to mention opening bank’s name as consignee or ‘To Order’, the opening bank (buyer’s bank) has to issue a ‘Delivery order ‘ to the buyer. The carrier of goods can release cargo to the buyer only after receiving such delivery order issued by the bank mentioned on Bill of Lading. Before issuing delivery order, bank confirms receipts of payment from his customer (buyer) against the Letter of Credit. Also read Can Original Bill of lading be surrendered under LC at sight Is Airway bill a documents of title to us under LC at sight?
In this article I have explained about the importance of Bill of Lading under LC at sight. Have you satisfied with this article about the mechanism of Bill of Lading under sight Letter of Credit? What is your experience in handling Letter of Credit at Sight? Would you like to share your knowledge and experience to add this article? Share below your thoughts about the function of Bill of Lading under Letter of Credit at sight.
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The above information is a part of Online export import training guide
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