Stand by Credit


Stand by Credit


Stand by CreditThis is similar to a performance bond or guarantee, but in the nature of letter of credit. The credit assures the beneficiary that in the event of non-performance or non-payment of any obligation, the beneficiary may request the issuing bank to make the payment. The beneficiary has to draw the claim by drawing a bill on the issuing bank, accompanied with documentary evidence in support of non-performance of contract. When the exporter receives the advance payment from importer, importer may insist on exporter to open 'Stand by credit' in favour of the importer to protect the latter's interests.


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