Questions:

Usance L/C with credit available by deferred payment and acceptance.

  

Under Deferred Payment, understand that no bill of exchange is required. 

Answer : Yes, it is correct. The main purpose is to save Stamp Duties.

  

LC cannot be discounted and buyer can seek court injunction to stop payment. 

Answer : LC can be discounted if it is not restricted, i.e. if it is freely available. It is correct that buyer can seek court injunction to stop payment.

  

What is the reason for Issuing Bank to restrict such LC and not able to provide credit available by negotiation or acceptance?

Answer : Issuing Bank prefers to restrict such LC to correspondence bank of its choice mainly due to business relationship, risks and cost factors. As Seller, you should request your Buyer to instruct the issuing bank not to restrict the LC, i.e. it should be made available with any bank.

  

Under Acceptance, understand from some bank that even though the Credit is available by Acceptance, they cannot act.

Answer : If no bill of exchange is required, there is no requirement for acceptance. Seller must check the LC and ensure that payment is determinable, for example , XX days after BL date etc.

  

What is the experience of the members on the above or they are just the same risk to exporter?

Answer : The risks are higher and you can consider to accept such LC from buyers who are reputable and reliable.

  

For further explanation, please refer to attached note.

Contributed by Roland Teo - Knowing Your Customer