Letter of Credit (LC)

This is an arrangement that is irrevocable and thereby constitutes a definite undertaking of the issuing bank to honor a complying presentation.

Letter of Credit (Sight)

This is an LC that involves immediate payment to the seller by the negotiating bank. The payment is later reimbursed by the issuing bank.

Letter of Credit (Usance)

This is an LC that involves payment to the seller at maturity i.e., (at a future date). The drawee bank obligates itself to make the payment.

Non-revolving

Letter of credit is one in which the limit is reduced permanently to the extent of bills drawn under the credit.