1.14 Revolving and Non Revolving Islamic LCs
You can open an Islamic LC and choose to make it available again in its
original amount after the goods have been shipped, documents presented and credit is
settled. Such an Islamic LC is a revolving Islamic LC. Under a revolving Islamic LC the
amount is reinstated or renewed without any specific amendments to the Islamic LC. A
revolving Islamic LC may be revocable or non-revocable, and can revolve in relation to
the following:
- Value
- Time
This facility can be utilized when a supplier wishes to make repetitive shipments over a period such as a year.
The Islamic LC can have an automatic reinstatement clause, which provides for continuing the renewal of availability. You also have the option to manually reinstate an Islamic LC. The credit may require approval of the opening party before it becomes available again.
Parent topic: Overview of Islamic Letters of Credit