Documentary letter of credit as an instrument of payment in international trade, is a written undertaking of a bank (The Issuing Bank) given to the seller (The Beneficiary) acting at the request and on the instructions of its customer (the applicant) to:

• make payment to or order of third party (The Beneficary)
• pay or accept bills of exchange (drafts) drawn on the beneficiary
  or
• authorize another bank to effect such payment or to pay, accept or negotiate such bills of exchange (drafts) against stipulated documents.

In issuing the letter of credit, the importer’s bank (The Issuing bank) substitutes it’s credit standing for that of the importer, thereby assuming credit or financial risk in full.

Nostro Letter of Credit (Documentary Letter of Credit for import business) – Issuing bank at the request of it’s client (importer) issues letter of credit on the basis of the written order, and the Issuing bank undertaking payment upon presentation of stipulated documents by the exporter.

By order and on behalf of the client, RAZVOJNA BANKA VOJVODINE a.d. Novi Sad, in accordance with instructions issues the letter of credit on the basis of covering or delayed taking of cover (no later than 5 days before maturity date).

The Bank issues all kinds of irrevocable documentary letter of credit that are in use in international practice respecting Uniform Custom and Practice for Documentary Credits UCP revision 2007, ICC publication No. 600.

Loro letter of credit (documentary credit for export business) – Issued in favor of home seller (exporter) through commercial bank (Advising bank).

RAZVOJNA BANKA VOJVODINE a.d. Novi Sad:

• Notifying loro letter of credit (based on the instructions received from issuing /foreign bank)
• Transfer of letter of credit (according to the instructions of the beneficiary)
• Consultations in respect of terms and conditions of letter of credit and creation the documents

The main significance of documentary letter of credit, as well as extremely attractive and represented instrument of payment is that it also provides maximum protection of the interests of the sellers and buyers in international trade, especially in the case when they are new partners in international trade. The seller is sure to collect for the goods delivered in accordance with the terms and conditions of letter of credit, and the buyer is sure to get the same goods.