Letter of Credit Issuance

At a Glance

A Letter of Credit (LC) is issued at your request to assure payment to your supplier up to a stated amount, within a prescribed time.

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On your terms

Ensure the necessary documents are received for goods clearance

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Documents are checked for compliance and terms before you make payment

Features & Benefits

Help when you need it

Our experts can offer you advice and expertise regarding DBS SME Banking’s Import LC

Leverage our “AA-” and “Aa1” credit ratings

Provide your sellers with assurances of payment through our LC issuance to fulfil your import needs

Save time and ensure fast delivery

Apply for an Import LC online via DBS IDEAL

Types of Letter of Credit (LC) Provided by DBS Bank

	Sight LC
	The issuing bank will honour payment at “sight”, meaning payment is made once documentation received is in order.

	Usance LC
	The issuing bank will accept the draft once all documentation received is in order and an agreement is in place to pay on the due date.

	Red Clause LC
	It allows the issuing bank to make a partial advance payment to the seller upon receipt of documentation.

	Transferable LC
	DBS Bank transfers the Export LC in favour of the ultimate seller at the request of the middleman who will then sell goods under the Export LC.

	Back-to-Back LC
	The master Export LC from the buyer’s bank backs the issuance of an Import LC. Proceeds from the Export LC are used to pay the bank under the Import LC.

How it Works

How does a Letter of Credit (LC) work

The buyer and seller enter into a contract and agree that payment be made on the basis of LC
Buyer approaches DBS (issuing bank) to issue an Import LC in favour of the seller
DBS issues a LC which is advised through its branch or correspondent bank (advising bank) in the seller’s country/region
Advising bank advises a LC to the seller
Upon receipt of the LC, the seller prepares shipment and delivers documents to the presenting bank
Presenting bank dispatches documents to DBS for payment
DBS pays the presenting bank upon verifying the documents are in order.
Upon receipt of payment, the presenting bank pays the seller
Buyer pays the document amount to DBS
DBS forwards the documents to the buyer, who can now use them to obtain the goods

Fees

For fees associated with DBS SME Banking’s Letter of Credit (LC), please refer to Trade Finance Service Fee Schedule.

How to Apply

Simply submit your application form at one of our Trade Collection Branches or SME Banking Centres. Alternatively, you can apply via DBS IDEAL.

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Smart Form

Pledge and Trust Receipt Application Form

Trade Finance Service Fee Schedule

FAQs

	What is a Letter of Credit (LC)?
	A LC is a letter from the bank guaranteeing that a payment made by a buyer to a seller will be received on time and for the stated amount. If the buyer is unable to fulfil the payment, the bank issuing the LC will have to honour the entire or remaining amount of the payment agreed upon between the buyer and the seller.

	Can you issue a Letter of Credit (LC) to my seller, without a DBS facility?
	No, you must obtain a credit facility with DBS Bank before we can issue an Import LC to your sellers. Please call us at 2290 8068 should you require assistance.

	How do I complete the Letter of Credit (LC) application form?
	You may call us at 2290 8068 for assistance.

	Can DBS issue an Letter of Credit (LC) if the seller does not provide the advising bank’s details?
	Yes. When there is no DBS branch or office in the seller’s country/region, we will issue an Import LC and advise through a network branch/agent bank.

	What can I do if my loan application is not accepted? Is there a process to review the decision?
	If you have any questions or need to discuss the result of your loan application, please contact our "SME Credit Approval Review Hotline" at 2290 8050 or email to [email protected]

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