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Letter of Credit

Letter of credit (LC) is a financial instrument used in domestic and cross-border trade. It is a written commitment by the buyers’/ importers bank (LC issuing bank) to the seller/ exporter's bank to pay on due date to the seller on presentation of credit compliant documents as per the terms of the LC.

Letter of Credit can help you to –

  1. Expand your business in new geographies

  2. Negotiate better pricing and terms with sellers as letter of credit ensures payment

  3. Enhance working capital efficiency & cash flows  

  4. Reduce the risk of non-performance of the seller and ensure timely supply of goods

A letter of credit can have multiple clauses, which may take a lot of time to formalise.  ICICI Bank offers a unique facility for instant generation of draft letter of credit.

  • Available for both customers and non-customers of the bank
  • No dependency on sellers/ seller’s bank to provide the draft LC format

Unlock speed & efficiency with ICICI Banks’ Instant LC draft generation. 

Click here to generate the LC draft now

I agree that by clicking on 'Submit', I authorise ICICI Bank and its representatives to contact me by telephone, e-mail, using Short Messaging Service (SMS) with respect to products/ facilities hereby applied for.

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How does a Letter of Credit work?


  • Step 1 - You (the buyer) and the supplier sign a contract stating that payment will be made on the basis of Letter of Credit
  • Step 2 - You approach ICICI Bank to issue a Letter of Credit in supplier’s favour
  • Step 3 - ICICI Bank issues the Letter of Credit, advised by its own branch or correspondent bank in supplier’s country
  • Step 4 - Advising Bank advises Letter of Credit to the supplier
  • Step 5 - The supplier receives the Letter of Credit, sends the shipment of goods and deliver’s documents to its own bank
  • Step 6 - Supplier’s bank sends the documents to ICICI Bank for payment
  • Step 7 - You now pay the amount due to ICICI Bank, and get the documents in turn

Types of Letter of Credit

Sight Letter of Credit

The issuing bank makes the payment once the documentation is received in order

Usance Letter of Credit

The issuing bank accepts the draft once all documentation received is in order, and agrees to pay on the maturity date

Standby Letter of Credit

This is typically used to ensure that the applicant will meet the payment or contractual obligations. A Bank Guarantee can also serve the same purpose.

The ICICI Bank Edge

  • Convenient - Sanctioned and Issued quickly
  • Wide Acceptance - Gloabally accepted by all beneficiaries
  • Multichoice - ICICI Bank Letter of Credit can also be availed against 100% cash margin in the form of Fixed Deposits
  • Competitive pricing