Use this service when your company makes an agreement with your exporter to use L/C as the settlement of trade. Our bank will open Letter of Credit to exporter based on your application. When we receives all the commercial documents sent from your exporter's bank, our bank will proceed for acceptance (or payment) to exporter or its assigner provided all documents are verified without errors.
2) Service Features：
Turn importer and exporter’s commercial credit into the banking credit, provide importer financial supporting and lead to more trade opportunities.
3) Target Clients：
Institutional customers who meet the following requirements:
1. Foreign trade enterprises, manufacturing enterprises and foreign-investment enterprises which have been proved to have the import and export licenses and have done the annual inspect already.
3. The applicants of L/C should be on the list of export enterprises from State Administration of Foreign Exchange. If the enterprise is not on that list, the enterprise should provide record of exchange payment verified by the local administration of foreign exchange.
4. In principle, the applicants of L/C are our clients which have good credit records.
5. Issuing applicant shall have stable RMB or foreign exchange income and good record of operation, credit and economic returns. For manufacturing enterprises, credibility and consignments condition shall be good. For trade enterprises, imported merchandises shall have a good sale market.
A. Examination before issuing
1. Application. The customers need to present the following documents to open an L/C:
（1）L/C Opening Application Form, Stamped.
（2）The copy of trade contract.
（4）business license, for the first application.
For non-credit customers, 100% margin deposit is required. For excellent-credit customers, the bank may reduce or waive the margin. That is the customer applies in accordance with the Bank’s credit system, and relevant department of the Bank will verify the application and provide opinions. After the approval of authorized person, Bank of Kunlun signs the contract of relief for the margin of issuing with customers to reduce or waive the margin.
（1）Whether the signature on the application of issuance of L/C follows the requirement.
（2）Should be noted whether the type of audit letters of credit and payment terms are consistent. If the letter of credit is transferable, the letter of credit should be designated to inform that the advising bank is transmitting bank, and require notification of the assignment details.
（3）The applicant of L/C must be consistent with the importer of the contract and with the official stamp sealed on the back of the application.
（4）The beneficiary of the L/C. Under normal circumstances, the beneficiary of the L/C should be the same as the exporter of the contract.
（5）The validity of the credit should not be earlier than the date of issuing. The effective location of L/C, except for the back-to-back letter of credit and payment letter of credit, is generally located in the beneficiary country.
（6）Type of currency on the application should be as free convertible currency. The capital form of credit amount must be the same as that of the lower case. If the credit amount on the L/C doesn't match that on the receipt or on the contract, the proportion of the money order payment amount and invoice amount should be notified.
（7）The payer should be banks, but not the applicant.
（8）The latest shipment date should not exceed the expiry date of L/C.
（9） The applicant should notice whether shipment by turn or transferring is allowed.
（10） Loading and unloading land should be harbor place when the L/C is shipped by sea and transferring is not allowed.
（11） According to different regulations, the applicant should obey the regulations to deal with different notices.
B. Issuing of L/C
1. We issue the L/C after we check and audit the compliance and identification of the application.
2. The L/C must be identical with the application.
3. Selection of Advising Bank。
The Bank chooses advising bank selected by applicant, and selected advising bank should be Bank of Kunlun’s agent bank.
If applicant does not assign advising bank:（1）assign overseas branches where the beneficiary stays;（2）assign agent banks where the beneficiary stays;（3）if there are not overseas branches and agent banks at beneficiary’s location, the Bank may assign branches of the agent bank.
After issuing, based on customers application, the Bank may modify the content of issued letter of credit or revoke the letter of credit.
1. The issuing applicant submits the application for modification.
2. After processed by international business department, the Bank will exam the reason of modification and find out the potential risks for issuing bank, and then verify the content of modification.
3. After approval of modification, the Bank delivers the documents to international business department to verify if the formalities are completed; if the content is clear and reasonable; for those that exceed the authority, check if it has been approved by bank with authority.
4. Modifying letter of credit. Advising bank should be the original advising bank of the letter of credit. The number of modification should be informed.
1. It is the most important processing step of letter of credit business, and the main evidence to justify whether the issuing bank meets the obligations of payment. According to the regulation of UCP600, the issuing bank should process documents within 5 business days.
2. Method of processing documents。
International business department should provide opinion within 3 business days after receiving documents.
3. Examination of documents
（1）International business department will audit the content of BP from foreign bank, including whether acceptance/payment date is in accordance with that on the letter of credit, whether the types and number of documents is the same as the attached documents, whether the documents meet the requirement, whether it contains payment instruction and the transfer routing number, and whether the remitting bank has special instructions.
（2）Review the documents under the letter of credit. Main reviewing points of the documents are:
① Review of bill of exchange. The bill should be marked with “Bill”; should indicate the correct number of letter of credit; whether the amount of the bill of exchange is consistent with the letter of credit; whether the due day of payment of the bill for is consistent with that of letter of credit; whether the date and place of the bill are correct; whether the bill payer is in line with the letter of credit; Whether the bills of exchange is signed by the beneficiary; For endorsement, whether proper endorsement has been done; whether the content on the bill is consistent with other documents.
② Review of the commercial invoice. Whether the word “Invoice” has been marked on the invoice; whether it is issued by the beneficiary, unless the credit is for sale. Invoice appears to be issued by the beneficiary; whether the bill ispayable to the applicant; Whether the goods description, unit price, total price match those in the letter of credit; whether terms of trade, or the price are the same as the terms of the letter of credit.
④ Review of the insurance document. Bank of Kunlun should make sure that whether the name of the insurance document is consistent with the L/C, whether the number of copies submitted is in line with the requirement on L/C, whether it is opened by the insurance company or the insurer or its agent and signed, whether issuing date is not later than the date of issuance of the transport document, whether the insurance amount and currency is in line with the L/C or the provisions of UCP500 Article 34, whether the content of the letter of credit is required as stated in the insurance documents, whether the required information from L/C has been displayed.
⑤ Guidelines for reviewing other documents. The Bank needs to make sure that whether document name is correct and is consistent with the L/C, whether goods descriptions match the L/C and other documents, whether the documents are issued by the designated issuer, whether the provisions of the letter of credit and other documents are consistent, whether the required information on letters of credit has indicated on the documents
（3）Other Key Points for Reviewing.
① If the L/C designated bank for negotiation / acceptance / payment / deferred payment, the documents should be submitted by the designated banks.
(2) If the beneficiary directly hands in documents on the counter, in addition to the review of the documents, the L/C should be endorsed.
③ If the L/C designated bank for negotiation / acceptance / payment / deferred payment, for documents from non-designated bank, under normal circumstances, the remitting bank should be asked to confirm with the Bank, in order to ensure that the letter of credit will not be reused.
④ For those documents not required by L/C, the Bank will not examine and then return to the remitting bank or pass to the next process depending on the circumstances. The Bank shall not be responsible for any consequences.
1. Payment. Payment under the letter of credit can make at issuing bank against documents or wire transfer and mail transfer to reimbursing bank. In principle, Bank of Kunlun only accepts payment against documents. The processes of payment against documents are as follows:
(1) The Bank has charged the full amount of the deposit in same currency or issuing the applicant has deposited the full amount of payment amounts in same currency, debit issuing applicant’s account or margin account, and process external payments.
(2) If money charged by margin payment or provision of applicant’s account is not in the same currency as stated on L/C, the Bank should follow the relevant regulations.
(3) Issuing applicant may reduce or waive the margin within the available credit limit; the Bank shall promptly notify the client departments to prepare provision.
(4) If the rights of acceptance bill have been transferred, you should ask the Bank to confirm before Bank of Kunlun will pay at the due date.
(5) After the payment from letter of credit, the Bank should stamp "closed" and keep separately with the outstanding volume.
(1) If the remitting bank requires Bank of Kunlun to accept and return the bill, the Bank only accept the effective positions of documents against payment. The acceptance include: the word of accept, the date of acceptance of the signers’ signature. Acceptances only a bill to avoid the two bills of exchange in two different proper holders and the Bank will have to bear double amount of debt.
(2) If the remitting bank is not required to return the bill, Bank of Kunlun should generally use SWIFTMT754 or telex foreign acceptances, and make the payment at maturity.
(3) After determine acceptances, if the applicant apply for an extension of the payment period, the international business department should carefully examine the financial condition and solvency ability. After approved by authority, the Bank may start to process. The extension of payment terms must come into force until the relevant parties of letter of credit agree, otherwise, the issuing bank must pay at the original due date.
If International Business Department discovers discrepancies in the documents, and the issuing applicant does not accept the discrepancies, the Bank will take the following approaches:
(1) The payment will be refused within seven working days after receipt of the documents. The bank will set out all the discrepancies in a dishonor message, declaring that because of the discrepancies, the Bank declined the payment / acceptance and will take custody of the documents, pending for the processing.
(2) If the remitting has discrepancy, the bank should firstly seek the views of the applicant issuing written confirmation of the consent of the issuing applicants, and dishonor or to accept discrepancies. Discrepancies accepted if the issuing bank examine the documents and found discrepancies, the issuing bank can still dishonor outside 7 working days after the receipt of the documents.
(3) After dishonor
After dishonor, the Bank should handle depending on different situations:
①Agreed to accept the document, promptly notify the remitting authorized to put a single process external payment / acceptance procedures of such as the Import and Export negotiation.
②The applicant insists on not to accept the discrepancy, the bank will promptly return the full set of original documents. The import and export sides resolve the issue. If secondary sending, it should be confirmed whether the first set was received when the second set is received, and then returned two sets of documents.