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Why Are Letter Of Credit Known As Non Fund Based Advance? |
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Answer» In Letter of credit, no money payment is DONE by the bank directly. Bank issues a letter of credit which is a confirmation to the Exporter/Importer about payment from the Importer/Exporter respectively. Bank issues Letter of credit on basis of security which is forfeited if Letter of credit issued by the bank on BEHALF of the customer is INVOKED. In Letter of credit, no money payment is done by the bank directly. Bank issues a letter of credit which is a confirmation to the Exporter/Importer about payment from the Importer/Exporter respectively. Bank issues Letter of credit on basis of security which is forfeited if Letter of credit issued by the bank on behalf of the customer is invoked. |
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