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Letter of credit

Reliable tool for settlements with counterparties

About the product

A tool where Bank undertakes to carry out settlements under the transaction: the seller is confident that he receives money, the buyer - that the bank pays only against documents under delivered goods
• Covered (deposited) letter of credit - at the time of issuing letter of credit, the payer's (buyer’s) funds are blocked in full on the current account at issuing bank or nominated bank
• Uncovered (guaranteed) letter of credit - the issuing bank issues LC with bank credit granted to applicant of LC (buyer)

Who can use a letter of credit

• Small and medium-sized enterprises (legal entities and individual entrepreneurs) within the framework of contractual relations with counterparties
• The use of letters of credit allows you to protect the interests of both the seller and the buyer. For the buyer, the most important is the properly carried out delivery of goods/ provision of works/services, while for the seller - timely receipt of payment

Letter of credit is used most often in the settlements in the following cases

• Business partners have established new, untrusted business relationship
• The seller is not sure of the buyer's solvency, and the buyer is not sure of the seller’s ability to deliver the goods/ perform work/ provide services
• The objects of the contracts  are large projects or special designed goods

Operations with letters of credit

• Opening a letter of credit - issuing bank (PASHA Bank) by the request of applicant (Bank client) issues its obligation where bank undertakes to make payments in favor of supplier of goods or services or assigns another (nominated) bank to make those payments against documents complying to LC terms and conditions

• Confirmation of a letter of credit - the issuance of an additional obligation to make payment under a letter of credit opened by another bank

• Advising of a letter of credit - official notification of the supplier by the bank about the opening of a letter of credit in its favor and any changes in its terms

• Execution of a letter of credit - verification of documents under the letter of credit provided by the supplier of goods or services and making relevant payments


Guaranteed protection for all parties to the transaction

High level of legal security, as letters of credit are governed by International Uniform Rules

Timely settlements under transaction

Business expansion, effective way of establishing business relationships with new counterparties

Letter of credit for importer

• Avoid advance payment
• Reduce the risk of default by exporter

Letter of credit for exporter

• Use the letter of credit - guaranteed receipt of payment for goods (works, services)
• Get paid without delay

How a letter of credit works?


Conclusion of a contract


Application of the buyer to the bank for a letter of credit issuance


Opening a letter of credit


Notification by the supplier’s bank of the opening of a letter of credit (advising) in its favor


Shipment of goods by supplier


Presentation of shipment documents by the supplier to the bank


Bank checking of documents and relevant payment to the supplier (execution of the letter of credit)


Passing of documents by the bank to the buyer

How to get a letter of credit?


Submit an application for letter of credit to any Business Centers of the Bank or leave your e-application


Provide a package of documents and open an account in PASHA Bank


Sign agreement with bank for opening of a letter of credit

Apply or place a request

For a business with annual turnover up to 8 million

Are you a legal entity/private entrepreneur?*:

For additional information please contact PASHA Bank Business Centers, Contact Center at (994 12) 496 50 04 /*8123 or email address.



Place a request