Letter of Credit

Letters of Credit have become a crucial aspect of trade after traditional payment methods became impossible. In the modern business world, there is no international trade without them. Reduce your risk of non-payment and advance your business with confidence.

Import Letter of Credit

At the request of the customer (Importer), AlRajhi Bank issues an irrevocable undertaking to pay the value of the complying presentation to the Exporter. Accordingly, AlRajhi Bank credit worthiness replaces that of the customer.

Features and Benefits:

1. The importer ensures that payment will only be undertaken if the exporter complies with the terms and specifications of the letter of credit.
2. Immediate notification to importer upon receipt of documentation.
3. Importer improves his negotiating position through Al Rajhi Bank’s payment guarantee.

Musharaka Letter of Credit

While the mechanism is the same of Import LC , AlRajhi Bank and the customers (Importer) can agree to import the goods on predefined shares basis. Once a complying document received, AlRajhi Bank sells its share to the customer on a deferred term.

Features and Benefits:

1. Importer needs to contribute only a portion of the funds required for import.
2. Importer is assured that payment will only be made to the exporter only when he complies with the terms and conditions of the letter of credit.
3. Importer can defer payment to the bank on arrival of the goods as per prior agreement with the bank.
4. Immediate notification to Importer upon receipt of documentation.
5. Importer improves his negotiating position through AlRajhi Bank payment guarantee.

UPAS Import Letter of Credit

The Import LC UPAS " Usance Payable at Sight" is a product offered by alrajhi bank, at the request of the applicant (Importer), Usance lc is issued allowing the exporter to claim payment at sight against complying documents while Importer pays alrajhi Bank at the agreed maturity date.

Features and Benefits:

1. Facilitate commercial negotiations as its Exporter receives payment at sight basis.
2. Strengthen the relationships with the exporter by allowing for payment at sight while LC is on Usance basis.
3. Competitive Financing price.

Export Letters of Credit (Advising / Negotiating/Financing)

By Advising the LC and its amendments, AlRajhi bank signifies the apparent authenticity of the Letter of Credit. Moreover, ALRajhi bank offers the services of documents checking and the follow-up with the Issuing bank to settle the value of the documents/drafts.

Post acceptance of Shipping documents by the Issuing Bank, alrajhi bank at its sole discretion can further finance the exporter and effect an upfront net present value to Exporter on a without recourse basis, which enhances Exporter cash flow and working capital.

Features and Benefits:

1. Pledge from Al Rajhi Bank to pay the value of the complying presentation.
2. Providing Islamic financing for exporters at competitive prices
3. Reducing the risks of dealing with the country and issuing bank of LC

Export Letter of Credit Confirmation

In addition to the issuing bank undertaking, Confirmation is an irrevocable undertaking by Al Rajhi Bank to pay the value of the complying presentation under Export Letter of Credit either at sight or at future maturity date according to the LC terms.

Features and Benefits:

1. Undertaking from Al Rajhi Bank to pay the value of the complying presentation.
2. Mitigating the country risk of the importer.
3. Mitigating the issuing bank credit risk.