Glossary / Also known as

Documentary credit

Another name for Letter of Credit (LC).

Other names

What does documentary credit mean?

Documentary credit is another name for Letter of Credit (LC). A bank-backed guarantee that a seller will get paid - the backbone of international trade when buyer and seller don't know each other.

The two names mean the same thing. You will see "documentary credit" in some ledgers, reports and contracts and "LC" in others. The full entry covers how it works, with examples.

Read the full definition of Letter of Credit (LC)

Topics

From the glossary

Related terms.

Trade and foreign exchange Letter of Credit (LC) A bank-backed guarantee that a seller will get paid - the backbone of international trade when buyer and seller don't know each other. Also called documentary credit, L/C Payments and banking Bank Guarantee Your bank's written promise to pay a third party if you can't deliver on a contract - widely used in tenders and trade. Also called BG, letter of guarantee Payments and banking Remittance Money sent across borders - whether it's an NRI supporting family, a business paying an overseas supplier, or a student's tuition transfer. Also called outward remittance, inward remittance, foreign remittance Trade and foreign exchange FEMA (Foreign Exchange Management Act) India's primary legislation governing foreign exchange transactions, cross-border investments, and external trade payments. Also called FEMA 1999, foreign exchange regulations Trade and foreign exchange Legal Entity Identifier (LEI) A unique 20-character alphanumeric code that identifies legal entities participating in financial transactions globally. Also called LEI code, LEI number Payments and banking Nostro Account An Indian bank's foreign currency account held abroad - the hidden infrastructure behind every cross-border payment. Also called nostro, foreign currency correspondent account

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