Definition
A bank instrument guaranteeing payment to a seller upon presentation of specified documents (invoice, bill of lading, insurance). If the buyer (applicant) defaults, the issuing bank pays the seller. LCs are widely used in trade finance. Fraudulent LCs (where documents are forged) are a major banking fraud category and attract IPC S.420/S.467 and BNS S.320/S.340 charges.
Need Expert Advice on Letter of Credit (LC)?
For specific advice on how Letter of Credit (LC) applies to your debt recovery matter, consult Advocate Subodh Bajpai — LLM, MBA (XLRI Jamshedpur). 25+ years of exclusive banking and debt recovery practice across DRT, SARFAESI, IBC, and NI Act.
Defined by Advocate Subodh Bajpai, Senior Partner, Unified Chambers and Associates