Non-operative L/C

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Joined: 10/07/2008
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Please help to explain about Non-operative L/C , Stanby L/C are they the same?

Thank you in advance

tulsi's picture
Joined: 04/09/2008
Non operative L/C is only a Un transmitted L/C

Non operative L/C is only a non transmitted L/C specimen, ready in the swift system of the issuing bank. Some case, the seller says they will open the PBG only after receiving the Non-operative version of the L/C from the buyer’s bank.

 A performance bond is used to make sure the seller or buyer will perform according to the contract. Incase any of them do not perform the contract and then the bond will be useful to compensate another. Once the Performance guarantee confirmed the non operative version of the L/C become operational and transmitting to the beneficiary’s bank.

Some times this copy is sending to the beneficiary by the applicant as a proof of L/C establishment. The shipper will chase the bank with this information and wasting time. It is better to ensure, chase the bank with a transmitted swift copy for the original L/C.   

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Tulsi/ Dubai