Friday, April 29, 2011

Revolving LC

This LC allows to make the shipment of the goods in prescribed times and value as mentioned in the lc on revolving basis and payment is made accordingly. after drawing is made the credit reverts to its original amount for re use by beneficiary without requiring specific amendment to the credit. there are two types of revolving credit. in the first type of revolving credit credit gets reinstated immediately after a drawing is made. for example, if a credit is opended for rs. 100000. and beneficiary draws an instruments for rs. 100000. immediately after the drawing the credit, reverts to its original value of rs 100000. allowing beneficiary to draw again and so on. in the second type of revolving credit the credit reverts to original amount only after it is confirmed by the issuing bank which normally occurs after the documents reach the issuing bank.

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