Issuing of Financial Guarantees and Instruments

Bank Specialization in the Issue of Letters of Credit

Issuing of financial guarantees and instruments is effectively the issue of letters of credit for customers of your bank who are making overseas purchases. A letter of credit is issued when a purchaser will not actually see the goods until they are delivered to them. They approach their bank with a letter stating the conditions of the letter of credit that has been agreed upon by the buyer and the seller of the goods.

The letter of credit is issued by the buyer’s bank, and is issued in the name of the seller of the goods. The letter of credit will contain terms and conditions of the release of the funds to the seller, however in order for the funds to be released, all of the terms and conditions will need to be met. A Letter of credit is used to protect buyers from purchasing goods that are damaged, incorrect goods that are shipped, or fraudulent sales or marketing of goods purchased.

To specialize in the issuing of financial guarantees and instruments, you will need to hold a banking license that allows you to take deposits, and send wire transfers. These services can be offered to clients no matter what bank license you hold, with the exception of the customers that you can provide services to. If you have a Class A bank license, you can provide the services to anyone, if you have a Class B unrestricted bank license, you can provide these services to anyone who lives outside of the country where your license is issued, and if you have a Class B restricted bank license, you can only offer this service to you client list that was presented to the licensing body at the time of you bank license application.

Starting Business can assist you in obtaining a bank license that allows you to engage in the issuing of financial guarantees and instruments. We can also assist you in setting up the best issuing of financial guarantees and instruments practices for your customers.

To find out more about the banking license required to specialize in the issuing of financial guarantees and instruments, please Contact Us.

Alternatively, if you wish to proceed with your bank formation, please complete our Bank License Application form.