CKB

Nostro letters of credit

  • Over 10 years of experience in working with letters of credit for the largest Montenegrin companies
  • Professional expert assistance in defining proper L/C terms and conditions

Product description

Documentary letter of credit is an international payment instrument. Nostro letter of credit represents a written obligation of a bank to effect payment to the beneficiary (buyer of goods/services), usually through advising, confirming or reimbursing bank in the country of the beneficiary, provided that it has presented compliant documents to the bank within specified time frames.

The Bank has been providing expert assistance related to letters of credit for the past 10 years, which makes it your most reliable partner on the Montenegrin market. This is also evidenced by its larger than 60% market share. One of the most important factors in establishing an L/C is to formulate it properly, i.e. to define adequate L/C terms and conditions. Therefore, the most important part of the service is not the price, but professional support extended by the Bank.

IN LETTER OF CREDIT OPERATIONS, “ICC UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS”, UCP NO.600 REVISION 2007) ARE OBSERVED.

Fundamental principles governing documentary letters of credit are as follows:
1. Principle of dealing with documents only and not with goods or performance
2. Principle of independence of L/C obligations from underlying contract
3. Principle of autonomy of legal relationships
4. Principle of examining documents

There are two key elements of documentary letter of credit:
  1. issuing bank (in this case, CKB) opens/issues an irrevocable letter of credit in favour of beneficiary (seller of goods/services) and assumes an irrevocable undertaking to pay the beneficiary;
  2. the beneficiary will collect the funds provided that the bank is presented the documents specified in the L/C that are in strict compliance with all terms and conditions stipulated in the L/C within the foreseen time.
Letters of credit may be used by all legal entities which are the Bank’s clients.

There are different types of documentary letters of credit, including: COVERED, UNCOVERED, TRANSFERABLE, NON-TRANSFERABLE, REVOLVING DOMICILE IN THE COUNTRY OR DOMICILE ABROAD, PAYABLE AT SIGHT, ACCEPTANCE, TIME, STANDBY.

It is very important for a foreign trade company, which is the Bank’s client, to consult the Bank, prior to concluding a foreign trade contract, on defining the FINANCIAL CLAUSE adequately:

  • what type of letter of credit the buyer should open,
  • when the letter of credit must be opened,
  • under which terms and conditions.

Product price

Price of a nostro letter of credit depends on the L/C type and agreement on cooperation with particular client and ranges from 0.5%-3.5%.